HR Glossary

Employee Referral Bonus

What is an Employee Referral Bonus?

An employee referral bonus (ERB) is a financial incentive offered to employees who refer qualified candidates to a company. The bonus is typically a percentage of the new employee’s starting salary, and is paid out after the new employee has been on the job for a certain period of time. ERBs are a way to encourage employees to refer qualified candidates, and can be a valuable recruiting tool.

How do you build an Employee Referral Bonus?

There are a few key things to keep in mind when creating an employee referral bonus program:

  1. Clearly communicate the program to employees. Make sure employees are aware of the referral bonus program and understand the criteria for receiving a bonus. This will help ensure that employees are actively looking for qualified candidates to refer.
  2. Set a reasonable referral bonus amount. The referral bonus amount should be enough to incentivize employees to refer candidates, but also reasonable enough that it doesn’t break the company’s budget.
  3. Have a clear referral process in place. Make sure employees know how to refer a candidate and what the next steps are. This will help ensure that all referrals are properly tracked and that candidates are evaluated fairly.
  4. Celebrate successful referrals. Reward employees for referring qualified candidates who are hired. This will help encourage employees to continue referring qualified candidates.

What are the benefits of an Employee Referral Bonus?

Employee referral bonuses are a great way to show your appreciation to employees who refer qualified candidates to your company. Not only do employee referral bonuses show your employees that you appreciate their help, but they also serve as an incentive to continue referring qualified candidates. Additionally, employee referral bonuses can help you reduce your recruiting costs, as referred candidates are typically more qualified and less expensive to hire than candidates who are recruited through other methods.

How do you organise an Employee Referral Bonus scheme?

There are a few things to consider when organising an Employee Referral Bonus scheme. The first is deciding what the bonus will be. It’s important to make sure that the bonus is attractive enough to incentivise employees to refer their friends and colleagues, but also affordable for the company.

The next step is to create a process for employees to refer friends and colleagues. This could involve a form they fill out, or simply putting a poster up in the office with all the details.

Finally, you need to decide how the bonus will be paid out. This could be a one-time payment, or a payment that is given every time the employee’s friend or colleague is hired.


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