Optimizing Your Employee Referral Program

Optimizing Your Employee Referral Program
January 16, 2024 Susan Diepen

Rev Up Your Recruiting: Optimizing Your Employee Referral Program in 2024

Patrick Yearout

Patrick Yearout, FMP, CHT

Director of Innovation, Recruiting, and Training, Ivar’s & Kidd Valley Restaurants
CHART Past President


Finding and retaining top talent in the highly competitive recruiting battles of the hospitality industry can be an incredibly challenging task. However, there is a powerful yet often underutilized tool at your disposal that can revolutionize your recruitment efforts: employee referral programs. By leveraging the networks and goodwill of your existing team members, you can gain access to potential candidates who are more likely to be familiar with your operation and its values, and who will save you the time, money, and effort of frantically grasping for applicants through online methods.

The many benefits of hotels and restaurants implementing employee referral programs include:

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1. Increased candidate quality – Your current employees are more likely to refer individuals who they believe possess the necessary skills, characteristics, and work ethic to thrive in the hospitality industry, so this program results in a higher chance of finding candidates who will not only possess the required qualifications but also blend seamlessly into your team.

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2. Enhanced employee engagement and retention – When employees are actively involved in referring candidates, they become more invested in the success of their colleagues. This sense of ownership and camaraderie boosts employee morale, job satisfaction, and ultimately, retention rates. Moreover, employees who successfully refer candidates are likely to feel a sense of accomplishment and recognition, further reinforcing their loyalty to the organization.

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3. Cost and time efficiency – Traditional recruitment methods, such as advertising on job portals or hiring external agencies, can be costly and time-consuming. Employee referral programs provide a cost-effective alternative that can significantly reduce recruitment expenses. By tapping into the networks of your existing employees, you can reach potential candidates who may not be actively seeking employment but are open to new opportunities. Additionally, since referred candidates have already been vetted by your employees, the screening and selection process can be expedited, saving valuable time.

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4. Increased diversity and inclusion – By actively promoting diversity through referrals, you demonstrate your commitment to creating an inclusive work environment. Encouraging your employees to refer candidates from different backgrounds, ethnicities, and experiences can enrich your organization and enhance its ability to cater to a wide range of guests’ needs.

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5. Strengthened employer brand and reputation – Implementing an employee referral program demonstrates that your organization values the opinions and contributions of its employees. When employees are proud to refer others, it reflects positively on your company’s culture and work environment. This, in turn, can attract top talent and position your hotel or restaurant as an employer of choice within the industry.

Once you have made the decision to implement an employee referral program (or maybe you need to revive one that is gathering dust on a shelf somewhere), you will need to think about how you can make it work within your hospitality business to ensure it becomes an effective part of your overall recruiting strategy.

These strategies should include:

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1. Define clear objectives – Determine the goals you want to achieve with the referral program, such as reducing recruitment costs or improving retention, and set up a system to monitor any changes that occur after the referrals begin.

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2. Involve employees in program design – Seek input from your current hotel or restaurant team members to understand their preferences and ideas for the program. If they have been in the hospitality industry for awhile, ask them about the details of referral programs at their previous workplaces (What worked? What didn’t?).

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3. Customize rewards – Tailor the referral bonuses or incentives to match your company’s budget and decide whether the bounties will be greater when higher level positions are filled…and don’t be cheap! Make this program worth the while of your team members and always remember that what you pay for a qualified referral will be substantially less than bringing in a bad hire, letting them go, and starting all over again. You may also want to celebrate, recognize, or offer incentives for employees who actively engage in the program, even if their referrals don’t lead to hires.

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4. Set specific eligibility criteria – Clearly outline who can participate in the program and consider factors like job roles, tenure, or performance levels. For example, can a manager refer an employee to their own workplace, or would they only be allowed to refer employees to other locations?

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5. Promote the program – Communicate the referral process, criteria for selection, and reward structure clearly to all employees through the different channels available in your company (emails, break room posters, communication tools, or pre-shift meeting). You should also consider how often you will repeat the message during your recruiting season, and what information needs to be included (for example, we emphasize quality candidates over quantity).

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6. Offer various referral channels – Allow employees to submit referrals through multiple channels, including email, a dedicated portal, or in-person. The process should be as easy and frictionless as possible for them.

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7. Set a timely response framework – Establish guidelines for how quickly the management or HR team should respond to referrals to maintain candidate interest and follow up to ensure these candidates are not waiting around for days or weeks for someone to contact them.

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8. Leverage social media – Encourage employees to share job openings on their personal social networks, extending the reach of your job postings, and use the company’s social media page to crow about the top employees who are making referrals.

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9. Encourage diverse referrals – To further customize and optimize your employee referral program for your company, actively champion the recruitment of staffers from various backgrounds, ensuring that your organization benefits from a “cultural add” (and not just a “cultural fit”) with a wide range of perspectives and experiences. This sounds like it might be complicated, but really, you could start the support for this effort by simply including your company’s diversity statement or a photo of your diverse workforce on the program’s promotional flyer.

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10. Seek feedback – Regularly gather input from participants to identify areas for improvement, and continually refine the program based on this feedback and changing company needs.

As you embark on the journey of implementing and customizing an employee referral program tailored to the unique needs of your hospitality business, remember that it’s not just about finding top talent; it’s about building a thriving, inclusive, and engaged team. If done correctly, the programs can unearth exceptional candidates who not only possess the skills and work ethic required in our demanding industry, but also contribute to a more diverse and dynamic workplace.