If you’re looking for ways to grow your company, you may have considered establishing an employee referral program. In these programs, employees recommend people they know for open positions, and then are rewarded if their candidate is selected. 

While this process sounds like a win-win, many companies have concerns about the effectiveness. We’re here to tell you there’s no need to worry! Employee referral programs are a great way to generate a loyal company community. They help recruit loyal, hard-working employees that add camaraderie and positivity to their work environment. Additionally, when your current employees help you find excellent candidates, your business can cut its recruitment costs.

Still not convinced? Read on. 

Why Employee Referral Programs Work

There are a few different aspects of employee referral programs that lead to more effective recruiting.


When you ask your employees to assist you in growing the company, they feel involved and trusted. You are saying that you want their help, and that their recommendations are useful. With referral programs, you can show your appreciation through more than an empty gesture or a shallow message. You are actively demonstrating that their efforts are meaningful and worthwhile to you, helping them feel valued. 


Because employees are familiar with both the company and their candidate, they can more accurately predict whether they are good fits for one another. Additionally, the company and the candidate can both trust the employee to make a good recommendation.

For the candidate, the employee can offer a genuine perspective on the culture, processes, leadership, and duties of the job. It is easier to trust someone you know and respect than a job posting about the realities of a position.

For the company, the employee knows the candidate well enough to offer a compelling recommendation. They know the candidate’s skills, work ethic, goals, and information, which can be difficult to obtain from a resume and interview. The company can ensure that the candidate is a good fit for the position. 


By offering incentives for effective recommendations, companies can ensure they are receiving high-quality candidates and cutting their hiring costs. An employee referral bonus is a fraction of the cost of a recruiter’s fee, and companies can still receive great candidates. 

Tips for a Successful Employee Referral Program

While employee referral programs do work, there have to be certain conditions in order for them to be most effective. Here are some tips to help you set up an excellent employee referral program.

Work Environment

First thing’s first, your company environment has to be a great one. Your employees should feel supported, appreciated, and comfortable in their workplace. No one is going to recommend their friends or family work at a place they hate. 

Part of this is treating all of your job applicants with respect and encouragement, not just your referral candidates. Candidates should feel positively toward your company and want to work there. 

Additionally, to support the employee that referred your candidate, you should respond to applications quickly. Candidates will expect a response within two weeks, and will ask their point of contact (your current employee) about it. 

Your goal in hiring a candidate is to build and grow a hard-working, supportive, loyal community. Hiring candidates already connected to your employee can help ensure that they feel more comfortable in the workplace, as they already know at least one person there. Building this culture will make a continuous difference in your work environment as you put the employee referral program into practice.

Strong Connections

The most effective employee referrals involve strong connections between the employee and the candidate. Harvard Business Review performed a study where they tracked internal referrals. They found that strong connections between employees and candidates were nearly three times as likely to result in a hire than recommendations from surface-level connections. 

Start your employee referral program today!

Candidates from employee referral programs tend to be higher quality, more likely to receive and accept offers, stay longer, and perform better. Companies spend less time on their hiring process, their turnover is reduced, and their productivity is increased. 

Your employees can provide you with great candidates. Start your employee referral program today and see how effective these programs really are!

WarmUp is a referral program software company with programs for both customers and employees. Schedule your free demo with WarmUp today and learn how powerful referral programs can be for your company. 

Once you have established your referral program, you can work on perfecting it to get the best results possible. Download WarmUp’s eBook, “7 Things Your Referral Marketing Software Should Do,” to find out exactly what your referral software should offer you.