Issue: Imaginative cash rewards are the key to successful employee-referral programs.
Benefit: Employees hired through employee referrals have higher retention rates.
Action: Read below to gauge whether your rewards are too little, too much or right on the mark.
If you don't have an employee-referral program (ERP), urge upperto start one. They're more effective and less expensive than other recruiting methods. But don't expect a big bang from ERPs if you pay token rewards.
Advice: Push upper management to make room in the budget for bonuses that inspire employees to make quality referrals.
How much should you pay out in referral bonuses? Consider these results from a survey by compensation association WorldatWork:
For referrals that result in the hiring of professional staff, 7 percent of the organizations responding pay $250 to $499 per referral, while 26 percent pay $500 to $999, and 42 percent pay $1,000 to $2,499. The figures are about the same for supervisors.
For referrals that result in the hiring of clerical staff, 20 percent of companies pay $250 to $499 per referral, while 33 per-cent pay $500 to $999, and 29 percent pay $1,000 to $2,499.
Another option: Offer employees something beyond a one-time cash bonus for each referral. For example, hold a quarterly or yearly grand prize drawing for everyone that received a referral bonus. Reward the person with the most successful number of new hires in a year.