5 Reasons Your Employee Referral Program Isn’t Working

Attracting top talent to your business is a must for every employer. Competition for outstanding candidates is tight, so how do you find your next superstar? You can search for candidates through your company website, internet job boards, or recruiting agencies, but one of the best ways of finding new talent is through your current employees.

The recruitment process for a referred candidate is faster than other methods. The retention of referred employees is longer, with forty-six percent of referred employees staying with a company for at least three years. And no agency fee is tied to a referred employee, resulting in a higher return on investment.

Many companies may have a referral program, but if it’s not effective, it’s not going to produce results. If you want to attract and retain talented employees through an employee referral program, make sure you establish a program that’s easy, effective, supportive, and diverse.

Here are five common referral program mistakes and how you can avoid them.

1. Complicated Process

How does your employee refer a potential candidate? Does the employee submit a paper form? Does the employee submit a form via the employee portal? Can an employee refer a candidate on a smartphone? Can an employee link into their social media for referrals?

Don’t over-complicate the process for the employee. The more complicated the process, the less likely the employee will take time to refer a potential candidate. What good is an employee referral program if no employees refer?

Make your program easy for employees to refer from any device with one or two clicks. Let employees refer from their social media contacts for job openings. Leverage your employees’ social media contacts to recruit top talent. Make the referral system understandable and user-friendly.

2. Ineffective Referral Awards

When do your employees receive awards for their referrals? Once the candidate is hired? Are your employees motivated by their awards? Are the awards personalized? Do employees show excitement when they receive them? Have you asked for feedback?

How did you answer the questions above? You may be thinking to yourself right now, “Wow, our rewards are ineffective.” Or you might be slightly defensive, saying, “But we don’t have a huge budget for awards.”

Most awards don’t need to be high-dollar. Awards could be a closer parking spot for a month. Or a Friday afternoon off. Or additional professional development paid for by the company. Or share the boss’s assistant for the week.

Employees want to be appreciated and recognized for their efforts. And the appreciation and recognition need to happen regularly and often. Don’t offer awards only at the end of the recruiting process. That process can take one to two months or more. Reward employees at specific milestones during the recruiting process in order to keep the employee engaged and excited. And it will keep the referrals coming.

3. Lack of Communication

Do your employees know about open positions at your company? Once an employee refers a candidate, do you keep that employee in the loop? Does the employee know where the candidate is in the recruiting and interviewing process? Do your employees know if a candidate was hired or not hired?

Communicate openly with your employees about open positions with the company. If employees know what positions are open, they can recruit for the company. Additionally, if an employee can track the path of a candidate through the recruiting process, it creates excitement for the employee as the employee hits each award milestone.

Finally, communicate the referral program itself to your employees. If your employees don’t know about the program, don’t know how to refer, or don’t understand the award system, then why have the program at all? If you don’t get your employees to participate, you’re missing out on the top hiring strategy.

4. Lack of Diversity

What type of candidates are your employees referring? Are they referring candidates like them? Is your workforce diverse? Do your employees come from different backgrounds?

Often, it’s great to have employees refer candidates just like them. If your employees are dedicated, intelligent, and hard-working, then you definitely want referred candidates just like them! However, you need to develop a diverse workplace. Diversity expands beyond sex, race, ethnicity, and religion. It also extends to backgrounds, thought process, ideas, and viewpoints.

A more diverse workforce leads to more creativity, better brainstorming, exceptional decision-making, and superior innovation. To encourage more diverse referrals, consider ramping up your employee awards for candidates who are underrepresented employees in your workforce. By encouraging diverse referrals, you’re accelerating your business potential.

5. Underdeveloped Culture

What’s your company culture like? Do your employees enjoy working at your company? Are they engaged? Satisfied? Loyal? Do they stay or is your company a revolving door?

Culture is your competitive differentiator. If you’re paying your employees fairly, then your employees will judge their jobs on flexible schedules, employee benefits, professional development, personal growth, type of work, and community involvement. If they enjoy the culture, then employees will talk to their friends about their job. If they love their culture, they’ll want their friends to work at their company.

By focusing on your culture, not only will you improve your retention of your current employees, but you’ll also gain access to coveted talent through employee referrals. Your employees will become your best recruiters.



Most employee referral program challenges can be fixed. However, it takes encouragement, participation, and communication from management. It takes consistent and frequent awards and recognition. It takes a program that’s easy to understand and use.


To produce results, tailor your employee referral program to your company and workforce. What works for one company doesn’t necessarily work for another. Ask for feedback on your program and make changes as necessary. Keep your program updated and fresh. After all, you’re going after the best of the best.

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