Buried somewhere deep in many employee handbooks is the chance to earn cash, even prizes. The problem is, who reads it? For referral programs to really work they must stay fresh and visible in the minds of employees at all times.

Primedica Corp., a Horsham, Pa.-based pharmaceutical research company, a division of Charles River Laboratories, has witnessed the power of revamping referral efforts. Before the revamp, about 20 resumes annually were received via employee referrals.

In the first 11 months of Primedica's "Sea Green" referral campaign that started last year, 220 resumes surfaced. In the same time frame, 60 percent of hires at one research site came from employee referrals, says Carol Kline, director of human resources.

With the help of Philadelphia-based Alstin Advertising Inc., Kline created the "Sea Green Employee Referral Program," which incorporates a scratch-off, lizard-green-lottery-style card that employees receive when they hand in a "resume or application for a candidate qualified for a posted job opening," Kline says. "The card enables them to win something for their efforts immediately."

Prizes include a free vacation day, travel mug, "See Green" T-shirt or a video store gift card. Primedica awards $500 to each employee who refers a successful hire once the new hire has been employed for 90 days.

Johnson & Johnson had an employee referral program for years, but last year the employer re-energized efforts by rolling out "Efferal." The "E" stands for electronic and employee referral, says Ellen Gilbert, director of recruitment marketing at Johnson & Johnson in Raritan, N.J. "We wanted to promote the use of the Internet because a company goal is to better leverage our intranet and the Internet."

Along with publicizing ER "success stories" on Johnson & Johnson's intranet and using banner ads and posters, the company designed Tylenol medicine boxes with the Efferal theme that were given away on kick-off day.

The company didn't change the cash awards. "What has changed is the interpersonal communication and promoting the satisfaction an employee receives from connecting a friend with a great opportunity," says Gilbert.

Referral awards are paid two weeks after the new employee's start date. "We don't build time into the system. We've found that there's a real drop-off in interest if we wait 90 days," Gilbert says. "Employees get a real sense of gratification when the payout is immediate."

A unique feature of Johnson & Johnson's program is that practically all employees, regardless of their position level within the company, are eligible for the cash awards. "This includes vice presidents and higher," Gilbert says. "We also include HR people, as long as they are not directly involved in any part of the recruitment process for the specific job."

Keeping referral programs alive and fresh are the biggest challenges employers face. Informing participating employees of the status of their referrals and keeping the benefits of the program highly visible are key components to success. Here are some other pointers gleaned from the practitioners interviewed:

• Announce successful hires. In many companies, all employees, with the exception of the recruiting staff and often times, senior personnel, are eligible to participate in the referral program. But when higher-level employees do refer individuals, company-wide e-mails are sent out to announce and recognize their contributions. Their efforts also can be acknowledged at special meetings or luncheons.
• Use paycheck stuffers and the company newsletter or intranet to publicize the program. Announce special events, such as giveaways or quarterly drawings, as well as the status of the overall program and the status of individuals referred. This should be done on a weekly basis via e-mail, the company intranet or written reports.
• Make the rules simple. Complex submission rules will dissuade employees from participating. Try to create guidelines that are easily understood. However, make sure you address problematic areas, such as how to deal with a situation in which two people claim to have referred the same candidate who ultimately was hired.
• Maintain clear records. By time-dating each resume that has the properly filled out referral card, for example, you can avoid potential problems. Keep data that list the referral, the date, the name of the candidate, all pertinent candidate data, a copy of the resume/application, and a copy of the referral form. Also, when the status of the referral changes, update it accordingly.
• Jazz up job postings. Write job postings like an ad agency would. Make them enticing and dynamic, and give the neat details of working for the company. And make sure employees have easy access to openings and the job descriptions.
• Kick off the ER program each year. This event is particularly effective if you have a new theme, or a revised look that fits the company culture. Primedica's top management wore "Sea Green" sunglasses the day of the ER kickoff. Another idea: Host ice cream socials and provide details about the program at the event.
• Use frequent giveaways to boost communication. Some employers use the staggered approach for the cash payouts in this way. Others give out T-shirts, water bottles, CD holders or other small items, in addition to the regular cash awards. Even e-mails can help build awareness. For example, at the bottom of e-mail correspondence, Johnson & Johnson's Ellen Gilbert, director of recruitment marketing, provides this message: "eferral-Who have you referred?"
• Offer bounty bonuses. Primedica announces "Sea Green Specials" for hard-to-fill positions or jobs it wants to fill quickly. An e-mail is sent out explaining the "special" and the fact that the cash award is double-$1,000 instead of the usual $500 referral bonus.
• Consider using an ad agency to develop high-quality materials. Smaller advertising boutiques often offer reasonable rates and work at stretching the dollars. For example, some firms suggest using low- or no-fee Internet-available photos instead of paying royalty fees for stock photos. Some agencies have stretched dollars by printing posters digitally, then laminating them to avoid the expense of the four-color print process. And typically, the digitally produced posters can be turned around in two days.
• Build momentum. Offering prize drawings on a quarterly basis is a popular tool. Another way is to use the new-hire orientation program to build momentum. Many employers use this opportunity to communicate more thoroughly about employees' recruiting efforts. Often, follow-up collateral is sent to new employees via the paycheck envelope or through a separate "reminder" mailing to their home.

Building A Budget

Given the current conditions of the economy, is it really beneficial to spend time and energy on an employee referral program? Yes, according to Primedica's Kline: "The program would be effective no matter what the economy is like."

So how do you build a case to improve an existing referral program or start a new one? By first asking the following questions. The answers will help you build a budget or reallocate money in the existing budget for the ER program:

• How much money is spent now for recruiting overall?
• Could you reduce some cost areas and improve the quality of hires?
• Are you using outside agencies instead of your own "inside agency"?
• How many hires would you like to get from the ER program?
• What cost-per-hire numbers would you like to hit in your overall recruiting program?
• What types of metrics will be used to measure the impact of employee referrals?

Of course senior management support is crucial. One of the best ways to keep the program's success alive is by generating a weekly or monthly e-mail report, which features information on resume flow, interviews conducted and individuals hired. And of the individuals hired, make a notation of which ones came via referrals. That small note can make a big impact when the hires start rolling in based on employees' recommendations.

Michelle Martinez is a writer and editor specializing in recruiting, career development, human resources, and workplace management issues.