December 1999

Executive Summary

Today’s tight labor market is forcing many employers to improve their recruiting strategies to ensure they attract top talent to their organization. Some organizations have even begun to turn to their current employees’ networks of contacts for leads on job candidates. In return, many have developed referral bonus programs to award employees for bringing top talent into the organization. Companies have also managed to spin these programs into retention tools for the referring employee, by making them pay out over an extended period of time as the new employee stays with the company.

A recent e-mail survey by WorldatWork polled approximately 800 member organizations on their referral bonus programs. The survey also noted that a significant number of responding organizations (78%) do not have a referral bonus program for upper management.

Other key findings include:

• 18% paid a referral bonus for all classifications
• 60% paid referral bonuses for technical and professional staff
• 54% of companies with a referral bonus for upper management program paid $1,000 or more
• 29% of the companies paid bonuses immediately upon the date of hire
• 58% paid bonuses after a new employee completed six months of service
• Only 7% of those surveyed paid bonuses after one year of service
• An average of 29% of the companies split the payout of a referral bonus after set time periods.

Detailed Results

Question 1 Does your company award referral bonuses for recruiting the following positions:
	Yes	No
Upper Mgmt.	22%	78%
Middle Mgmt.	49%	51%
Supervisors	54%	46%
Professional Staff	60%	40%
Technical Staff	61%	39%
Clerical Staff	56%	44%
Actual submissions: 813
Click here to see a breakdown by company size.
Question 2 How long does the new employee have to stay before the payout is given?
	No Waiting	30 days	90 days	6 mths	1 year	More than 1 yr	3+ yrs
Upper Mgmt.	35%	2%	5%	52%	6%	0.3%	0%
Middle Mgmt.	28%	2%	5%	57%	8%	0.3%	0%
Supervisors	28%	1%	4%	58%	8%	0.2%	0%
Professional Staff	27%	1%	4%	60%	8%	0.2%	0%
Technical Staff	27%	1%	4%	60%	7%	0.2%	0%
Clerical Staff	28%	1%	4%	60%	6%	0.2%	0%
Average	29%	1.5%	4%	58%	7%
Click here to see a breakdown by company size.
Question 3 Do you split the payout so part is given upon hire and reminder after a set period of time?
	Yes	No
Upper Mgmt.	22%	78%
Middle Mgmt.	29%	71%
Supervisors	30%	70%
Professional Staff	31%	69%
Technical Staff	32%	68%
Clerical Staff	30%	70%
Average	29%	71%
Click here to see a breakdown by company size.
Question 4 What is the actual dollar payout on average
	<$250	$250-499	$500-999	$1000 +
Upper Mgmt.	11%	13%	22%	54%
Middle Mgmt.	10%	13%	30%	46%
Supervisors	12%	15%	32%	41%
Professional Staff	12%	15%	32%	42%
Technical Staff	11%	14%	29%	46%
Clerical Staff	20%	20%	33%	27%
Average	13%	15%	30%	43%
Click here to see a breakdown by company size.