The Secret Way Big Companies Hire Via Employee Referral

The Secret Way Big Companies Hire Via Employee Referral

The headquarters for Appstem, a boutique app-development company, is located in a hub of innovation in San Francisco. On a nice day, the CEO, Robert Armstrong, can stroll the streets of the neighborhood and, within a one-mile radius, pass by the offices of tech giants Google, Salesforce, Twitter and Yahoo.


While such proximity might intimidate many leaders of smaller technology companies, Armstrong says it doesn’t bother him one bit. He says he’s found a way to get top-notch talent that allows Appstem to compete with these behemoths.


That secret: employee referrals.


“We implemented an employee-referral program a year or so ago,” Armstrong told me. “It has not only helped us attract new talent, but also retain talent because the new employees are generally friends.”


He went on to say that Appstem has a lot to offer tech talent, like a variety of flexible work options and an outstanding culture. The employee-referral program allows him to put his brand out there and attract skilled employees, despite the company’s own positioning in the shadow of larger, more established tech organizations.


Here are five ways Appstem and other companies have created employee-referral programs that help them keep up with the big boys:


4. Reward employees.


Employee-referral programs are not about “free” talent sourcing. They’re about redirecting money that might otherwise be spent on job ads or recruiters, to those who are more invested in the organization: its employees.


“We know what it would cost to use a recruiter for certain roles, and we decided that we would rather pay that money to our employees,” said Greg Besner, founder and CEO of CultureIQ, in New York. “We decided on an amount that was a fair incentive while also coming in lower than what it would cost a recruiter.”


Many companies require a new hire to stay employed for a certain amount of time to discourage people from referring dozens of friends just for the monetary bonus. However, as Besner pointed out, there’s an inherent safeguard built into employee referrals.


“Employees take these referrals very seriously, because they know that they will be working directly with them on a daily basis. Wanting the best co-workers, the quality of referrals we get is extremely high.”

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