How good is your referral program?

Your company has a referral program to weed out weak links from the expensive recruiting process. Smart move. But how fruitful is your program?

Cut your headhunters from the payroll. Your best source of new hires comes from folks already on your payroll: existing employees.

It’s not just a matter of asking staffers if they know anyone well-suited to the open A/P clerk spot. There’s a huge stretch between how well a successful referral program pays off vs. a not-so-hot one.

Compare your current referral rates against these:

So what’s the difference between the companies getting nearly ¾ of their workforce from referrals and the folks picking up a body or two?

And they tell 2 friends … and they tell 2 friends …

Hint: It’s not about which companies reward employees with the biggest referral bonuses.

In fact, that strategy backfires on many folks. When the stakes are too high, many staffers believe they’ll never nab the prize, so they don’t even try. Or they’re naming everyone they know for a chance to “win” the money, so you’re flooded with as many unqualified people as if you’d put in a classified!

Recruiting experts say anything from an iPod to a few hundred bucks works best.

The other big problem? Companies pay out too soon. You need time to see if that new hire will pan out the way you’d hoped.

Waiting six months or so reveals two things:

• The “referee” is a good fit, and
• The “referrer” is planning to stick around.