Free HR calculator
Employee Referral Program ROI
See what an employee referral program is worth. Enter your hiring plan and bonus. This shows your referral cost, the agency and sourcing spend you avoid, your net savings, and the cost per referral hire.
Before you start
What you will need. Hires per year, Share filled by referrals, Referral bonus per hire, Cost per hire through other channels
Your hiring plan
Add a payroll cost for the bonus
Net annual savings
How the savings add up
The method
What an employee referral program is worth
A referral program pays your own employees a bonus when they refer someone you hire. The reason it pays off is simple math. The cost of a referral hire is mostly the bonus. The same role filled through an agency or heavy sourcing costs far more. This tool puts numbers on that gap. It takes your hiring plan, the share you expect from referrals, your bonus, and what a hire costs you through other channels. It then shows the program cost, the spend you avoid, and the net savings.
How this is calculated
How the calculation works
Referral hires are your total hires times the share you expect from referrals. The program cost is those hires times the bonus, plus any employer payroll tax you add. The cost avoided is those same hires times what each would have cost through your other channels. Net savings is the cost avoided minus the program cost. The cost per referral hire is the bonus, the figure to compare against your agency or sourcing cost per hire.
Why referrals usually cost less
Agencies typically charge 15% to 25% of first-year salary, which on a 60,000 dollar role is 9,000 to 15,000 dollars per hire. A referral bonus for the same role is often a few thousand at most, and for hourly work a few hundred. Referrals also tend to fill faster and stay longer, which lowers the cost of vacancy and turnover on top of the sourcing saving. This tool counts only the direct sourcing saving, so the number stays conservative.
Setting the bonus so it works
The most common mistake is setting the bonus too high and paying it too late. A bonus paid only after 90 days can land after the referring employee has already left. The link between the referral and the reward is then lost. Many employers split the payment, part at hire and the rest after a retention milestone, and use a smaller, faster bonus for high-turnover hourly roles. Match the amount to the role: low for easy-to-fill, higher for hard-to-fill.
Carry this into the decision
Build the program around the math
The Referral Program Kit adds the policy, bonus and dispute rules, a tracking workbook, ready-to-send manager and employee messages, and a 30-day campaign you can launch in an afternoon.
$49. 30 days. Reply to your receipt or email support@truestephr.com for a full refund. No form or explanation is required, and you keep the files.
Related
More free tools and the notes behind them
Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
This tool estimates from the figures you enter. It is general information rather than legal, tax, or accounting advice, so check the result against your own records before you rely on it.