4 Reasons Why Your Employee Referral Program is Not Working

There are several reasons why employees refer people in their network for jobs advertised by their companies.

Job satisfaction, a genuine desire to help people in their networks and their company find fitting jobs and employees, and of course, the rewards that come with the package, comprise some of the top reasons.

If your company offers a referral program or is thinking of launching one, it’s important to understand why many well-intentioned programs fail to achieve the desired results.

Some issues are easier to fix than others. But with a strategic approach, your business can strengthen the program and motivate employees to recommend the best candidates for every role.

Here’s a rundown of the top four reasons why employee referral programs don’t work:

1. A Complicated Process 

In a digitally-transformed world, employees are used to quick and easy digital workflows for any process. Your company’s employee referral program must mirror this expectation.

Instead, many companies tend to have complicated steps as part of their referral program. For instance, an employee may need to fill out a long form with many details on their role at the organization as well as the individual they are referring.

This can be counter-productive; you don’t want employees to see referrals as another target they need to meet in exchange for some benefits.

By leveraging the power of AI-driven automation and integration into existing systems, the workflow of employee referral programs can be simplified. This makes it easy for employees to participate and tap into the power of their networks.  

2. Inefficient Referral Awards 

Many companies are under the impression that the only way to trigger more employee referrals is through enticing cash rewards. They make the mistake of promising cash bonuses once the referral is hired and stays on for at least one year.

The problem with such a model is that the gratification comes too late and is also conditional. Instead, companies can set milestones and get creative with the reward structure.

For instance, once a referral is made, employees can receive a social shoutout. If the referral translates to hire, an employee could earn a few days off.

Mapping various milestones with relevant rewards motivates employees to bring excellence to employee referrals. Rewards can be both aspirational and functional, including trips, gadgets, and shopping vouchers.

Keep things exciting by updating rewards at regular intervals. 

3. Communication Gaps

Proper information design and flow play an important role in the success of any employee referral program. However, communication gaps are a common problem.

For instance, employees may not be aware of new positions that need to be filled. The friends, family members, and peers whom they referred with enthusiasm may not hear back from the company or post their referrals. Employees may also be unaware of the exciting new rewards you just introduced.

Treating employee referral programs as an ongoing campaign is a key to their success. Any lag in information can disrupt the workflow, demotivate employees and create a poor impression among potential hires. 

4. Company Culture 

Remember, one of the reasons why employee referrals benefit a business is because your employees understand your work culture and company goals. Hence, they are in a position to recommend potential hires who can be a good fit for the business.

However, if your company has a culture of high attrition and you are constantly trying to hire new people, this is a red flag for employees.

In such a context, your current employees may be actively seeking opportunities elsewhere. The lack of job satisfaction among your employees will discourage them from recommending their friends and peers to join the company. 

A culture of high attrition eats into the profitability of the business and can threaten its long-term sustainability. While this might be the hardest problem to solve, companies must address it head-on and fix it from the ground up. 

In Conclusion

Companies often tend to consider employee referral programs as an add-on process in the overall recruitment strategy, thus reducing their effectiveness in delivering results.

On the contrary, they need dedicated resources to design the program strategically, execute it efficiently, and measure the results.

Glitches in the existing frameworks can be fixed with a combination of strategy, program design, tech-enabled solutions, and smooth, inspiring communication.


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