If you don’t have an employee referral programme yet, you’re missing out on real potential. According to freely available studies by various HR software providers, the following applies:
- The quality of applications is significantly better.
- Hiring through referrals is therefore much faster. Referrals have the highest success rate of all recruitment methods.
- Depending on the study, recommended candidates stay with the company at least 25% longer on average because they fit in better with the team.
- And the recruitment costs are significantly lower than with traditional channels.
In short, referrals are one of the most powerful recruitment tools available.
But clear rules are needed to ensure that they work properly. Here is a guide to everything you need to consider.
1. Who is allowed to recommend someone?
In principle: all employees. Clarification required in advance:
- What about temporary workers, freelancers, temporary staff, interns, working students or external persons?
- Usually excluded: senior management, managers with direct influence on recruitment and HR staff.
- Members of the works council are sometimes also excluded if the council is heavily involved in recruitment.
2. When is the bonus payable?
- The recommended person must not already be in the process of applying for a position.
- It must be clarified how to proceed if the recommended person is already or was previously employed by the company as a temporary worker, consultant or service provider.
- Cases where no regular position is being filled, but rather trainees, working students, interns, bachelor’s or master’s students are being hired, also require clarification.
3. How does the process work?
- The name of the person making the recommendation must be provided directly in the application, not later. Applicant management systems usually have an integrated field for this purpose.
- The application goes through the normal recruitment process. There is no automatic preference.
- Special rules are possible, e.g. for apprenticeships: children of employees may be given preference if they are equally qualified. This is a matter of taste.
4. The bonus – how much and when is it payable?
- In Germany, between €500 and €2,000 gross per hire is most common. The tax liability should be explicitly pointed out to avoid disappointment.
- Important: According to studies, the amount of the bonus has no significant influence on the number of referrals.
- Non-monetary bonuses can also be considered: additional holiday, vouchers, further training.
- Payment is usually made after the probationary period has been successfully completed, typically with the following payslip. Staggered payments are also possible, but more labour-intensive.
- One requirement may be that the person making the recommendation is still with the company at the time of payment.
- Some companies also reward recommendations that do not lead to a hire with a small recognition bonus.
5. And now for the marketing
- A good programme needs a clear, appealing name. Examples:
Employees recruit employees, Bring a Friend, Talent Scout Programme, etc. - And the programme must be well communicated. Not just passively, e.g. on the intranet, but also actively on a regular basis. This can start as early as the onboarding process.
My conclusion
A good employee referral programme is not just nice to have. It is a real competitive advantage – especially for medium-sized businesses.
If you want to get started, as a trained lawyer, I can support you in a legally compliant, precise and eloquent manner. Tailored precisely to your corporate culture.
Inken Schneider – TALENT PUZZLE
HR consultant for small and medium-sized enterprises
kontakt@talent-puzzle.com
+49 151 67337785
PHOTO: canva.com
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