The 5 Ps: A Recipe for a Successful Referral Program

The 5P methodology of recruitment referrals

Employee referrals are the most effective, as well as the most cost- and time-efficient, method of acquiring new employees. At the same time, however, making your referral program effective is no easy task. Implementing it is, in essence, an interdisciplinary project spanning not only recruitment, but also marketing, internal communications, IT, compliance, HR administration and payroll. To help HR teams successfully source candidates from recommendations, we have developed the 5P methodology of recruitment referrals. It consists of:

• people,
• process,
• prize,
• promotion,
• plan.

People

We have heard it a thousand times: "people come first". In the case of recruitment referrals, we can say this without a hint of metaphor or exaggeration. Without the engagement of referrers and candidates, there is no referral program. This simple truth, however, starts to get complicated at the level of detail.

First, the organization must decide who its program is aimed at. It can be internal (only employees can refer), open (anyone can refer) or limited (only selected categories of people can refer, e.g. alumni, interns and trainees, or only a specific type of employee, e.g. IT).

Defining who is to make up the community of referrers is the most fundamental issue, because it determines the course of the recruitment process, the communication channels, and even the amount, type and settlement method of the rewards for successful recommendations.

Process

In the next step, we move smoothly from "who" and "whom" to "how". The process must respond to the needs and preferences of the end user. For example: a 25-year-old developer will want to refer online, preferably completing the process in a few clicks. Referral links, which they can easily send via email, social media or messaging apps, are the recommendation method made for them. A 50-year-old warehouse worker, on the other hand, will usually prefer offline referrals. These include, for example, filling in a short form, giving the candidate a code to attach to their application, and so on. The SMS-based model is somewhat more complex, but allows for better monitoring and control of the process.

At this stage, another important question is whether the organization wants to design the referral process itself or buy one of the ready-made solutions available on the market. In the case of the latter option, the path forks again: you can choose basic referral modules integrated with ATS systems, or a more advanced dedicated solution offering, among other things, payment and settlement of cash rewards, cafeterias of material and symbolic rewards, gamification, and adaptation of the program's look and the messages it sends to the company's marketing standards.

Prize

The most popular reward in referral programs is money. A successful referral means a transfer to your account, and its amount usually depends on how difficult it is to source a given candidate (simple line positions pay from a few hundred to a thousand zlotys, while a full-stack developer can be worth even a dozen or so thousand). Remember that the organization is free to decide in how many installments it pays this benefit, and to freely shape the amount of the individual tranches. The ability to split the reward can serve as a financial guarantee (e.g. the company pays only once the employee has spent X days with it, so the referrer knows it will not pay off to put forward an uncertain candidate) or as a retention tool (e.g. the organization pays subsequent tranches incrementally, so that the referrer recommends people they know will stay for the long haul).

Going further, you can introduce a gamification mechanism, e.g. the three best referrers in a given quarter receive special material rewards. The element of competition — the awareness that the points earned translate into a position in the ranking, and that position into a truly attractive benefit — will spur people to action. This is all the more true given that programs usually create two "communities within the community". There are the so-called heavy users, who refer willingly and often, and the occasional referrers. Gamification helps to fully exploit the potential of the former. It is also important to remember that while we mainly reward success (a hire), it is also worth recognizing other desirable activities (the very act of making a referral, the candidate submitting a CV, etc.). This is exactly where points can help. In addition to financial and material rewards, remember about intangible benefits. A perfect example is an extra day off work.

Promotion

First, you need to know what to communicate and to whom. This is determined by the components of the referral mix we have already discussed: "People" (the target group), "Process" (what we expect from them) and "Prize" (what we offer in return). At the operational level, what remains is to define the communication channels and develop the promotional content we want to put into them. For example: are we addressing employees who do not use email? Then SMS messaging may be a better idea. Do we want employees to keep referrals in mind? Let's leave a shortcut to the referral program on the desktop of every company computer. In any case, it is a good idea to use the spaces where employees gather to remind them of the possibility of recommending friends: cafeterias, break rooms, areas near the elevators, and so on. Posters and leaflets — or, in a more digital version, screens — work well here. Awareness of not only place but also time offers room for creativity. For example: a pre-holiday or summer promotion, +30% on the value of every reward. Onboarding is also a special moment. Let's use it to teach new employees how to refer right away and encourage them to make recommendations.

In the case of open, publicly available referral programs, once again, the first "P" will suggest the direction of action. Do we want referrals from candidates? Let's give each of them a leaflet during the job interview, mention the program in headhunters' email signatures, and train recruiters to actively source referrals from people in the database. Do we need young people for internships and traineeships? Let's establish partnerships with student research clubs and be active on Instagram and TikTok. Are we thinking about engaging former employees? Let's create a newsletter for alumni or invite them to a company reunion, using both to talk about referrals and rewards.

Plan

An outstanding strategist once said: "decision-making circles should have an odd number of members, and three is already too many". For all of this to run smoothly, the entire project should be carefully planned and then coordinated from one place. The process must have its owner, e.g. the HR director or the recruitment manager. It is they who must create a plan for the program's implementation, adoption and development, and then enforce the delivery of the individual elements by all participants in the process (procurement, IT, legal, accounting, etc.). A clear message from managers (and sometimes even the board) that the referral program matters is key. It cannot be a project done on the side, in spare moments, in fits and starts. It is good practice to assign it goals, or even hard KPIs (e.g. the number of registered users, the number of referrals per period, the percentage of vacancies filled thanks to recommendations).

Meanwhile, we often observe planning gaps even at the most elementary level, e.g. a company decides on an open referral program (aimed at non-employees) without securing a budget to promote the idea of referrals externally, even on its own Careers page. Another case: it does not differentiate rewards between employees and non-employees, causing a murmur of discontent within its own team. It is also extremely important to provide referrers with constant feedback on the fate of their candidates and the quality of their recommendations. The user must know whether their friend has been hired, rejected, or is perhaps serving a notice period. The referrer has no obligation to wonder about this or ask about it. If we show them that the program works and that their engagement is noticed and appreciated, they will certainly be motivated to recommend another person!