Is your organization experiencing challenges sourcing new employees for various open roles because it is time- and energy-consuming? If you can’t acquire new employees, you can’t grow your business. 

So, what are some of the ways to attract new talent and grow your company? The simple answer is employee referrals. Thanks to employee referrals, businesses can hire great candidates without relying on job boards or career communities – and bring in new business through trusted voices. 

Employee referrals help build trust, as the referred customers or employees are more likely to stay loyal to the organization. Furthermore, employee referrals enable employers to get high-quality employees and customers, and save time and resources. 

That’s why a serious business needs to learn how to encourage employee referrals. One of the ways that can work is by giving rewards for successful referrals. Your organization should also build on a strong company culture and introduce referral software that makes identifying the employee who made the referral easier. 

This article offers a comprehensive guide to employee referrals and how they can help your organization flourish.

Why encourage employee referrals? 

There are various reasons your organization needs to encourage employee referrals, as this has a lot of benefits. But first, understand that your employees can refer potential candidates to fill an open position within the organization. Alternatively, the employees can refer potential customers who help grow the company’s ROI. 

Employee candidate referrals have various advantages, like reducing the hiring process’s time, as the company doesn’t have to advertise and conduct interviews. The referred candidates also turn out to be high-quality candidates who can help the organization achieve its long-term goals. 

Furthermore, candidate referrals bring in employees who are more likely to stay loyal and reduce turnover rates. Plus, they improve employee engagement, as they show employees their recommendations are valued. This in turn makes your company a desired employer.

On the other hand, employee customer referrals increase the chances of the referred customer being a repeat buyer. Referred customers are also more likely to be loyal to your company, as they tend to trust the referrer. 

Moreover, a formalized program provides a way to track employee advocacy, which gives you insights on how to encourage employee referrals more effectively. Apart from that, employee customer referrals are inexpensive and pose low risks to the company, as you’ll only pay for a referral that results in new business.

How to encourage employee referrals: Top 11 tips

Since employee referrals can benefit your organization in so many ways, it’s up to you to act. Your hiring managers can take the necessary steps after mastering the right tricks on how to encourage employee referrals. You can use the following tips to encourage both candidate referrals and new customer referrals from employees:

1. Have a company worth referring

The foundation of getting employee referrals is making sure employees want to refer you. Before expecting your employees to refer potential candidates or customers, ensure you work on your company’s image. Create a favorable work environment to convince your current employees to refer you. Also, work on your company’s culture to make your employees love working for you. Make sure all employees are engaged and motivated to perform their duties well.

2. Offer employee referral rewards

Another trick on how to encourage employee referrals is by introducing referral incentives. Remember, when employees receive rewards for successful referrals, they’re motivated to keep sending the right customers or candidates your way. Be sure to introduce rewards that employees want to earn. For example, most employees prefer cash bonuses as they can use them for anything. 

employee referral bonus step by step

Apart from cash, your organization can also offer the following as a referral reward:

  • Gift cards 

Gift cards from popular brands like Amazon are a plus, as they show your company values quality and give your employees some options on what to redeem them for.

  • Event tickets 

You can also sponsor your employees to various events after they refer top talents or customers your way. Give them tickets to sports games or popular concerts they want to attend. 

  • Credit towards developmental experiences

Allowing your employees to attend conferences to gain developmental experiences is also a great strategy to encourage employee referrals. A conference can help your employees stay on top of industry trends, and improve in various areas like communication, collaboration, conflict resolution, and productivity.

  • Give useful and valuable items

Select useful and valuable items for employees that bring customers and candidates your way. Give tech items, fleeces from The North Face, or Yeti products your employees will be proud of.

  • Offer tangible gift baskets

You can also personalize the gifts you give to your employees after a successful candidate or customer referral. Customize gift baskets according to the employee’s taste and preference. You can ask an employee directly, do research on this, or use a close friend to determine what to include in the basket.

  • Sponsor the employee to take classes

What do employees want to learn, inside or outside of work?  Ask employees what they want to learn, and help them achieve this dream through enriching classes.

  • Travel credits 

Another way to encourage employee referrals is by giving them travel credits. The travel credits can allow the employees to explore different parts of the world without paying for the flights. 

  • Paid time off

You might also give them extra paid time off for vacations of their choosing. This allows your employees to enjoy life outside of work without worrying about missing the next paycheck. 

  • Charitable donations 

Charitable donations can also encourage your employees to keep referring candidates or customers. The charitable donations can be towards local, national, or global organizations, depending on the employee’s preference. 

3. Use referral software 

You can also automate the referral process through referral software. The referral software will encourage and mobilize employee referrals in the following ways:

  • It creates trackable referral links that tie referrals back to the employee who made them, making sharing easy on employees’ end and tracking easy on your end.
  • It lets you quickly create a streamlined referral program that simplifies and centralizes the referral process.
  • It automates the sending of rewards, so employees get them immediately once earned.
  • It lets you send reminder emails to keep employees engaged with your program.
  • It lets you create programs with added rewards bonuses (like tiered referral programs) to help motivate employees to keep sending referrals.

4. Use different rewards structures 

Different reward structures can also encourage employees to keep referring candidates or customers. 

If you want employees to refer candidates, try giving smaller rewards when candidates apply or get approved for an interview. Then, bring a bigger reward if the candidate becomes a successful hire. (This is called stepped rewards.) Additionally, you might offer higher rewards for the harder positions that are hard to fill.

If you want your employees to keep referring customers, consider increasing the reward’s value after an employee makes certain milestone amounts of successful referrals. This structure of increasing rewards is known as a tiered rewards program.

5. Make sharing easy

You’ll also want to enable employees to share the employer brand with just a few clicks or taps. Do this by offering multiple sharing options, like emails. Give the right referral links for social media platforms like LinkedIn. 

But don’t forget to teach the employees how to send referrals. On the page where employees send referrals. explain how the process works in a few simple steps. And only ask for the information you need to contact the referred person, to keep the process streamlined.

With a digital referral program (run through referral software), your employees can have an even easier time sharing.

6. Ask employees directly

You can also use personal conversations with your employees to bring up the employee referral program. Talk directly to employees, mention why employee referrals are important. and go over who would make a good referral. Also, tell your employees where to get more information on the referral initiative and emphasize the benefits of the referral process. 

7. Promote your employee referral initiative 

Send out emails containing the rewards on offer, to further encourage your employees to participate in the referral initiative. Also, post about the employee referral program on Slack, or on your preferred employee communication channel. Flyers about the program at your workplace can also do magic. But if you choose to put up flyers, incorporate the digital elements of the program by including a QR code. That way, it’s easy for employees to access the referral portal.

jenks public schools employee referral program

8. Consider a referral contest

You can also introduce a referral contest where employees compete for bonus rewards. Let the friendly competition run for a given time, and the employee who makes the most referrals will get a valuable referral bonus (such as extra cash, travel credits or a tech item). You can further motivate the employees by showing a leaderboard, so employees can see how close they are to the added reward.

employee referral contest

9. Host a “pop-up” referral event 

Looking for another hidden gem way to encourage employee referrals? A simple luncheon can do wonders for you. Plan for a free lunch where you encourage your employees to keep referring candidates or customers to your organization. Also, tease them with the referral rewards to get them moving. 

Alternatively, you can hold a happy hour where the current employees bring the friends they wish to refer for the open positions. Or, promote the referral program during a fun night out for which employees don’t pay, such as glow bowling or an escape room night. 

employee referral mixer

10. Spotlight successful referrers 

Remember to highlight successful referrers on your Slack channel or during company meetings, to help build a culture of referrals. You can consider giving extra rewards to top referrers and recognizing them as “referrers of the month” or “referrers of the quarter.”

11. Keep employees updated 

Updating your employees on the status of their referrals is also necessary. Use your referral tracking system to identify when their candidate applies, gets interviewed, or is selected for the job postings. Also, let them know the status of referrals, whether a referred lead becomes a customer or if the referral isn’t successful.  Thank them for every referral, regardless of the outcome, to show your gratitude and encourage more referrals.


Every organization needs to know how to encourage employee referrals, as this helps reduce hiring time and improve employee retention and engagement. It also saves on costs and builds trust and loyalty, which are important for the company’s growth. 

You can encourage this by introducing referral rewards and different reward structures. Using referral software can also encourage employees to refer candidates or customers. Also, remember to make sharing easy and promote your employee referral initiatives.