The Ultimate Guide for Employee Referral Programs

How to implement one heck of an Employee Referral Program.

Tawfiq Abu-Khajil

Co-Founder

Tiffany Jin

Co-Founder

Guides & Resources

10-15 min read

Introduction

Employee referrals are one of the best sources to attract and retain talent. This guide covers everything you need to set up an engaging and successful employee referral program. Let’s make your employees your number one source of hires!

1. Start by calculating your average cost-per-hire*

*Cost Per Hire = Total Recruitment Cost in a given period (one year) / Total Number of Hires in that given period

Note: In this case here, you’ll only* need to calculate costs that referral hires help you avoid. These include: Job advertisement fees, Job Board Fees, External recruiter fees, Recruiting agency fees, Staffing agency/firm fees, Recruiting event costs, Travel expenses due to recruitment, Employer branding.

2. Determine your average referral bonus amount.

Next, you’ll need to determine how much you want your average referral bonus amount to come down to. Typically, this should at-least be equal to your cost-per-hire. This is because you're going to see your ROI on reducing turnover costs. Alternatively, you can have your average referral bonus be slightly less than your calculated cost-per-hire if you want a clear way to show reduction in your recruiting costs.

3. Categorize your open positions

If you’re a large organization, your roles will probably be already categorized according to seniority.

If not, there are multiple options for categorization:

For example, divide your open roles into 1) Hardest-to-fill 2) Hard-to-fill 3) Easy-to-fill.
Another example is by seniority: VP, Directors, Managers, Seniors, Entry-Level
A third example of bucketing is by departments: RN/LPN, Allied Health, Nutrition, Technicians, etc …

4. Distribute your average referral bonus amount across your categories

There’s two ways to do so.

a) The easy way is to distribute your average referral bonus amount across your categories. For example, let’s say your your average referral bonus amount is $1,500, you would distribute it as such:

b) The second and even more-accurate way is to use your past hire data and distribute the bonus amounts accordingly. Here’s the table:

Keep editing the proposed referral bonus amounts until the average equals your target one calculated above.

For example, for the above to produce an average referral bonus amount of $1,500, the proposed amounts would have to be $3,200 for RN/LPN, $1,500 for Allied Health, and $1,300 for nutrition.

5. [Extra] Average employee referral bonus stats

Average employee referral bonus by industry:

Average healthcare bonus is $3,200
- Average CRNA Employee Referral Bonus: $3,700 – with the highest being $10,000
- Average RN/LPN Employee Referral Bonus: $1,900 – with the highest being $5,000
- Average Surgical Tech Employee Referral Bonus: $3,000 – with the highest being $5,000
- Average Physician Employee Referral Bonus: $5,000 – with hospitalist going up to $10,000
Average Employee Referrals Bonuses for healthcare by state
- California: $2,200
- Missouri: $1,800
- Maryland: $1,300
- Minnesota: $1,100
Average Employee Referral Bonus in Assisted Living: $1,600
- Average Resident Assistant Employee Referral Bonus: $2,000
- Average Nutrition Services Aide Employee Referral Bonus: $750‍
‍Average Employee Referral Bonus in Construction: $1,400

You can also request a free Policy Template here - but we added some starting points below.

Purpose

The [Company] Employee Referral Program is a value-based program designed to motivate and reward employees for referring qualified external candidates for hire. Employee participation in this program assists [Company] with sourcing top talent, decreasing cost per hire, time to fill, and turnover.

Scope

This is a [Company Legal Name] policy and applies to active salaried and non-bargaining employees working for [Company Legal Name] in the [Countries this policy applies to e.g USA] with the exception of the groups listed below:

Referral Process

Employees who wish to participate in the Employee Referral Program must submit their referral by texting REFER to 67000. The message chat will guide you on how to proceed. (See how you can use Eqo to make this possible)

Eligible Referrals

Referrals must be for external candidates who are not currently employed by our organization and have not been previously referred for the same position. Referrals must meet the minimum qualifications for the position and must be eligible to work in the country where the position is located.

Reward

The position in which the candidate is being referred to is posted as an eligible position to receive a referral bonus reward within the Employee Referral Platform. If the position is not listed in the Employee Referral Platform or has a $0 dollar reward in the Employee Referral Platform, a referral bonus reward will not be granted.

Payment of Referral Bonus

Referral bonuses will be paid out in accordance with the company's regular payroll schedule. The referral bonus reward payment is subject to taxation and legally required deductions. The reward will not have 401k deductions and is not pensionable. Referral bonuses are subject to change or termination at the company's discretion.

Confidentiality

Employees who participate in the Employee Referral Program are expected to maintain the confidentiality of any information they receive about referred candidates, including contact information, and other personal details. Sharing such information with unauthorized parties or using it for any purpose other than the referral program is strictly prohibited.

Non-Discrimination

The company is committed to a fair and equitable referral program and prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, age, disability, veteran status, or any other legally protected status. Referrals will be evaluated based on their qualifications and fit for the position, regardless of the referral source.

Program Administration

The talent acquisition team will administer the Employee Referral Program and reserves the right to interpret and enforce the program policy. The company may modify or terminate the program at any time without prior notice.

Policy Acknowledgement

By participating in the Employee Referral Program, employees acknowledge that they have read and understood this policy and agree to comply with its terms and conditions.

Compliance with Company Policies

Employees participating in the Employee Referral Program are expected to comply with all other company policies, including but not limited to the company's code of conduct, data privacy policies, and anti-harassment policies.

Effective Date

This policy is effective from the date of issuance and supersedes any previous policies or practices related to employee referral programs.

This Employee Referral Program Policy is intended to provide general guidelines and is not a contract of employment. The company reserves the right to modify, interpret, or terminate the program at any time, with or without notice.

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