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How to Create an Employee Referral Program That Hires for You

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Isabelle HahnAuthor

A referred candidate is faster to hire and train than a traditionally sourced candidate. How do we know this? Word on the street. But also, study after study show that the best recruiting practice is to ask your current employees if they know someone who might be a good fit.

According to the Bureau of Labor Statistics, in 2018 there were 5.4 million workers in the restaurant industry. While that labor pool seems massive, searching for great employees can still be tough. In the 2019 Restaurant Success Report, we learned most restaurateurs rank hiring staff as a top challenge. And replacing an hourly employee can cost nearly $6,000 for a restaurant.

It’s not just hiring, either — it’s hiring the right team members who will stick around. The annual restaurant employee turnover rate is at an all-time high of 75%. This means three-quarters of employees are unlikely to stay in a restaurant job for a whole year, leaving restaurateurs in a constant cycle of replacing staff.

Hiring staff shouldn’t be so damn hard. Restaurant owners and managers have the deck stacked against them when it comes to hiring and retaining great talent. But an employee referral program can make hiring a little easier.

What is an employee referral program?

An employee referral program is a recruiting and hiring strategy where current employees refer people they know for jobs at their places of work. Employers can encourage employees to refer candidates through rewards and benefits.

Building a referral program is one of the best ways to find employees for your restaurant. Your current team members have a vested interest in bringing in people who will make the workload lighter, not heavier. They’ll also be more likely to introduce candidates who add to your culture. Employees are happier when they’re working with people they want to work with.

In most cases, it’s cheaper to hire using referrals, even when you’re offering a referral bonus for every hired candidate. Plus, new hires who are recruited through an employee referral program produce 25% more profit for their companies than new hires who are recruited the old fashioned way.

It's a win-win. Mostly.

There’s danger in hiring within your circle.

Employee referral programs come with a certain level of risk. Employees tend to refer candidates who are similar to them. Whether intentionally or subconsciously, they’ll bring in candidates with similar career experiences, similar socio-economic backgrounds, similar communities, and similar perspectives. And that type of sourcing can pose a risk to the diverse makeup of your team.

In 2017, PayScale asked 53,000 U.S. workers if they had received an employee referral or were connected to an employee at the company at which they currently work. That research discovered that referrals disproportionately benefit white men more than other groups. Women and minority applicants seem to be less likely to receive an employee referral. Of course, this depends on industry, department, location, and even role, but because the majority of restaurant positions (especially in leadership) are held by men, it’s dangerous to hire only the friends, family, and coworkers of those who hold most of the jobs.

There are ways to prevent a hiring bubble while still running a great referral program. Many businesses try to extend the reach of their sourcing efforts, offer incentives for more diverse candidate referrals, or make sure hiring teams include a diverse range of team members. We’ll dig into that more below.

Here’s how to build your employee referral program and find the employees you’ve been searching for.

1. Start With Focus

The first step to any new program is to figure out your goals. What do you hope to achieve? How do you want the program to grow? And over what period? Who will be involved? And is that actually achievable?

Having a clear vision of what you want to accomplish will help you focus on what matters most and clearly communicate the value of a referral program to your team.

Maybe your first goal is to cut 50% of spending on hiring ads or recruiters. Maybe you need to hire five people in the next month. Maybe you want to bring in employees with a different or more diverse skill set. Or maybe you want to set a goal around staff turnover: hire people who have long-term career goals in the industry so they stick around for more than two years. Whatever it is, be specific.

2. Reward the Work

Most businesses offer an employee referral bonus as part of their referral programs. Incentivizing your employees to take part in your referral program is a great way to source a large number of high-quality candidates. Plus, think of all the money you’re saving by using a referral program instead of recruiters or job boards. Instead of spending that money on traditional recruiting resources, invest some of it back into your team.

Getting your employees excited about the program is step one, and an employee referral program won’t work if your team doesn’t feel like there’s anything in it for them — whether that be a better team culture, talented new team members to learn from, or cold, hard cash.

When it comes to rewards, cash is king, but don’t be afraid to get creative. Think about your staff and the types of rewards that might motivate them. Maybe some of your best staff members would like a few extra vacation days or the weekend off to spend time with family. You could include free meals as a bonus or extra discounts for friends and family if meals are something you already comp. Heck, you could give your team a list of killer rewards and let them choose their favorites.

Here are a few other ideas we’ve heard from the community:

  • Shift preferences. Ah, those coveted shifts. Let your winning employees have their favorites for a week or a month.
  • Gift cards. Amazon — enough said.
  • Entrance to win a gift raffle or drawing of a valuable item. 
  • The latest tech. Think Apple Watches, Kindles, GoPros, or other cool devices.
  • Tickets to stuff. Give away two seats to a big sporting event, a concert, a comedy show, or the movies.

Structure incentives to match your hiring needs. Incentivize employees to bring in candidates with unique skill sets or qualities they see as additions to your team. If you’re looking for a general manager with 10+ years of experience, offer better incentives for referred candidates with experience working at top-performing restaurants you admire.

Most businesses offer these types of rewards after a referred candidate has been hired and made it past their first 90 days. Delayed incentive structures like this motivate team members to source only high-quality candidates — the people who will truly be successful working with your restaurant team. But to find the right candidates, employees need a solid understanding of the type of person you’re looking for.

3. Make it Clear Who You’re Hiring

With every open role, give your employees a super clear understanding of who you’re looking to hire and why. If your employees aren’t aligned with your vision for the team you want to build, they won’t refer the right candidates.

This goes way beyond sharing a standard job description with your team. List the skills and behavioral qualities you’re looking for in terms of priority, and explain why you’re weighing them that way. Outline the type of work the new employee will be doing, who they’ll be working closest with, and what success might look like. Describe the big challenges your team is facing right now and how you hope this person will solve them. Talk about new qualities you want to add to the team culture.

There’s a risk here in getting too specific about the type of candidate you’re looking for. Avoid outlining required past experience or education. This’ll help your team keep an open mind and seek out candidates for their potential, not their profiles.

4. Make It Easy

If an employee referral program is new to you, keep it simple. If your employees need to jump through hoops to refer a candidate and get their rewards, they’re never going to do it. The best thing to do is make referring easy and accessible to everyone.

Here’s how you can use tech and other tools to run a great employee referral program.

Use social media.

Every time a new position opens, ask your team to share information about the role on their social channels. This is a simple and effective way to reach your employees’ trusted contacts and spread the word about the job. When a new position opens up, send a company-wide email including details about the role, links to where a prospective employee can learn more, and a short snippet of text employees can easily post to their social media accounts. Boom. You’ve just reached a few thousand people.

Use email.

Everyone has it. Young or old, it’s a great way to reach candidates of any age. Send a weekly or bi-weekly company-wide email that includes the roles you’re trying to fill, the status of the roles, and short snippets of text explaining what you’re looking for in candidates. Consistently sending these emails will keep your staff in sync with the status of your recruiting efforts and which positions are open or have been filled. You could also try setting up a dedicated email address for employees to send referrals to. That way you can easily track who referred who and where they are in the system without messing up your own inbox.

Use an online form.

Have your team fill out an employee referral Google Form every time they refer a new candidate.Google Forms organize entries into Google Sheets, making it super easy to track your referred candidates.

Use employee referral tools.

There are a ton of employee referral software solutions you can use to run your program. Maintaining an employee referral program can become chaotic without automation, so look for an employee referral system that allows for automated or semi-automated processes. If money’s tight, try using a free CRM or even a Google Sheet first.

Use the tech you already have.

Within most restaurant point of sales systems, there are typically ways to communicate messages out to your team. In the daily log, managers can often record the goings-on during their shifts and leave memos for other staff members to read. Use your manager's log to get the word out to staff about your employee referral program, and track who on staff has recommended someone.

Technology and tools can make it easy for your team to submit referrals, but they also make it easy to continually engage your staff in the referral program. Keep your team informed of the hiring process when they refer a candidate. If they refer someone who doesn’t work out, proactively reach out and let them know. They’ll appreciate it.

5. Look Beyond Your Employees

If your candidate pool is small and you’ve tapped out your existing employee networks, don’t worry. Get acquainted with a larger network by extending referral bonuses and rewards to everybody.

Tell everyone about your referral reward program. Tell your customers and they’ll broadcast it to their networks. Tell your employees to tell their friends, and their friends’ friends, and you get the picture. Tell your produce guy, your fishmonger, your accountant. Tell your local community organizers. Announce it on your restaurant’s social channels and post it on your website. Tell your employees to post about your referral program on LinkedIn, and see where the messages take you.

By extending your reach into groups beyond your immediate network, you’ll make sure you’re not just hiring the same person over and over again. Diverse teams build strong businesses. By sharing your referral program far and wide, you’ll find candidates who bring different perspectives, skills, and even new communities to your restaurant team.

Hire happily.

While there’s no such thing as a perfect recruiting process, channel, or source, an employee referral program can be great for the long-term success of your restaurant and for your current employees, too. Employees who have healthy relationships at work are more emotionally invested in the success of the business, especially if they helped hire the new line cook.

Hiring is a team sport. Remind your team members that their input and ideas matter. Be willing to test, learn, and be open to new ideas. You’ll find that winning candidate.

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