Why use this Employee Referral Form Template?

Referral Programs : To do or not to do

Birds of a feather flock together is a mantra one can follow while looking to fill vacancies and find the right fit for the organization. Your organization has a workforce handpicked by the top force and they are there because they are great at what they do. They probably also know other people who are great at what they do. Let one awesome find another.

Referral programs are a great way to find potential candidates for your company especially when you are the HR and you have to fill vacancies across the organization. Finding the right talent is not an easy task; however, when you have your current workforce refer someone, you know the preliminary step is done.

Companies are seeking to improve work ambiance and reduce friction within teams as a healthy working environment results in higher productivity and increased employee engagement. Hence, facilitating referrals enables employees to work with people they enjoy being with.

This is indeed a great practice to improve employee engagement and retention. However, do we provide other perks to the employees for referring candidates for open positions?

Yes. Generally, referral programs are known as employee referral bonus programs. Under such programs, employees are given bonuses once the candidate they referred completes a certain period of association with the organization. Sometimes, they receive the amount in installments. The referral bonus amount depends on the position and designation the candidate is hired for. Leadership positions attract more bonus amounts.

While in most cases, there is a referral amount at stake, some companies also provide referral leaves that can be availed by the candidate.

Is there a benchmark for setting the referral bonus?

At this point, there is no benchmark for referral bonuses. However, it should not be too less for employees to not care for the program at all.

But is the monetary bonus taxable?

Yes. Any monetary bonus is taxable.

It still sounds like a great practice. But do referral programs really work? How can we rely on them?

Absolutely. In fact, many companies nowadays have done away with the hiring norms and only fill their positions through referral programs. Top management often encourages referrals during their town halls. It helps boost employee morale.

It also reduces the stress on the HR and the talent acquisition team. The time required to fill a position is also reduced as there is no need to use career websites to scout for profiles. The amount spent on advertising openings also goes down by encouraging employees to spread the word about any open positions. In the end, it really helps bring down employee turnover by getting quality hires. It also speaks volumes of your trust in the current workforce.

I cannot wait to introduce this in my organization, which is a start-up and a midsized company.

In fact, it works best within smaller businesses because hiring managers have a direct reach to all the employees. Gather teams for coffee or lunch and introduce the practice by asking them about people outside the organization with whom they would want to work with. It is also important to keep your organization’s job portal updated with the latest open positions with all details about the job, role, and requirements.

Non-cash rewards such as movie and event tickets and shopping coupons also work out great. However, the most important factor to remember is to recognize and appreciate their efforts at referral.

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