How to Start a Staffing Agency Referral Program

While finding clients is essential to starting any staffing agency, you can’t take on clients without a roster of qualified candidates. Running ads, marketing your services, and reaching out via word-of-mouth can steadily bring in more candidates, but you need candidates ASAP.

Starting a staffing referral program is one of the best ways to attract high-quality candidates and give your clients exactly what they want. This approach allows you to tap into the networks of other recruiters, candidates, and industry connections to spot top talent faster.

You don’t need much to start a staffing agency referral program, either. In this guide, we’ll explain how these programs work and share eight steps to help you start a staffing referral program of your own to maximize your agency’s success.

What Does a Referral Program Involve?

A staffing referral program encourages employees, candidates, recruiters, and other industry connections to refer job seekers to your agency. You pay a predetermined finder’s fee in exchange for the candidate referral. While referral programs aren’t free, they’re much more affordable than expensive strategies like paid ads. It doesn’t hurt that the candidates are usually of higher quality, too.

Of course, not all referral programs are created equally. A successful staffing agency referral program incentivizes those who refer candidates and provides clear guidelines for participation. You still need to be transparent about eligibility, the staffing agency referral program process, and the reward structure. But with the right approach, these programs can help you source top-tier candidates for less effort and at a lower cost.

Types of Staffing Agency Referral Programs

There’s no one-size-fits-all approach to staffing referrals. You can choose the model that best aligns with your budget and market. While you’re free to design the program however you see fit, these are the most common types of staffing agency referral programs:

Financial rewards: This is the most popular model. Referrers receive a cash finder’s fee when their referred candidate is hired. Some programs stipulate that the hire must be in their position for a certain period of time before paying the fee. If you’re wondering how to pay a referral fee in staffing, it’s typically a one-time payment once the new hire starts their job.

Non-monetary incentives: This type of referral program isn’t as popular, but it can work well for new staffing agencies on a tight budget. With this option, you offer non-cash rewards like gift cards or merchandise to get referrals.

Tiered rewards: The more referrals you get, the stronger your candidate pool will be. Encourage repeat referrals with tiered rewards, which offer better perks the more someone participates. For example, the first hire earns a standard reward, while the second referral could come with a higher-value incentive.

Benefits of Starting a Staffing Referral Program

Starting a referral program requires a little upfront work and strategy, but it’s worth the effort. There are so many benefits to starting a referral program, including:

Higher placement rates: According to a recent Jobvite survey, 30% of referred candidates are successfully placed in open positions compared to 7% of applicants who were sourced through other methods.

Improved employee retention rate: Not all referrals will work out, but you’re much more likely to source higher-quality candidates from trusted sources.

Not only will you find better candidates for your clients, but these hires are also more likely to stay in their roles longer. Referred candidates have a 55% two-year retention rate compared to a 20% rate for candidates found via job boards, according to the same survey. Since many staffing agencies make their money from both acquisition and retention, this perk alone is a game-changer.

Speedier hiring: Per Jobvite, referred candidates are hired 55% quicker than those sourced through career sites. The faster you hire candidates for your clients, the more revenue your business will earn. While you should never rush through the hiring process, referrals speed things up by connecting you to folks qualified for the job.

Lower costs: Traditional candidate sourcing costs a lot of time and money. Even when you factor in the price of rewards, referrals are a smart way to minimize expenses.

How to Start a Staffing Agency Referral Program

A solid staffing agency referral program can help you find more high-quality candidates. Follow these eight steps to establish a clear, structured process for finding top talent in less time.

1. Invest in Staffing Referral Software

Manually managing the staffing agency referral program process is just too much work. Fortunately, software can help you automate referral tracking, manage rewards, and monitor program performance.

Most staffing referral software costs a monthly subscription fee, but it’s worth the investment. If you’re wondering how to pay a referral fee in staffing, this software will take care of everything for you, ensuring you stay true to your word and keep your referring sources happy.

2. Set Internal Referral Goals and Targets

Referrals should be your primary focus when sourcing candidates. Still, you can’t sit back, twiddle your thumbs, and hope referrals will come your way. You have to pursue referrals, which requires setting intentional goals.

Start by defining key metrics, such as the number of referrals you aim to receive monthly or quarterly and tie them to your broader recruitment targets. This is especially important if you’re starting a new staffing agency because tracking will help you measure effectiveness—and profitability—over time.

3. Determine Rewards for Successful Referrals

Rewards are the lifeblood of successful referral programs. These perks motivate participants to go the extra mile and recommend high-quality candidates. The key is to be generous with these rewards without hurting your staffing agency’s profitability.

When planning your incentives, consider both monetary and non-monetary options to appeal to a broader audience. For example, cash bonuses are a common choice for third-party referrals, while gift cards, experiences, or exclusive perks can also be effective for internal referrals.

4. Set Clear Guidelines for the Program

Participants need to feel that your staffing agency referral program is transparent and fair. Clear instructions and guidelines ensure everyone knows how the arrangement works. Transparency is essential. Communicate how you pay a referral fee in staffing, including when the reward will be issued (for example, after a candidate stays employed for a set period).

In your program terms, define key ideas like the “referral” definition for staffing so there’s no confusion about what qualifies as a successful referral. Ensure your program includes rules for tracking, verifying, and rewarding referrals to keep it fair and organized. Setting these guidelines upfront helps build trust and ensures a smooth experience for everyone.

5. Brand Your Referral Program Effectively

Branding is an essential step when starting a staffing agency. While your agency might have a solid brand, your referral program also needs a professional brand.

A well-branded staffing referral program stands out and attracts more participants. Give your program a unique name that resonates with your audience and reflects its purpose. For example, names like “Refer & Reward” or “Top Talent Connect” add a professional touch.

Work with your marketing team and a graphic designer to create consistent messaging and visuals for your referral program. Effective branding builds excitement and positions your program as a valuable opportunity for candidates to contribute.

6. Motivate Your Recruiters and Candidates to Sell the Program

The more people know about your staffing agency referral program, the more likely they are to participate. Encourage your recruiters and candidates to share the program with their networks.

Do as much of the legwork for them as possible; this makes promoting the referral program even easier. Educate your team on the program’s benefits and provide them with tools, such as email templates, social media posts, and talking points, to share the opportunity with their networks.

7. Market and Advertise Your Program Across Multiple Platforms

Like any initiative in your staffing business, you also need a marketing strategy for your referral program. Promote your program via:

• • Email newsletters
• • Social media
• • Your website
• • Direct mail
• • Ad campaigns
• • Industry influencers
• • Video testimonials

Getting the word out about your employment agency referral program takes time, but it will steadily bring in more participants. Start with low-cost strategies like social media or blogging before trying more expensive options like ads or influencer partnerships.

8. Have a Method (or Metrics) to Gauge Success

Staffing agency referral programs can be incredibly beneficial, but success is never guaranteed. It’s a best practice for staffing agencies to track their performance in everything, including their referral programs.

You need to get results, and the best way to do that is to monitor performance. Establish and track key metrics such as:

• • Number of referrals
  
• • Conversion rates
  
• • Cost savings
  
• • Time-to-hire
  
• • Hire quality
  
• • Candidate retention rates

By consistently evaluating these metrics, you can identify areas for improvement and optimize your employment agency referral program for sustained success.

Other Ways to Market and Grow Your Staffing Agency

A staffing referral program is an excellent tool for sourcing higher-quality candidates, but it isn’t the only trick you should have up your sleeve. Maximize the potential of your referral program with a holistic approach to promoting your staffing services. Try these tips to grow your staffing agency:

Create a business plan: It might sound simple, but every staffing agency needs a business plan. This formal document lays out your plans for the future. You can (and should) change your business plan as things change, but it’s a helpful resource that will clarify your vision for the business and make the most of your resources.

Join staffing associations: Join a handful of staffing associations to connect with other professionals in your field. You might not get clients or candidates immediately, but these associations allow you to build your network and establish more referrals over time.

Invest in SEO: Search engine optimization is the secret to gaining lots of organic traffic to your job listings. It takes time, but consistently creating high-quality content will boost traffic to your website (and referral program!). Create content for candidates and potential clients to promote both sides of your business.

Automate what you can: There are plenty of ways to grow your staffing agency, but automation is one of the best ways to scale up without hurting the quality of your hires. Specialized software will grow your business by speeding up candidate sourcing, onboarding employees, and more. If you’re starting a new staffing agency and need extra hands, automation is the key to sustainable growth.

In-Summary: Starting a Staffing Referral Program

Referrals are one of the best ways to grow your staffing agency into a hiring powerhouse. While designing a fair reward structure requires some upfront effort, you can automate the entire referral process with the right software. Done right, a strong employment agency referral initiative can become a powerful tool for building a thriving, engaged talent network.