Cost Reduction Strategy For Your Employee Referral Program

Employee referral programs make a splash for the incredible incentives they offer, for instance an employee receiving a brand new car as part of the referral bounty makes for good news. But it can sometimes lead to the erroneous assumption that it takes big money to drive referral success. In fact organizations with the most successful referral programs do not offer substantial rewards at all,the biggest incentive they offer is the opportunity to work with similar high performing talent. The thought that referral programs need to be expensive to be successful has often led referral programs to be termed as costlier than other recruitment tools even though they may provide better hiring talent.

The best thing about referral programs is the fact that costs are entirely under your control. As an HR professional if you are worried that reduced costs might reduce the effectiveness of your employee referral program, think innovation. The most creative referral program have chosen to do away with cash prizes to offer employees unforgettable experiences, one that gives employees something to cherish while not costing a fortune to the organization. A cost reduction strategy for your employee referral program actually offers you an opportunity to make your program more participative and different from other organizations. Here are some more ways you can reduce costs while increasing the effectiveness of your employee referral program.    

•    Build A Referral Culture
The best referral programs do not promote the referral program as a one-off program but rather promote the organization itself as a great place to work and treat employee referrals as priority in the recruiting process. Employees are treated as partners in the recruiting process and their suggestions, feedback and comments are giving due weight and importance.  With a well entrenched referral culture, an organization does not need to include big bonuses to get employees to participate, saving on cost and time.

•    Innovative Rewards
Many referral programs have replaced cash rewards with referral reward points. This is especially true of organizations with gamification as part of the referral programs. An employee can chose to accumulate referral points and redeem them for an item of their choice. This has the twin benefit of both keeping employees engaged with the referral program while allowing them the flexibility to pick an item of their choice. The organization benefits by spreading the cost over a longer period of time as well as through negotiated deals with supplier organizations.

•    Differentiated Reward System
Not all positions are equally difficult to source or equally valuable to the organization. Use differentiated rewards with higher rewards for hard to fill or important positions. This way you can prioritize your referral program while saving costs on the less important positions.

•    Effective Use Of Social Media
Making more effective use of social media both internally within the organization as well as externally within employee connections to promote referral successes and get more people to participate in the referral program is the most cost effective way of marketing the referral program.

Ultimately, the success of a referral program depends on how willing are employees to market the organization as a place to work. As such nothing is more guaranteed to work as building engaging and productive working teams that are willing to go the extra mile for the sake of the organization.

Savio Vadakkan is a Marketing Professional for ZALP, a unique employee referral software. ZALP guides organizations about how to create an employee referral program by means of social media integrated recruiting techniques.