When it comes to hiring new employees, referrals are very popular. It is common practice in many companies to reward employees who make referrals with bonuses.

What exactly is a referral bonus?

Referrals are the most common way for people to find new jobs. Bonus referral programs are merely a formalization of this procedure.

Some companies have a referral program for all positions, while others only apply to those with a scarcity of qualified candidates.

The bonus could be monetary or in the form of a reward such as gift cards or extra vacation days. Having said that, 90% of the time, bonuses are paid in cash.

If it is given as a monetary bonus, its worth can range from 1,400 € (the average in the United States) to 300 € (the average in the UK and Australia).

Which companies typically provide them?

Because of the nature of the bonus, companies that offer them are looking for new talent.

As shown in the following graph, referral bonuses are common in small businesses because they cannot afford lengthy recruiting processes.

Data source: https://erinapp.com/wp-content/uploads/2020/01/Employee Referrals Infographic 2020 ERIN.pdf .

The majority of companies that offer referral bonuses are in the Business Services industry. They are ideal for sales professionals within the industry. It is also found in the Health Care, Consumer Services, and Transportation & Logistics sectors. They are also popular in job postings for social workers.

Insights from employee referral programs

Employee referrals were rated as the best source for generating a return on investment by more than 80% of employers.

45% of them stay with their current employer for more than four years. Only 25% of employees hired through job boards remain longer than two years.

On average, referral recruitment takes 15 days less time than traditional recruitment procedures.

Are they helpful to employees?

Employees with medium-high salaries are typically offered them. Employees who receive these benefits earn 55k GBP in the UK and $40k in the US. This means that, despite their high salary, these bonuses are still relevant to their yearly pay and are much appreciated.

Indeed, research has shown that the majority of employees refer candidates to help friends find work or to help their company. Employees who refer candidates solely to make money are in the minority.

Why are sign-on bonuses advantageous to businesses?

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