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Build an Employee Referral Program

Next, focus your search on the top sources for high-quality employees. The best source of new employees is following up with great employees who have left your company for another job and enticing them back — perhaps with help from your new messaging and commitment to being a star employer. The second-best source for new employees is employee referrals, Kleiman noted.

“The question is what percentage of your employees come from referral. If you’re a great place to work … your people are going to want to bring their friends to work for you,” he said.

Most companies don’t ask employees for referrals properly, Kleiman explained. “Most employers ask something like, ‘Do you know anybody else who might want to work for us?’” 

But you’ll get better-quality referrals if you use an old sales technique of shrinking the pool, Kleiman said. Asking about referrals from a specific group can spur ideas. For example, ask if any of their close friends might want to work for you. Or ask about school friends, church friends or so on, depending on the employee.

To further encourage high-quality referrals, build a referral bonus program.

“Don’t make the mistake that most people make in the referral bonus program,” Kleiman said. “The No. 1 mistake they make is they pay the bonus 30 days, 60 days or 90 days after somebody comes to work for them, if the employee stays,” Kleiman said.

Instead, he encouraged retailers to reward behavior they want to see repeated and give employees a bonus up front if they referred someone that you decided to hire. 

“You’re making the hiring decision. You know what you’re saying when you don’t pay them for 30-90 days?” he asked. “You’re saying, ‘I’m not sure my decision is good, so I’m not going to pay you.’”

Kleiman pointed out that companies don’t have trouble paying for an Indeed.com post or a LinkedIn ad, so why wouldn’t they pay an employee up front for their lead? But Kleiman also added that the way in which you reward an employee with a referral bonus is equally important.

Kleiman recommends publicly recognizing the employee who made the referral in front of the team, highlighting the bonus they are receiving, introducing the new team member and showcasing high expectations by saying something like, “Employee A brought Employee B to us, and they wouldn’t have brought them to us if they weren’t a great fit for our team.” 

Presenting the check or highlighting the bonus is important to show other employees the benefit of referring a new member and the expectation that they be a good match for the company.