5 Best Employee Referral Software Platforms for 2023

HR and talent acquisition teams are looking to add an employee referral solution because it can be a game changer for your recruiting efforts.  Here are the key benefits of referral technology, see below for how we translate these benefits into an actual return on investment calculation for your CFO.

• More Top of Funnel: Simply put, getting more referrals drastically increases the top of your recruiting funnel fast.  Right now you are no doubt getting employees to recommend their friends via your ATS or whatever system you currently have setup.  Imagine getting 3x that amount of candidates simply by putting in the right process, reminders, rewards.
• High Conversion Rates: For every 10 employee referrals, you probably get 1 hire.  Contrast that with the number of applicants you need from a job board or even your career site to get a hire.  Referral candidates convert to employees at a much higher rate.  This decreases time to fill, as well as the amount of hours you spend screening candidates.
• Better Retention: Job seekers who are brought to the recruiting team via employee referrals have a much better understanding of the job they are getting into.  This translates into better retention, especially for roles where churn is an issue: nursing, retail, transportation, etc.
• Employee Engagement: Anytime you can get your employees involved in the recruiting process is a win.  Employee referral tools make the workflow simple and rewarding for employees who get to help their friends, their company, and typically get a reward for themselves as well. This is a key part of employee experience software.

When we talk to our expert council of HR and talent acquisition professionals, there are a few things that come up again and gain when it comes to buying and implementing this type of software.

• Implementation goes at your pace: Implementing an employee referral program can take a week.  But, it usually takes longer.  Let’s face it, most people in recruiting are super busy filling reqs and don’t have the headspace to take on new initiatives.  So, we highly recommend giving someone on your team time to spearhead this initiative and make sure it gets done quickly.  Or, partner with a company that has a robust professional services org to help you.
• Metrics matter: Make sure that you are tracking where candidates are coming from in your ATS.  If you aren’t, then it may become hard to understand how much value this tool is actually creating.  Most of these vendors make it super easy to do that, but you still need to make sure it’s working.
• Understand cost per hire: The easiest way to say “yes” to this solution is to realize it’s going to lower your cost per hire.  But, do you know your cost pre hire currently?  Make sure you have a handle on your overall cost per hire (and ideally the cost per hire for all your different roles/channels) so that when it comes time to renew the contract, you know whether or not this channel is bringing down your costs!
• Employee Engagement: While the vendors listed above all have built in workflows to get your employees engaged in your hiring, you still need to think through your general philosophy on rewards, as well as how this will all be messaged.  Our advice is to get hiring managers onboard with a short presentation on why employee referrals is worth investing in, and then have the hiring managers re-enforce messaging to employees on a regular basis to keep your hiring pipeline full of high quality referrals.
• Dive In: Companies that are tentative in rolling out their programs typically don’t see high returns.  If you tell employees this is a pilot, they are going to be much more hesitant to use the product, and you won’t get the ROI you’re looking for.  Go all in, even if it’s for a “pilot” for one segment of your organization.
• Be Proactive: Referrals are great when your employees offer them.  But, the companies who are most successful with these programs have recruiters who are reaching out to their colleagues and asking for intro’s.  Use these tools as a sourcing database that has an 80% response rate from candidates vs whatever you’re currently getting on cold outreach.
• Integrations Matter: Make sure the vendor you partner with has easy to setup and maintain integrations with your ATS and HRIS - you don’t want to spend time each money downloading and .csv files.

Don’t get tripped up on these common hurdles, make sure you are thinking strategically about how a tool to boost employee referrals will be implemented and measured.

We believe that whenever you are going to ask for money, you should be prepared to back up your thinking with a model of the returns from your spend.  Here is a short model that details how we think about the ROI from implementing an employee referral platform.  Feel free to tweak it to meet your own goals.

Essentially, we’re going to drive more hires through employee referrals, at a lower cost than our typical recruiting channels.  This means we are saving money on each of these hires.  What’s not contemplated in this exercise (but feel free to model it if you’d like):

• Referred candidates typically ramp faster
• The benefits from decreased time to fill
• Referred candidates stay longer

Pro Tip: Put a time on your calendar right now for 6 months out that reminds you to go back and look at this model again.  What did you get right, and what did you get wrong?  Understanding this will allow you to get better as a practitioner and allocator of capital within your organization!

Generally speaking, referral technology is priced based on the number of employees in your organization.  We like this as the value you get from the offering is very closely tied to the number of employees you have.  More employees means more referrals, and a decreased cost per hire and time to fill.

Here are some general guidelines you can use to understand how much this type of software will cost you.  

Please note the pricing depends on which vendor you choose, which modules you want, and how fast your organization is growing.  Some of these vendors also have implementation fees on top of the annual subscription (not necessarily a bad thing, especially if you need hands on help to get started).

Again, the pricing you’ll get from a given vendor depends on the specific needs of your organization, and your ability to negotiate.

If you’re looking at buying employee referral software, you’re probably going to get demos of a few different solutions.  We recommend staying organized by keeping track of the features that matter to you, and how each vendor can currently deliver on each.  The below spreadsheet will help you stay organized throughout your demos, so that you can pick the right referral platform.

What is an employee referral program?

An employee referral program is a recruiting method where hiring managers incentivize current employees to refer qualified candidates from their networks to open roles.

What is employee referral software?

Employee referral software are tools that make employee referrals more efficient. This can be achieved through automated recommendations, detailed employee networks, and gamification.

What are some benefits of employee referral software?

Employee referral software provides many benefits to your company, including:

• More top of funnel candidates
• Higher conversion rates
• Better retention
• Heightened employee engagement

What are the pitfalls and misconceptions about employee referral programs?

There are a few pitfalls and misconceptions that may arise when using employee referral programs. Implementation goes at your pace, meaning you have to put time and effort into getting it up and running. The metrics are important, and if you aren’t tracking if the program is working then you can’t be sure it’s working. Make sure you get a solution that integrates with your tech stack.

Do employee referral programs work?

Yes. SSRN found that between 30% and 50% of hires in the US are from referrals. By using an employee referral program, you’re ensuring that you’re keeping up with the competition and hiring the best talent.