Updating the referral bonus

We all know that finding and retaining great people is a vital element for any experience-based store or company.  What might not be as obvious is how much harder it is to work and succeed in our stores.  It's a heck of a lot harder to engage than clerk, or to maximize a sales opportunity instead of transact it.

Who better to help us find the people who can do this than the people who are already doing it?  True, most retailers have some type of current employee referral program, but most of them are ineffective.  How do you make them more effective?  Here are some things to consider.

1. Substantially increase the amount of your referral bonus.  Make the payout such a WOW amount that most of your employees are always recruiting.  Forget $100 or $250 payouts...go BIG!

Here's an idea. What if you paid a $1,000, $1,500, or higher referral bonus for every new sales associate?  Before you hit send on the email telling me I'm crazy, think about the cost of an open position or high turnover.  And how much more can a really good employee sell versus an average one?  This program will easily pay for itself.

2. Change the way you pay out.  Most companies only pay a bonus after the new employee makes it past their probationary period.  I think employees need more instant gratification.

With a $1,000 bonus, I would pay the employee who made the referral $250 on the referred employee's first day.  I would pay another $250 if the new hire is still there after 90 days.

Here's the big change I would make.  If the referred employee is still with the company after one year, the referring employee gets a $500 bonus!  That is motivation to not only find good people, but to help them be successful in their job.

3. Keep championing your program.  It's vital that your referral program remains front and center to your team.  It takes more than a poster or annual announcement to keep the program viable.  The key is to publicize every payout.  Make it a big deal...because it is.  

Here's a twist on finding and creating a great team. 

4. Pay managers to develop new managers. This is a concept Chipotle uses. They pay a developmental bonus of $10,000 for managers who bring an employee up through the ranks into management. The manager gets $5,000 when the person gets promoted, and another $5,000 after the employee has been in the position for six months.

Check out the result. This focus on developing staff and promoting from within has had a significant impact on Chipotle's turnover at the management level.  For salaried managers, turnover dropped from 52% to 35%, and entry-level hourly managers went from 111% to 47%!  Sounds like that bonus is also paying for itself.

So let me ask, are you leveraging your staff to help you find and retain great people?