How to Design a Referral Bonus System That Works

How to Design a Referral Bonus System That Works

Without the proper motivation and ongoing communication your employees won’t be interested in sending referrals, dooming your referral program to a life of mediocrity.

But properly incentivized, your employees become your biggest advocates, referring talented candidates and ensuring the success of your referral program.

The types of bonuses you offer, how you communicate them, and accurately tracking and analyzing their effectiveness are the three most important parts of your rewards system.

Using the guide below, you’ll be able to craft your own rewards structure that will increase the number and quality of referrals, and that’s a win for everyone.

Types of Rewards to Offer

For many companies, monetary bonuses are often the first thing that comes to mind when considering how to reward employees for referrals. This is totally natural — who wouldn’t want to receive some cold hard cash?

But money isn’t always the motivator we think it is.

In fact, it’s been shown that employee recognition can be one of the most low cost, high impact tactics — even ranking higher than money according to Gallup’s analysis.

Recognizing employees for their contributions can be done publicly or privately depending on your company culture and what will resonate best with your team — not everyone is looking to be called out in front of coworkers, even for a job well done, while others may take pride in being publicly acknowledged.

A few examples of how to publicly recognize employees include:

  • In a team meeting (virtual or in-person)
  • “We would like to give a special shoutout to ______ for sending _____ referrals this week. Thank you for helping us bring more talented people to the team!”
  • In the company communication tool — Slack, Microsoft Teams, et al.
  • Create a special channel that includes a leaderboard and callouts for the week’s top referrers.
  • In a company-wide email blast
  • A dedicated section of the email to highlight the top referrers for the week.

By acknowledging an employee’s contribution in front of their peers you’ll show the entire company that management sees and values their contribution to building a strong team. It will also provide a consistent reminder about the program, keeping it top of mind.

A few examples of a more personalized approach include:

  • Sending a personalized email
  • Writing a handwritten letter
  • Scheduling a one-on-one meeting, coffee, or lunch

While the personalized approach will take a little more time, the effect will be much greater as it indicates a higher level of appreciation for the employee’s willingness to go the extra mile.

Besides money and recognition, getting creative with the types of bonuses you offer can get employees excited about the program and eager to get involved.

A prime example of this is one of Boon’s customers - a popular energy drink company - who offered employees the reward of skydiving with their professional team, an experience not afforded to anyone.

Now, jumping out of a plane may not seem like a bonus to some, but for this brand, it aligned with their company culture and turned out to be a motivating factor as their referral program enjoyed a noticeable boost in candidates.

While this is an extreme example, there is a wide range of unique bonuses to offer your employees:

  • Free food delivery
  • Ride share credits
  • Extra vacation days
  • Credit for pet daycare
  • Complimentary yoga or workout classes

You can even have some fun with it and let employees pie the CEO during a company lunch — whatever works!

Regardless of the bonus you offer, its value must match the type (internal vs external/social) and status of the referral.

For example, an internal referral requires the employee to send the opportunity to a specific person. This means they’ve spent time thinking about the person in their network who would be an ideal fit for the position. Alternatively, a social referral is less specific as the employee may have shared a link to the position on one of their social media profiles for anyone to apply.

When the bonus is distributed should also be taken into consideration. The common approach is to reward everything at one time once the hiring process is complete. This is the easier option but you miss out on the opportunity to regularly engage and reward your employee, while also increasing the perceived value of the reward.

Ultimately, all referrals are not created equal so their rewards shouldn’t be either.

How to Communicate

An effective referral program isn’t something you just turn on. It’s something that is cultivated over time through authentic engagement and collaboration with your employees. At the core of this is communication; clear, informative, and timely communication.

These open and transparent lines of communication should be present from start to finish to ensure employees are updated and invested every step of the way. Not only when a reward is delivered, as is often the case.

Developing a communication plan to regularly update employees on the status of their referrals and rewards is a must-have. If an employee is willing to take the time to refer someone to your company, keeping them in the loop on how this progresses (or doesn’t) fosters a stronger connection and a higher likelihood for future referrals.

It’s also an excellent way to regularly remind employees of the program and encourage their continuous involvement.

For those employees who haven’t referred anyone, communicating the value and importance of the program is also important.

Highlighting how employees have a direct hand in strengthening and diversifying the company through their referrals, the many ways they can personally benefit from referring candidates, and simple instructions on how to get involved will inspire them to take action.

As important as the message is the method of communication. Understanding the tools, as well as how and when your employees use them, is critical.

Are emails and push notifications in the company app the preferred method or would a post in the company Slack and mention in the daily standup be the way to go?

Either way, the goal is to deliver information where employees are most likely to engage and take action.

Just don’t overdo it — finding the right balance of informing and educating without annoying is something you’ll need to test.

Tracking Your Rewards

Once you know what to offer and have mapped out a communication plan, accurately tracking the bonuses and rewards can become labor-intensive and difficult to keep in order, especially when you start involving other departments, such as finance and accounting.

Even with certain tools in place, manually handling these activities will quickly become cumbersome as the number of referrals grows. This increases the potential for mistakes, detracting from the value and credibility of the referral program you’ve worked so hard to build.

Items to ensure you’re accurately tracking and analyzing include:

  • What type of referral was sent
  • Who will be receiving the reward
  • What type of reward will they get
  • When will the reward be sent out
  • Who will be distributing the reward
  • Was the reward acknowledged, used, and appreciated
  • Analysis to understand which rewards are most effective

With Boon, all these issues have been addressed thanks to our comprehensive backend logic that ensures everyone is updated on the status of each referral, reward, and communication. Automatically.

Boon has also developed a user-friendly platform where employees can track the status of their referrals and rewards via real-time leaderboards and reward trackers. Gone are the days of employees wondering what happened to the referral they sent or how they’re being rewarded for contributing, they now have the power to access all of this whenever they want.

This allows your recruitment, HR, and finance teams — even employees — to remain in sync, ensuring an efficient process from start to finish.

The cost and time savings with Boon are substantial, most noticeably as your number of referrals grows. Contact us today to book a demo and get started with optimizing your employee referral program.


Gallup Study -

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