Best Practices: A State Employee Referral Bonus Program

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Best Practices A State Employee Referral
Bonus Program
SC Budget and Control BoardOffice of Human
Resources Chris Byrd, Assistant Director
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Employee Referrals Pay Off
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What is a Referral Bonus Program?

• A program to provide an incentive award to a
  current employee who brings new talent to the
  agency in a hard-to-fill position

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Why Do We Need Referral Bonuses?

• The labor market is getting more and more
  competitive
• Changes in the work force will make strategic
  recruiting even more important
• South Carolina has many hard-to-fill positions
  in areas such as
• Engineering
• Information Technology
• Nursing

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South Carolina Turnover Rates

• Percentages shown reflect the turnover rates for
  state employees in hard-to-fill positions and
  overall for the last five fiscal years

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How Can a Referral Bonus Program Help Your
Agency?

• Your current employees are the best source of
  quality applicants
• Provide an incentive for your best employees to
  bring new talent to your agency
• Enhances your ability to attract and retain high
  quality employees

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Proven Track RecordReferral Programs in the
Private Sector

• Successful private firms get more than 50 of
  their hires from employee referrals
• Over 90 percent of technology and life science
  companies use some form of a referral bonus
  program, with most foreseeing no changes in the
  near future.
• Quicken Loans - nearly 65 of their new hires
  begin as referrals from current employees. They
  have also received numerous awards for their
  recruitment efforts.

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What About Programs in the Public Sector?

• State of Virginia
• Local Health Care Providers in South Carolina
• South Carolina State Government Healthcare
  Pilot Program
• The Budget and Control Boards Bonus Guidelines
  give agencies flexibility to implement a referral
  bonus program

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How Would a Referral Bonus Program Work?
Works under the Budget and Control Boards
Employee Bonus Guidelines Employees receive a
bonus for referring a candidate to a
hard-to-fill position Funding comes from
existing agency resources The Agency Director is
the final authority responsible for the
administration of the program.
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How Would a Referral Bonus Program Work?
(cont.)
The referring employee should be employed by the
agency at the time of payout to receive the
referral bonus Employees selected for eligible
positions should be employed by the agency for at
least one month before a referring employee may
be eligible to receive a bonus
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Options for Structuring a Referral Bonus Program

• Payments may be paid in a lump sum at the end of
  one month service by the new employee
• To reward longer-term retention, in periodic
  payments until the new employee has completed his
  or her probationary period. For example, if a
  referral bonus of 1,000 is awarded, the payments
  could be structured as follows
• 250 bonus payment after one month service,
• 250 bonus payment after six months service,
• 500 bonus payment at the end of the probationary
  period.

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Options for Structuring a Referral Bonus Program

• Different occupations may warrant different
  levels of referral bonuses
• Positions should be designated as hard-to-fill
  before the position is posted
• Certain employees should be excluded from
  participating, such as agency directors,
  recruiters, employees of the HR Department, etc.

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Potential Benefits of a Referral Bonus Program

• More people interested in the success of your
  recruiting efforts
• More people interested in helping retain good
  employees
• Build a greater commitment within your agency to
  the mission and vision of your organization
• Bring new energy and excitement to your
  recruitment efforts new Ambassadors for your
  agency

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Tips for Making a Referral Bonus Program
Successful

• Mention the program and its awards in agency
  publications
• Post flyers on bulletin boards
• Send periodic agency-wide e-mails reminding
  employees of the program and announcing when
  bonuses are awarded
• Stress the importance of the program to agency
  management. Ask managers to encourage their
  employees to participate and be rewarded.

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How Can OHR Help?

• OHR has a sample policy for a referral bonus
  program on our web site
• OHR can provide data to help identify
  hard-to-fill positions in your agency
• Your consultant is ready to help you consider
  ways to implement a program in your agency
• Explore other ways to strategically use bonuses
  as part of your overall compensation strategy

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Questions?