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Glossary of Human Resources Management and Employee Benefit Terms

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Employee Referral Rewards

Employee referral rewards are incentives given to employees who refer new hires. These rewards can be monetary or non-monetary in nature, but they are typically cash bonuses or company stock.

Employee referral rewards have been shown to have a positive impact on employee engagement and satisfaction because they give employees more control over their careers, as well as make them feel like valued members of the team.

What are referral rewards?

Referral rewards are incentives that you offer to your referrer for referring quality candidates or customers to your brand.

What are employee referral rewards programs?

Employee referral programs are an increasingly popular way for companies to recruit new talent. These programs allow employees to make money by referring candidates the company hires. The more successful hires made through employee referrals, the more money they earn.

The idea behind employee referral rewards is to motivate your employees to refer candidates who will be a good fit for your company culture and work environment, resulting in a win-win situation for both the employee and the company.

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Why do you need a referral rewards program?

Here are some key reasons you need an employee referral rewards program:

  • Attracts top talent
  • Grows your talent pool
  • Bolster your employer's brand
  • Increases employee engagement
  • Increases the quality of your referrals
  • Turn your employees into internal recruiters and ambassadors
  • Make the process of hiring more efficient and fun for everyone involved

What are some best referral reward ideas?

The best employee referral reward ideas are simple and effective. These include:

  • Referral points
  • Digital gift cards
  • Product discounts
  • Monetary incentives
  • Free training or educational classes
  • Recognition at an event or in their honor

How much does offering referral rewards cost?

The cost of offering referral rewards largely depends on the type of reward you choose. If you offer cash, checks, or gift cards, your cost will be much lower than if you provide something more valuable, such as a free trip or a new car.

The referral rewards cost depends on several factors:

  • The type of reward: monetary incentives or non-monetary incentives
  • How many employees do you expect will participate in your campaign?
  • What kind of value should an employee be able to receive for referring to their friends?
  • How long do you want the campaign to last, or how frequently do you like to offer incentives?

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How to choose the right referral rewards?

Here are some tips for choosing the right employee referral rewards:

  • Choose a reward that fits with your company culture. If you have culture-specific perks like free food or fun events, then those could make good rewards. You can also give out digital gift cards or monetary incentives — these are always popular choices because they can use them immediately.
  • Make it tangible. You want something that makes sense for your company and the person making the referral. If you're looking for someone with technical skills, offering cash or gift cards might be appropriate.
  • Consider timing and frequency. Your program should be structured so that employees are rewarded based on what they do — not when they do it — and ensure there is no limit on how many times they can earn points or cash rewards. 

How to create a referral rewards program?

Here are the steps you need to take:

  • Step 1: Set up a referral program page on your website or app. This page should be linked from your homepage or any other relevant pages on your site.
  • Step 2: Define what constitutes a successful referral. You can also define how long it takes for the referred customer to make their first purchase for both parties to receive their rewards.
  • Step 3: Define what kind of rewards will be offered. You can offer everything from discounts on future purchases to free shipping or even prizes like gift cards or physical products they can use or give as gifts.
  • Step 4: Decide how to track referrals and new employees coming through your program. This could be done through a unique code that each person would enter when making a purchase or by having them provide their email address (or some other information) when signing up for the program itself.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

What are the features of the best referral reward system?

Here are some key features of a successful employee referral reward system:

  • A clear policy that outlines what happens when an employee refers someone who ends up getting hired by your company.
  • A process for determining how much of a referral bonus (if any) will be paid out.
  • An easy way for employees to submit referrals electronically or through a paper form.
  • A clear explanation of what constitutes an eligible referral (i.e., must be referred by an existing employee).
  • Make sure to have a good incentive because with employee referrals, money talks. Ideally, the reward should be meaningful to both the employee and the referred candidate. 

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