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employee referral

Setting up an employee referral program

The retention rate of employees that come to you after being referred by one of your existing employees: on average 2.7 years compared to 1.5 years from job boards.

Between the driver and technician shortages, not to mention the dearth of people interested in working in the trucking industry, you have to do whatever you can to attract and retain employees.

One good source of potential employees is your existing employee base. According to Kevin Nelson, vice president of sales at, employee referrals are the best source for new hires. Speaking at a recent NationaLease meeting, Nelson said that employee referrals result in the best applicant-to-hire ratio at 1 out of 10 vs. 1 out of 18 from all sources.

In addition, the time for making an offer for a new hire referred by an existing employee is shorter — 20 days vs. 39 days for someone hired via a job board. But perhaps the best statistic of all is the retention rate of employees that come to you after being referred by one of your existing employees: on average 2.7 years compared to 1.5 years from job boards.

During the meeting, Nolan shared his thoughts on the steps you need to follow when setting up an employee referral program.

Step 1: Program Policy

Determine who is eligible for the program — managers, interns, temps, etc.? Explain how referrals are to be submitted and what your expectations are. Make sure you include information on the reward amounts you are offering for a successful hire including payout timeframe and structure.

Step 2: Tracking

You can use an applicant tracking system that should include a source field indicating where the lead came from; in this case, an employee referral. It also needs a field that indicates specifically which employee made the referral. You can also use Google Docs or a simple Excel spreadsheet to track the hiring process. The point is to keep track of where the referrals are coming from so you can reward the appropriate employees.

Step 3: Marketing

You need to get executive sponsorship for the program. The CEO should be the company’s biggest recruiter/advocate. Send out communications prior to launching the referral program. Consider having a launch party to build excitement. Follow-up with post-launch communications that talk about the program and its successes.

After the initial launch, continue to promote the program on an ongoing basis. You can do this via simple emails or texts. Make sure your hiring managers and recruiters understand the program and the value it brings to your business. And don't forget to explain the program to your new hires. They can be an incredible source of referrals because of their initial excitement for the opportunity to work at your company.

Step 4: Best Practices

If the program is going to be a success, you must pay out the rewards as promised. If more than one employee recommended the same person for a job, split the reward between them. Also, don't be stingy with the rewards you are offering. Your employees are giving you a big boost in your recruiting efforts by making referrals; reward them accordingly. Perhaps most important of all, always call your employees to acknowledge and thank them for their referral. If you fail to do this, say goodbye to future referrals.

Follow these four basic steps and your employee referral program should be a big success.

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