I’m sure that many of you Recruiters have worked in an organization that provides some type of referral program to encourage more qualified candidates. Unfortunately, most of these programs limit your ability to provide a flexible referral dollar or incentive to the referring party.

I’ve worked in a few companies, especially large corporate types, who enable you to provide a referral of up to a specific dollar amount maximum depending on the amount of margin or fee that the candidate brings in to the company.

It’s been my experience that putting a ceiling on a referral fee will cost you in the long run by putting constraints on your people to incentivize prospective referring parties in the market to help them find exceptional candidates and, in some cases if you are an agency recruiter, job requisitions.

Here are a few helpful alternatives to the typical referral program:

· For a candidate that is referred for a contract position, give a percentage of the margin dollars to the person referring for as long as the candidate bills. This will provide the person referring a residual income and encourage them to provide future people. Example: Margin dollars are $25 per hour. Pay the referring party a 10% commission fee and it will annualize at $5,200 ($25 X .10 = $2.50 X 2080 hour = $5,200 for 1 year)

· In addition to paying a percentage, accrue referral margin dollars and send a referring party on a trip. Example: If the referring person sends enough candidates to generate up to $30,000 in margin a month for example, send them and their significant other to Hawaii. If the dollars are there and the company is making money, it will help you in the long run.

· If it is a placement fee, be open to parting with up to 3o to 40 percent of your fee. Especially for hard to find skills. Remember that you may have zero dollars as the alternative.

· If you are a Corporate Recruiter or HR, pay your employees a fee of up to 10% of the first year salary. Most agencies will charge you at least 20%.

· Agency recruiters should have an automated email that is scheduled to go out to their consultants on billing every 2 weeks that incentivizes them to provide both candidates and leads to job requisitions at the client site. The referral program should follow the residual percentage method or the margin accumulation method (First 2 bullets above). When on-boarding new consultants that will be working at your client site, have the recruiter negotiate a referral program specifically for the new hire and follow up using the email program. Think of this as an On-site commission.

· If you are a business owner, recruiting and or sales manager, have a referral network meeting with your consultants on billing and your recruiters as a mixer at the office. Chances are they have a better idea as to what’s going on in the market and more contacts. This is especially true if you are a small or start-up business without the abundance of a large database and many clients.

Hope some of these ideas help you generate more business and find more qualified candidates. Regardless of unemployment percentages and the quote/unquote poor economy, good people are always hard to find.

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