The A-Zs of Hiring Glossary

Employee Referral Programs

What are Employee Referral Programs?

Employee Referral Programs are internal recruitment strategies that encourage employees to refer qualified candidates for job openings within their organization. These programs are designed to take advantage of the networks and connections of current employees to find potential hires who may not have otherwise applied for the job.

Employee Referral Programs are often incentivized, meaning employees who refer a successful candidate may receive a reward or bonus for their efforts. This can range from monetary compensation to extra vacation time or other perks.

One of the main benefits of Employee Referral Programs is that they tend to result in higher quality hires. Since employees are referring people they know and trust, there is a higher likelihood that the candidate will be a good fit for the company culture and have the necessary skills and experience for the job.

Additionally, Employee Referral Programs can help to reduce recruitment costs and time-to-hire since the referral process is often faster and more efficient than traditional recruiting methods.

It is important for companies to have clear guidelines and policies in place for their Employee Referral Programs to ensure fairness and avoid any potential conflicts of interest.

Why do companies have employee referral programs?

Companies have employee referral programs to encourage their current employees to refer qualified candidates for job openings within the company. Referrals from current employees tend to be of higher quality and have a higher retention rate than candidates sourced through other means. Additionally, employee referrals can save the company time and money in the recruiting process.

How do employee referral programs work?

Employee referral programs typically involve offering incentives to employees who refer a candidate that is ultimately hired by the company. The incentive can vary, but may include a cash bonus, extra vacation days, or other perks. The program may also have guidelines for the types of positions that are eligible for referral, the qualifications of the referred candidate, and the process for submitting a referral.

Employee Referral Programs Dos And Donts


  • Encourage employees to refer their contacts to the company
  • Offer incentives for successful referrals
  • Ensure that the referral program is communicated clearly to employees
  • Make the referral process simple and easy to understand
  • Provide regular updates to employees on the status of their referrals
  • Thank employees for their referrals, even if they are not successful


  • Do not make the referral process overly complicated or time-consuming
  • Do not limit the referral program to certain departments or positions
  • Do not ignore or dismiss referrals without proper consideration
  • Do not forget to track and measure the success of the referral program
  • Do not overlook the importance of providing feedback to employees on their referrals
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