The Business Case for your Employee Referral Program

Tiffany Jin
Co-Founder
December 3, 2023
Blog
2 min read
What is a Business Case?
A business case captures the reasoning for initiating a project or task. It evaluates the benefit, cost and risk of alternative options and provides a rationale for the preferred solution.

At any one time, you can count on the fact that there are multiple strategic initiatives your company is planning for depending on upcoming goals. Therefore, it is important the leaders in your organization will need to critically prioritize what they choose to have teams spend time and resources on. For talent acquisition teams, new employee programs or technology implementations will require a business case outlining the value the project will bring and what it will take to get there. 

Here’s the structure to build the business case to stand up your company’s Employee Referral Program.

Part 1: Executive Summary

This section is a high level summary of all parts below, and will clearly state that this business case outlines the values of an employee referral program and how it aligns with your organization's goals, the resources required to implement and the KPIs that will be used to measure its success.

Part 2: The Value of the Referral Program for Your Company

When making the case for an employee referral program, ensure the benefits will align to overall company strategy and goals. Within talent acquisition, here are proven metrics around the benefits of running an employee referral program that you want to cite to leadership.

Increases our retention & reduces turnover 

  • Referrals stay 70% longer than non-referrals at a company (iCIMS)
  • Employees Who Refer Others Stay 20% Percent Longer (iCIMS)

Reduces our Future Hiring Costs: 

  • The above leads to a 41% reduction in costs associated with backfilling an empty position (Zippia)

Reduces our Cost-per-Hire

  • The cost-per-hire of employee referrals is $1,000 less on average than other hiring sources. (Zippia)

Increases our offer acceptance rate: 

  • Referred candidates are 2.6% to 6.6% more likely to accept job offers (Zippia)

Part 3: The Ask

Once you’ve established that a successful employee referral program will help your company reach its goals, leadership will now need to know how much resources to allocate and the steps to get there. 

Outline a Referral Policy

  • You'll need to establish clear guidelines for the referral program, including the types of roles that are eligible for referrals, the referral process, and the incentives for successful referrals. We’ve got you covered there too, here’s our Referral Policy Template

Automation through Technology

  • Technology helps streamline the referral process by making it easier for employees to refer candidates and for the program managers to maintain. This can include automated referral tracking and tools for sharing job postings that creates a great referral experience for both employees and candidates. Clearly state you are looking to utilize a trusted technology partner you have vetted  that will ensure you can run the program efficiently.

Employee Participation

  • How will you encourage employee participation? Outline creative campaigns like friendly team competitions, or targeted communications to specific groups that will drive adoption and success (take a second to check out text-to-refer). Drive recognition through gamification using leaderboards and socialize your employees’ success stories. 

Part 4: How to Measure Success

How will you prove to leadership this was time and resources well invested? The right technology partner will also provide rich analytics to help prove ROI on your program and pave the way for future optimizations. This can help you identify areas for improvement and make data-driven decisions about the program. Examples can be: 

  • Increase referrals as a percentage of hires from X% – bringing it closer to  X% by a target date
  • Increase overall retention rate by X%

Building an employee referral solution can be a highly effective way to hit many of your company’s top line and bottom line hiring goals. Standing a program up will require resources so it’s important to show a compelling business case to your leaders to ensure you are properly set up to make this a success. Happy referring to your employees!

See how Eqo can work with you to build a business case for your Employee Referral Program

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