Free HR calculator
Employee Referral Program ROI
Compare referral program costs with other recruiting expenses. See potential annual savings and the cost per referral hire.
About this calculator
Method note: Employee referral program ROI Note reviewed
What to expect Have your annual hiring target, expected referral share, bonus amount, and other recruiting costs ready. About two minutes.
Your hiring plan
Employer payroll taxes on the bonus
Net annual savings
Understanding your savings
Email your results
Send yourself a copy of your calculation and inputs.
Calculating referral savings
Comparing referral and recruiting costs
Employee referral programs pay bonuses when recommendations lead to hires. The calculator compares those bonuses with other recruiting costs to estimate annual program expenses, costs avoided, and net savings.
See the calculation
Calculating referral savings
Estimated referral hires equal annual hires multiplied by the expected referral share. Program cost includes referral bonuses and applicable employer payroll taxes. Recruiting costs avoided equal referral hires multiplied by your other-channel cost per hire. Subtract program cost from recruiting costs avoided to find net savings. Cost per referral hire includes the bonus and applicable employer payroll taxes. Compare that figure with your agency or sourcing cost per hire.
Comparing recruiting channels
Recruiting agencies commonly charge 15% to 25% of first-year salary. For a $60,000 position, that equals $9,000 to $15,000 per hire. A referral bonus for the same role may cost considerably less than an agency placement. Some research links employee referrals with stronger retention. This calculator focuses on the direct recruiting costs you enter.
Choosing a referral bonus
Consider hiring difficulty, recruiting costs, and employee experience when choosing bonus amounts. Some employers split the payment between hire and a retention milestone. Others pay smaller bonuses earlier for hourly positions. Referral bonuses, including gift cards, generally count as taxable compensation. Depending on the bonus terms, they may also affect overtime calculations.
Run your referral program
Track referrals and bonus payments
The Employee Referral Program Kit includes a policy and design worksheet, editable employee and manager messages, and a tracking dashboard. Use it to establish program terms, communicate with employees and managers, and track referrals and bonus payments.
$49
One-time purchase. Instant download.
30-day refund. Reply to your receipt or email support@truestephr.com.
Compare this estimate with your records to help plan your next step.