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In this article, you will find:

Introduction: Why you too can benefit from an employee referral program

Zalando, Deutsche Bahn, Adidas, and even smaller or medium-sized companies use employee referral programs as part of their recruitment strategy to attract and retain particularly hard-to-find talents. In fact, these companies can reliably recruit up to 50% of their open positions through employee referrals.

The preference of many companies to systematically rely on employee referrals is not surprising, as such a program is generally much more cost-effective and efficient than hiring a headhunter. With the right measures and, above all, the right reward system, employee referrals can also be a predictable and continuous source of new hires for your company.

However, this only works if the concept is tailored to your company and a few important factors are taken into account. You can find out what these are and how it could look for you here.

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Escaping the "Dark Void" Effect – Successful Employee Referrals Require Timely Rewards

Have you or someone you know ever made a personnel recommendation to an employer that then seemed to disappear into the "void"? This is a common phenomenon in many companies, which we call the "Dark Void" effect. When an employee makes a recommendation, there is often no further communication. Whether the recommendation was accepted or not, the employee ideally finds out 6-9 months later when the paycheck arrives after hiring and the probationary period. By this time, the employee has long forgotten their recommendation, and the reward comes too late to have a lasting psychological impact. A lot of potential is lost here. And unfortunately, in many companies, this is still the best-case scenario. If the recommendation is ignored or rejected, the employee often receives no feedback at all – and that is very demotivating. It is understandable that employees hesitate to participate in such a process, invest their time, and involve personal relationships.

In short: It is crucial to acknowledge the progress and successes of employees in a timely manner, communicate decisions and process steps, and reward fairly.

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How to Choose the Right Rewards for the Employee Referral Program

Habits only form when the goal is truly attractive and there are quick, motivating success experiences along the way. This applies to personal routines, but also to making participation in a referral program a habit! For this, the program needs:

While a well-thought-out program, like Sprad, ensures the first two points, each company must find out for itself what rewards it should and can offer. After all, a simple bonus, i.e., more money, is not attractive enough as an incentive for everyone. Cash bonuses can be an attractive option, especially for employees at lower or middle levels, but less so for people in leadership positions who are already financially secure. Some people also associate cash bonuses with being bought when it comes to friends and acquaintances, creating an internal conflict. Finding the right and exciting rewards that appeal to as many employees as possible is therefore not just a question of money.

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Step 1 is therefore: Find out your employees' preferences.

“What do your colleagues consider an appealing and fair reward for their participation? Are they weekend trips? Additional vacation days? Seasonal support like supermarket or Christmas vouchers? Or even something social and selfless like donation opportunities? (Secret tip!) There is no way around it: You have to ask your employees what they want.

When choosing rewards, it is not only important that they are motivating but also that they are ideally visible within the company and a topic of conversation. A one-time payment will not interest anyone, and the employee who receives it will not tell anyone about it.

It would be more original to reward the person who diligently participates in the program and regularly makes recommendations with something they are happy to talk about and share with a clear conscience. It is important that the recommendation (the employee's action) is rewarded, and not just the end result, which is outside their control (i.e., the hiring). Our examples of rewards with high internal visibility and "word-of-mouth" potential:

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