Asking your current employees if they know of anyone that might be suitable for a role you’re hiring for is one of the most time and cost efficient ways to generate candidates.

But how do you reward employees for referring great talent and why and how might you set up a referral scheme?

According to research by LinkedIn, 70% of companies reward an employee with a cash bonus of between £500 and £3000 and 15% reward employees with a few days off. However, these aren’t the only ways to reward someone and it’s important to ensure that you’ve got good employee engagement in order to generate referrals in the first place.   

So why might you want your employees to refer candidates to you?

  1. Having great talent in your business in the first place is essential for an effective referral system. The person referring the candidate is only as good as the candidate they refer, so they shouldn’t want to refer someone who isn’t an A-player.
  2. Referrals are both cost and time efficient. If you typically use recruitment agencies, then it saves on the fees. Even if you have an internal recruiter, it will still save their time interviewing below par candidates.
  3. It’s often debated how much the employee referring the candidate needs to do to qualify for the bonus. The place they can be most useful is by pitching the business to the candidate and engaging them in working there, so by the time they make it to the recruitment process, the recruiter and hiring managers don’t need to be querying whether they would accept a job offer. Edelman Trust Barometer research tells us that in this case 'people like you' are the experts that candidates will trust when doing their research into the company. 
  4. Research tells us that people primarily refer candidates in order to help their network and to help their company. In fact earning money is nearer the bottom of reasons for referring someone for many people.
  5. You should choose the referral bonus/reward to suit your company culture. A cash bonus is one way to do this. Other ways to reward employees are to donate to their chosen charity or an activity of their choice and day out. You could consider doing a poll to ask your people what they would like to see.


If you are offering a cash bonus, consider that the amount must be enough to get your employees’ attention, but not so much that it distracts them from their real job. As guidelines 2-4% of the salary of the candidate’s salary is helpful to consider, but bear in mind you may wish to have a fixed bonus for any referral, as opposed to it fluctuating depending on seniority of referral. 

Consider paying 50% of the fee when the candidate joins and 50% upon passing probation so that commitment from the referral is evident. 

Ensure that your Referral scheme is publicised and your people know about it. Measure the success of it.