Although referral programs can provide a valuable source of new workers, many employees are reluctant to provide referrals because they're afraid that they'll take the blame if the new hire doesn't work out.

Here are a few ways to reduce this fear:
  • Provide a worthwhile financial incentive for referrals. Money can do wonders to overcome the fear of embarrassment.

  • Consider a mix of contests, raffles, etc. in addition to cash making referrals more fun and competitive.

  • Think in terms of the new employee's "lifetime" value. If a worker can earn the company $50K per year for an average of three years, how much would you be willing to invest to get this return? If you pay recruiters 10% to 30% of the new hire's annual salary, does it make sense to pay an employee only 1 or 2% for a referral?

  • Space out the referral bonus in quarterly payments, based on specific benchmarks. For example, you can give an initial payment for the referral, a second if the employee is hired, another one at six months, and the final one on the new hire's anniversary date.

  • Train employees on how to approach prospects and make it easy for them to tell the prospect your company story. Give them a pamphlet, some type of document, or a web page link that defines the business and the opportunity the position offers the prospect.

  • Finally, measure the program's results on a regular basis so that you can keep improving it.
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