Referral schemes: What you need to know

Want to bring your BFF to work, and get paid for it? With a referral scheme, you can…

Employee referral schemes are one of many perks businesses offer to improve staff retention, boost morale, and ultimately ensure they can hire the best people for their organisation. But they can’t do it without you…and a reliable, trustworthy, and hardworking friend or family member.

To help you understand what they’re all about, here’s everything you need to know about referral schemes:


What is a referral scheme?

An employee referral scheme is an internal recruitment method used by employers, which focuses on sourcing new employees from the friends and family of their current staff.

By offering attractive benefits (from bonuses and extra holidays, to duvet days and gifts), companies are able to encourage employees to recommend qualified friends and family.

A bonus as well as having your best friend at work every day? What’s not to like?


What are the benefits of a referral scheme?

Finding new talent can be hard for businesses.

Not only do they need someone with the right skills and experience, they also need to make sure their new employee fits in well with the existing culture of the workplace.

A referral scheme essentially cuts out the ‘getting to know you’ steps when interviewing staff, assuming that friends of present staff members will be of a similar nature.

Here are a few of the key benefits for employers and employees:


For employers:

They’ll save money. By recruiting internally, organisations can avoid the costs involved in recruiting new staff – especially if they usually hire through an agency. Even if the business is offering a bonus to employees who refer someone, it’s likely to cost less than starting from scratch.

They’ll attract higher quality candidates. People who are referred are more likely to be a good cultural fit. Not only will they have knowledge of what an organisation does via the person who referred them, they’re also likely to be similar in terms of values and personality.

They’ll engage and retain staff. Referral schemes are a great way to engage with and reward staff, encouraging them to feel involved.And, with new staff already interested in and knowledgeable about your business, there’s a higher chance that they’ll stay once employed.


For employees:

They’ll get a reward. The prospect of more money, a gift basket, or more holiday is an unsurprisingly popular perk for employees. With the promise of reward, employees are more likely to engage with the scheme and feel valued for their input.

They’ll have a better workplace wellbeing. Employees who are able to work with people close to them (who they already know and get along with) are more likely to be committed to their work, and enjoy spending time there. The same goes for the new employee they’ve referred.

They’ll feel more involved. In addition to getting a reward for their referral, employees will consequently feel more involved with the business and its goals. And with this kind of recognition, they’ll be more likely to speak highly of your business, and get involved with future schemes.

Employee perks: What UK workers really want

Office perks: Have they lost their pulling power?


How are referral schemes promoted?

The promotion of referral schemes can go all the way back to the initial application process, with many companies advertising their employee referral scheme as one of the benefits of securing a job with them.

In addition to employers advertising around the business (e.g. via email, internal notice boards etc.), existing employees can also share referral schemes on social media to attract friends and family, and many organisations encourage this.

And with new job posts usually advertised internally before they are promoted elsewhere, staff have a good chance of getting the news out to their friends before anyone else.

What makes a good referral scheme?

  • Incentives. Everything from money to holidays to gifts can be used to incentivise referral schemes.
  • Recognition. Employees should be praised for bringing in a new employee. This strengthens the team dynamic and makes other employees want to receive the same treatment.
  • Feedback. If an employee feels that their friend or family member was treated badly after applying via a referral scheme, they may never recommend someone again. Employers who provide feedback on what was good and bad about their friend’s application encourages employees to refer again.
  • Ease of use. The referral scheme needs to be quick, simple and properly advertised. This encourages staff to use it.


Referral scheme examples

There are many great referral schemes – but here are a few examples of the most unique and clever:

Google asks interviewees ‘Who is the best web developer you know in (city)?’, in the hope of finding out where to source new talent. They also get new recruits into the mindset of thinking of potential referrals straight away.

Intel, looking to diversify its workforce, doubles its referral bonus for employees who refer women and minorities.

Salesforce holds ‘happy hours’. This involves current employees bringing people they think might be good for the company to come and have a drink and mingle with other staff.


How can I get on a referral scheme?

Getting in touch with the HR team at your business is the best way to find out more about your company’s referral scheme (if they have one).

If you’re looking to join a company via a referral scheme, consider asking friends in similar careers to yours.

Some organisations may advertise their schemes online as well, so checking here (whether it’s via a search engine or a company website) could be a great way to get involved with one.

Social media networks, office parties, and networking events are also good places to see what vacancies are available.



Searching for a company with better perks? View all available jobs now