For businesses frustrated in the hunt for quality talent, an employee referral program might just be the answer. According to Jobvite data reported on by Business News Daily, as much as 40 percent of new hires are generated by employee referrals, who get hired up to 55 percent faster than candidates coming through other paths.

Matt Ham, president and owner of Computer Repair Doctor Inc., agrees. "Employee referral programs absolutely work," Ham says. "I've recruited a number of my top employees this way."

His Florida-based electronics repair and computer services firm, with locations in Tallahassee, Orlando and Raleigh, repairs laptops and offers both repair and data recovery services for all types of iDevices. The business was established in 2013 and now has eight stores.

Matt Ham of Computer Repair Doctor

Matt Ham, president/owner of Computer Repair Doctor

"It's always a challenge to find good people," Ham notes. He initiated an employee referral program in late 2013 after an employee referred a friend "and it worked out very well." Now, he says, "the candidates referred to us by existing employees tend to be a much better fit than 95 percent of the people we find through traditional job sites."

The COO of Computer Repair Doctor came through a referral, as did a regional manager. "I generally trust employees more if they came from a referral," Ham says.

Employees typically understand a company's hiring process and what type of employee is being sought, so when they refer an individual, chances are they have a good sense that they're an appropriate fit.

How do you go about creating an employee referral program? According to Ham, start by fostering a culture where employees are valued and then provide incentives to refer others.

"You don't want to overly motivate them with strong cash rewards, etc., or they'll start referring everyone they know. Set up rewards like a paid day off work or a $100 gift card for a nice restaurant. The strength of an employee referral program lies in how much your employees enjoy their work and how naturally motivated they are to help you find additional employees."

Here are some more tips on getting started:

  1. Make the Process Easy
    The less complicated the process, the better response you'll get. Craft an online referral program that's simple and user-friendly, then ensure that the referred candidate can learn more about your business and why it's a desirable place to work.
  2. Promote the Program
    Employee referrals only work if your team knows that's what you're looking for. Get the word out via staff meetings, newsletters and social media, demonstrating by constant promotion that this is a top priority.
  3. Celebrate New Hires
    When a referred candidate becomes an employee, make a big deal out of it. Introduce them at a company-wide meeting, explain how they were recruited. Again, this keeps people thinking about whom else they might recommend.

"The biggest reason our employee referral program works so well is we treat our employees well," Matt Ham says. "In exchange, they're genuinely interested in helping our company succeed. They only refer friends they believe in, and only people they know will be a benefit to our company."

Stay up-to-date on all the latest trends and insights for small and midsized business owners: Subscribe to our monthly e-newsletter.

Owner photo courtesy of Matt Ham, used with permission.

Tags: Recruiting recruitment How to Hire an Employee