The Social Network For The Recruiting Industry

When it comes to employee referral bonus amounts, does size matter?

Rating: No Rating

I would think that offering $1k for a referral is going to attract more attention than offering $10 for that referral, but does anyone have any proof or experience that suggests that larger rewards improve the quality and quantity of candidates that are referred? If you raise the reward to $2k or $5k, does the program become more effective in attracting more of the right candidates to your position than if you kept the $1k reward? What are your thoughts on this topic?

▶ Reply to This

Replies to This Discussion

Permalink Reply by Brian on June 8, 2008 at 9:25pm: Personally Kevin I think it is going to depend on what position you are recruiting for. If your hunting for a CEO it's entirely different from a middle manager or salary employee. The last firm I worked with gave a couple hundred to a referal that was sucessfully hired and met job expectation once on the job. They were recruiting for entry level sales with candidate earning 40-80/yr.

Best Regards,

Brian; ▶ Reply to This

Permalink Reply by Sandy on August 20, 2008 at 9:13am: Hi Kevin ...

The last company I worked for gave a referral fee between $200 - $500. or gift cards for contract positions after a 30 days process

Let me know if you can use my help!; ▶ Reply to This

Permalink Reply by pam claughton on August 20, 2008 at 9:32am: No, it doesn't really seem to matter. If people are going to refer they'll do it for $500 or $5,000....That's what I've seen anyway and half the time they don't even know what amount the referral fee will be, just that they're getting one. That said, when I was on the client side, we paid $2,000-$5,000 depending on the level and difficulty of the search.

On the agency side, I've seen as low as $25 (and tons of referrals) to as high as $1,000 for more difficult searches. The amount really never seemed to affect the quantity or quality.

What affected it more than anything else was if the recruiter actually solicited the referral. If you don't ask, you generally don't receive, is what we found. Even on the client side, employees often needed prompting and direct contact and a reminder that they would receive a referral bonus if they even gave us a name of someone good and we recruited them.; ▶ Reply to This

Permalink Reply by Dan Fournier on August 20, 2008 at 12:46pm: Hi Kevin,

I was wondering the same thing just last night and Googled the topic. I’m in the process of putting a referral program on my website, so I looked at similar web sites w/referral programs and did a “temperature check” on the amount. I found most were in the 1,000 range. The consensus seems to be that it does matter if you offer $20 apposed to $1,000 dollars.

When I was being pursued I would be offered a referral fee of 3% most often. $1,000 falls a little short of this mark, being that recruiting in the diagnostic industry a floor salary of our $50,000. I like the flat-fee model, and found it was the most prevalent of recruiter web-sites.

My experience tells me this: Recruiters often find passive, successful and gainfully employed candidates – which was my recent business development profile. When I gave a referral, my motivation was more about helping a friend than collecting a fee – not than 1K is chump change, but not a huge incentive either. Caveat: (That said) I would question the firm’s business sense, and therefore would not want a friend to be represented by them if the referral fee was $25.00 Starbuck’s Card.

I’ve also read a recent blog on this site that discouraged referrals. Although I’m new to the recruiting world, I’m a veteran biz dev guy and this advice seems counter intuitive to any sales process. These arguments against referrals were sound, but a defense of referrals can easily be made. I’d love to hear more on that topic.

Good luck!; ▶ Reply to This