Employee referral programs in 5 steps: Part 6
Step 5. Pay Referrals rewards.
· Do not delay reward/bonus payment.
Withholding payment of the bonus for 90 to 180 days post-hire is silly. Do sales people have to give back their sales bonuses if the customer stops buying after 90 days? Do you delay payments to staffing agencies or executive search firms? Well, of course not. So why should you treat your employees more harshly than you do your vendors? Rewards work only if they are immediate and there is no “risk” of not getting them. Nothing discourages participation more than delaying the reward based on something beyond the employee’s control. Paying half of the fee upfront is not an acceptable alternative. In addition, it’s not the employee’s responsibility to hire a candidate, only to refer them. Hiring managers do the final assessment and they determine whether the person is the right fit. If the person does quit prematurely, it’s the manager you should blame, not the employee making the referral, because they have no control over how the individual is treated.
· Provide different rewards for different jobs.
All HR programs should reward performance, and referrals are no different. Referrals for hard-to-fill jobs and mission-critical jobs should get a bigger bonus than easy-to-fill jobs. In addition, there should be a supplemental bonus if someone turns out to be a top performer after they are hired. If you fail to include reward differentials, your key jobs will be filled more slowly or not at all. In fact, the best programs allow referrals only for jobs that are high impact or are hard to fill.
· Use big-dollar bonuses only for top jobs.
Paying too much money can actually kill a program, as large bonuses incent employees to spend more time looking for referrals than doing their jobs. This angers their managers and eventually it will cause these managers to resist the program. Research shows that anything over $1,500 will generally have little impact on referral volume of quality candidates.
· Don’t pay a miniscule reward.
Do not embarrass yourself by paying a ridiculously small bonus. Yes, you can pay nothing or just have drawings for prizes and still have an effective program, but don’t pay $50 or $100 for something that if you had to hire an external consultant to do would cost thousands of dollars. If you’re paying significantly lower than the market standard, you will get push back from your employees who compare what your firm pays to what is paid by close competitors.
· Reinvigorate the rewards.
Although some well-designed referral programs produce great results without any monetary rewards, most research shows that offering a monetary reward increases both the number and quality of referrals. This does not mean that you should offer a lot of money ($1,500 is the recommended maximum), but it does mean that you should vary the rewards and change them periodically to keep people excited. Many firms successfully use drawings for trips, luncheons with the CEO, a reserved parking spot or other non-cash items. The key here is to vary them and to see what works and what doesn’t. When something does work, it generally needs to be changed less often — about every six months or so.
