How To Give Your Employees Extra Money For the Holidays

The title sounds like charity, but this is a win-win. I spent many months under the tutelage of a leading industrial psychology professor, studying research and dissertations about stopping employee turnover. One tactic kept jumping out, that employee referrals out-perform and out-stay other employees…and the research even indicated they tend to work for less money.

The obvious reason why referred employees stay longer is your current employees won’t risk their reputations by referring a low performer. The greater reason, though, might be that referred employees already know the upsides and especially the downsides of the jobs from listening to their buddy. They know what peculiar duties and work circumstances they are walking into.

I then dug even deeper to learn which companies were best at how they managed their programs. Some companies’ policies were considered extreme, thinking of one example where an organization offered to pay anyone a $500 fee for a referral…including you or me so they mean ANYONE…whereas most other companies restrict payments by eliminating managers and HR. I like the “more the merrier” approach.

Most companies see employee referrals as just another HR thing that companies do, so they put together a committee to form the policy and eventually sprinkle some communications, on the walls and electronically. Then they wait for referrals to pour in. Or not.

So right now, is the time to promote your referral program, promising holiday shopping money in return. Or some of you might provide different rewards, say time off or gift cards. Regardless, employees are always scratching for dough in any form during the holidays, and employee referrals provide a way for you to give them. Here are the six ways we recommend increasing referrals to our clients:

1. GOAL: Set a goal for what percent of new hires will come from referrals, increase the goal periodically, and hold one person accountable for achieving it, likely from recruiting; the ultimate goal is to get half your new hires from referrals.
2. PAYMENT TIMING: Pay half the award on day one when the referral starts, and the second half after the employee has stayed for a reasonable period of time so you know the new hire is a keeper, for example 90 days.
3. MARKETING: Ask the marketing department to assign someone to help achieve the goal, too…or form a small committee of smart and well-connected employees to help.
4. VISIBILITY: Present awards publicly with a large cardboard check, asking the employee how she intends to spend her reward money.
5. REMINDERS: Raffle off a night on the town each quarter for those who have successfully made a referral during the previous year.
6. TAXES: Increase the award to cover all taxes so the winning employee receives the full amount.

And now here are my favorite power moves to make your referral program soar:

POWER MOVE #1: Assign a specific referral goal to whoever conducts onboarding or new-hire training, as new hires just came from another company and likely know more candidates than someone who has been with your company for years…and those same new hires will be eager to impress.

POWER MOVE #2: Announce that you will double your reward for any employee who successfully provides five referrals, and that double reward will stay in place for as long as that employee works for you.

Whereas most organizations see referrals a just a way to increase the applicant pool, we see referrals as a way to improve retention…and engagement, too.

Please email your comments to me at DFinnegan@C-SuiteAnalytics.com.  You are also welcome to forward this blog to anyone you believe would find it helpful.