Why Your Referral Rewards Need to Include More than Bonuses

Employee referral programs are not only immensely popular, but they also deliver results—to both the employee and employer. Employee referrals are the number one way potential candidates find jobs, and this is good news for employers – employee referrals give employers access to a high caliber talent pool.

As an employer, you should offer a robust employee referral program that encourages your employees to serve as top brand ambassadors for your company while enticing talented candidates to join your team. Many programs offer bonuses to employees when a potential candidate makes it through the on-boarding process. To strengthen your referral program, however, you should look to expand beyond the one-time referral bonus and consider micro-rewards as part of your employee referral program budget.

Micro-rewards are small cash or non-cash awards given to employees for achieving more modest goals.

Here’s some reasons you might want to consider changing the format of your employee referral program.


Drawbacks of Bonus-Only Programs

Many companies with referral programs offer incentives to employees who recommend talented friends and acquaintances. Primarily, these incentives are paid as bonuses, which the referring employee receives after the potential candidate is interviewed, hired, and onboarded.

The length of the process is one drawback of the bonus-only program. On average, the time from interview to hire lasts between twenty-four to thirty-eight days. Add more time for onboarding. And, finally, some companies don’t pay bonuses until the employee has completed a requisite period with the employer, such as ninety days, to avoid paying a referral bonus in revolving door situations. Employees who refer potential candidates, at best, may receive their reward within a month to six weeks of referral. However, employees can also wait six weeks to six months for their reward.

This delayed timing is hardly ideal to incentivize employees. A longer payout period may protect the company from a quick turnaround, but it’s not the best thing for employee morale. The longer an employee has to wait for their reward, the less interested they may be in your referral program, which can reduce the number of quality referrals you receive.

Further, most employers don’t even pay a bonus if the prospective candidate isn’t hired, which the referring employee has no control over. Other companies only pay bonuses for high-level positions that may be hard to fill, such as executive or engineering positions. Employees may not be motivated to refer friends and acquaintances for other available jobs because the incentive isn’t there.


The Case for Micro-Rewards

To have a sound, effective referral program, consider using micro-rewards instead of (or in addition to) referral bonuses. Micro-rewards are small cash or non-cash awards given to employees for achieving more modest goals, like referring five friends for open roles. Micro-rewards don’t have to be as costly as a $3,000 referral bonus – they can be smaller gestures, such as a gift card or mini-bonus (around $15-40). By rewarding and recognizing your employees for their referral efforts, you’ll engage your employees, and see continuing referrals.

If an employee’s referred candidate makes it to the interview process, for example, you could incentivize your employee by giving him or her a micro-reward. Even if that candidate doesn’t make it past the interview process, your employee still referred a candidate—a candidate you considered for a position. That should be rewarded.

To encourage your employees to refer potential candidates for the long-term, you can provide incentives throughout the recruiting process, with each reward growing in value as the candidate graduates through each hiring step. This encourages your employees to refer candidates who will want to stick around at your company. By using micro-rewards, employers can recognize employees’ efforts, create a referral culture, and encourage employee engagement in the program without breaking the budget.


Using Micro-Rewards to Reward Employees

Micro-rewards give you the ability to get creative with your team. What do your employees like? What motivates them? What encourages enthusiasm? Micro-rewards allow you to personalize your incentives to your organization.

Reinforce the referral behavior you want from your employees through timely and frequent recognition. Millennials crave consistent reinforcement more than other generations, but all employees like to be recognized. By giving out smaller, personalized, creative rewards, you’re creating a team of ambassadors excited about referring candidates.

Here are some ideas to incorporate into your employee referral program:

  • Grant a morning or afternoon of waived paid time off (PTO) to an employee who refers five quality candidates within three months.
  • Let an employee work from home on a Monday or Friday, accessing your cloud-based platforms from their laptop (or company laptop, depending on your security measures).
  • Give out gift cards to Starbuck’s or the local lunch spot.
  • Give up your parking spot to an employee for a day or week.
  • Create a recognition wall in the break room for your top referral performers.
  • Throw an ice cream or pizza party honoring your employees who participate in the program – programs that involve the entire company or team incentivize the entire team, even if you’re only technically celebrating the top referrer.

By mixing up your rewards, you create fun and excitement around the referral program, making referrals part of your culture. Tailor your rewards to your company and your workforce – you may even have different rewards for different teams.

Through micro-rewards, you’ll be able to incentivize more employees more efficiently. Be sure to promote your rewards. Communicate with employees about what awards are available for each behavior. When employees understand the program and are excited about their participation, you’ve created a program that not only encourages referrals but also increases your employees satisfaction in the workplace. Happier employees, more referrals. More referrals, better talent. Better talent, more company success.

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