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PortugalRecruitment and Selection
What is a referral program and what are its advantages for recruitment?
Learn what a referral program is within a company and what its main advantages are for effective recruitment.
Marcos Lopez
HR Consultant
13 of March, 2025
The search for talent has never been so complex. You may have noticed that it’s increasingly harder to find candidates that fit your needs. Establishing a referral program could be the solution to your problems.
When we think about personnel selection and recruitment, we think about posting an offer. Or about approaching potential candidates directly, knocking on their door.
But we can also involve the team through a recruitment referral program. An option that offers us multiple benefits, for both the company and the employees.
What is a referral program
The referral program for recruitment is a talent acquisition strategy based on internal recruitment. It consists of incentivizing the team to recommend potential candidates that fit a certain position.
In this way, the employee sets a first filter of candidates. The referral program in human resources should ensure that the new employee fits in.
Moreover, our employees become promoters of the company. They present it as the ideal workplace among their contacts.
A vital component of the employee referral program are the rewards. When a candidate proposed by an employee is hired, this should be rewarded.
How? It depends on the company. It can range from public recognition to a bonus, days off, or a gift.
Pros and cons of the referral program
As always, before establishing it, you will have to study the referral program advantages and disadvantages. Most are advantages, although it is true that it has some weaknesses. If you are able to maximize the former and minimize the latter, you will have done part of the work.
Advantages
We have already discussed some benefits of the referral program, such as boosting commitment. On the one hand, employees feel that we trust them and are more identified with the company. On the other hand, new hires come with a double commitment, also with their “sponsor”.
When developing our selection processes, the referral program has a double advantage. Firstly, it allows us to access hidden talent.
Often, we will be proposed profiles that are not actively searching for a job. Talent that we could not access otherwise.
And secondly, we save time and costs in the selection process. It is unnecessary to publish the offer and await applications. And much less, filter through hundreds or thousands of CVs to find an interesting profile. We get straight to the point, being able to interview applicants quickly.
On paper, the referral program helps to reduce staff turnover. Presumably, we are hiring workers capable for the position.
If we add the commitment discussed earlier to this, integration into the company is facilitated. They tend to stay with us longer.
Disadvantages
The major drawback of any employee referral program is subjectivity. All recommendations made by our team will be subjective. And that is something normal. In spite of all the filters they apply, the personal and emotional relationship with the suggested candidate carries weight.
To minimize this risk, the Human Resources team has plenty of tools. After all, the job interview (or interviews) will ultimately put everyone in their place.
Another of the major risks of referral programs is the reaction of the employees. After all, the proposed candidate is a personal bet. And although it might be an extra motivation, the rejection can generate some detachment.
How to develop a referral program in Human Resources
Are you thinking about developing a referral program? You will have to complete the different stages of it to be successful.
Below, we offer you the keys to creating a referral program step by step:
- Reward system. We will begin by establishing the rewards. They are the main stimulus to participate in the referral program, and they must be coherent -and feasible-.
- Presentation. It should be known by all the workers. If not, they will not be able to propose candidates. It is necessary to explain how it works, what rewards it offers and how it is published.
- Share vacancies. This will be the next step. Take advantage of the internal communication platform to share vacancies and incentivize participation.
- Easy proposals. Make sure that the process to propose a candidate is easy. Avoid having employees fill out forms with too many fields.
- Follow-up and feedback. Periodically, you will have to analyze the results of the referral program. Ask for feedback from those referred and those refereeing to make it more effective.
Examples
We’ll end by looking at some examples of referral programs. In the case of Intel, they wanted to have more women and minority workers in their workforce.
Through a referral program with attractive bonuses, they achieved this goal. In contrast, Google found that experiential gifts were more effective than financial premiums.
For its part, Salesforce decided to create Recruitment Happy Hours. These are meetings where their employees invited those referred. In this way, they connected with recruiters in an informal setting.
Another interesting case is Booking. The tourism giant was unable to find bilingual workers using conventional channels.
What they did was set up a program where the bonus was greater depending on the difficulty of the position to be filled. Moreover, each employee could refer as many candidates as they wanted.
Do you want to learn more about recruitment and the referral program? Discover the related content waiting for you on the Sesame HR blog.
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