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Why Do So Many Employee Referral Programs Fail?

by Jessica Palm | Feb 27, 2017

Sourcing new talent through an employee referral program can be one of a recruiter’s best assets, but only if the program actually works. Kevin Fryer, president and CEO of JobShakers, a mobile application company, talks about why some referral programs don’t work, and how to develop key strategies to develop a successful program.  

Almost all HR professionals acknowledge that employee referrals are the “gold standard” when it comes to sourcing talent. Referred candidates are typically quicker to hire, perform better on the job, and have superior retention.1 This has led many companies to develop Employee Referral Programs (“ERP’s”) to try and encourage employees to make more referrals. While many of these programs offer very compelling cash bonuses or other incentives, more often than not the results fall far short of expectations. In fact, nationally referrals still represent less than 7% of total job applicants.1

So, why do these programs fail to deliver?  Well, despite the best intentions and a great deal of effort, the issue usually comes down to a poorly designed program that is not user-friendly and is cumbersome to administer. The initial excitement quickly fades as confusion and logistical hurdles result in waning interest amongst employees and the program losing traction.

Conversely, well designed programs will speed up your sourcing efforts, reduce your overall cost-per-hire, and can be instrumental in improving employee engagement and enhancing company culture. Some of the keys to a successful program include:

  • Easy and convenient to use (a mobile-solution can be ideal for today’s workforce).
  • Highly visible – i.e. a central part of the company’s recruiting strategy and company culture.
  • Attractive branding – i.e. memorable program name, logo and message.
  • Compelling incentives – i.e. lucrative referral bonuses (cash or merchandise) and timely payouts.
  • Enthusiastically & frequently marketed – to generate initial adoption and ongoing participation.

Spending the time and effort to develop a high performance ERP will deliver a strong recruiting ROI. By turning your employees into an army of recruiters you will greatly increase your talent acquisition reach and you will be sourcing pre-vetted candidates that have a higher likelihood of becoming productive contributors.

1 Jobvite Index

To learn more about JobShakers, contact Kevin Fryer. To learn more about TeamKC, contact Jessica Nelson.

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