---
name: referral-bonus-plan
description: "Designs employee referral bonus programs with incentive tiers, eligibility rules, payout timelines, and tracking systems. Use when building a referral-based hiring pipeline."
allowed-tools: Read Write Glob
metadata:
  author: matthewhitcham
  version: "1.0"
---

# Referral Bonus Plan

## When to Use This Skill

Use this skill when you need to:
- Create an employee referral bonus program from scratch
- Redesign an underperforming referral program
- Set referral incentive tiers for different role types
- Document referral program rules and payout processes

**DO NOT** use this skill for affiliate programs, customer referral programs, or general recruiting strategies. This is for internal employee referral hiring incentives only.

---

## Core Principle

A REFERRAL PROGRAM MUST BE SIMPLE ENOUGH TO EXPLAIN IN 30 SECONDS AND REWARDING ENOUGH THAT EMPLOYEES ACTIVELY PARTICIPATE — COMPLEXITY KILLS REFERRAL RATES.

---

## Phase 1: Brief

### Required Inputs

| Input | What to Ask | Default |
|-------|------------|---------|
| **Company size** | "How many employees could refer candidates?" | 5-30 |
| **Roles to fill** | "What types of roles are you hiring for?" | General — all open roles |
| **Budget per hire** | "What can you afford per successful referral?" | $500-$1,000 |
| **Current hiring cost** | "What do you typically spend to fill a role? (recruiter fees, job boards)" | $3,000-$5,000 per hire |
| **Payout preference** | "Cash, gift cards, extra PTO, or mix?" | Cash |
| **Past referral experience** | "Have you tried a referral program before? What happened?" | No prior program |

**GATE: Confirm brief before proceeding.**

---

## Phase 2: Design

### Program Structure

1. **Incentive tiers** — different bonus amounts by role difficulty
2. **Eligibility rules** — who can refer, who qualifies as a referral
3. **Payout schedule** — when bonuses are paid (split or lump sum)
4. **Submission process** — how employees submit referrals
5. **Tracking and communication** — how referrers stay informed of status

### Tier Framework

| Role Type | Suggested Bonus | Rationale |
|-----------|----------------|-----------|
| Entry-level | $250-$500 | Easy to fill, shorter ramp |
| Mid-level | $500-$1,500 | Moderate difficulty, specialized skills |
| Senior / Leadership | $1,500-$5,000 | Hard to fill, high recruiter cost savings |
| Critical / Urgent | 1.5x standard tier | Time-sensitive premium |

### Payout Schedule Options

- **Option A:** 100% paid after referral completes 90 days
- **Option B:** 50% at hire date, 50% after 90 days
- **Option C:** 100% at hire date (highest participation, higher risk)

**GATE: Present the program design and wait for approval.**

---

## Phase 3: Build

### Deliverables

**1. Program Policy Document**
- Complete rules, tiers, eligibility, and payout terms
- Edge cases addressed (self-referrals, recruiter-sourced duplicates, rehires)
- Tax implications note (referral bonuses are taxable income)

**2. Launch Announcement**
- Email or Slack message introducing the program
- Clear explanation of how it works in 3 steps
- Current open roles highlighted

**3. Referral Submission Form**
- Referrer name, candidate name, contact info, role applied for
- Relationship to candidate
- Why they are recommending this person

**4. Tracking Spreadsheet**
- Referral log with status (submitted, interviewing, hired, paid)
- Payout dates and amounts
- Quarterly program performance metrics

---

## Phase 4: Polish

### Program Health Metrics

Track these monthly:
- Referral submission rate (referrals per employee per quarter)
- Referral-to-hire conversion rate (target: 20-30%)
- Referral retention rate vs. other sources (at 6 and 12 months)
- Cost per referral hire vs. other channels
- Time to fill for referral hires vs. other sources

### Quarterly Review Template

Evaluate and adjust the program each quarter based on participation rates and hiring outcomes.

---

## Example 1: Small Startup (10 employees, 3 open roles)

**Structure:** Flat $750 bonus for any successful referral. Paid 100% after 90 days. Announced via team Slack with a shared Google Form.

## Example 2: Growing Company (40 employees, ongoing hiring)

**Structure:** Three tiers ($500 / $1,000 / $2,500). 50/50 split payout. Monthly "referral spotlight" in all-hands. Leaderboard with quarterly bonus for top referrer.

---

## Anti-Patterns

- **Complicated rules** — if the policy document is longer than 2 pages, simplify. Employees will not read it.
- **Slow payouts** — waiting 6 months to pay kills motivation. 90 days is the maximum acceptable wait.
- **No communication after submission** — referrers who never hear back stop referring. Update them at each stage.
- **Same bonus for all roles** — a $250 bonus for a VP hire insults the referrer. Tier by difficulty.
- **Forgetting taxes** — employees get surprised by tax withholding on bonuses. Mention it upfront.

---

## Recovery

- **No budget for cash bonuses:** Offer non-cash alternatives — extra PTO days, learning stipend top-up, team dinner, or public recognition.
- **Low participation:** Survey employees on why. Common blockers: unaware of open roles, process too complicated, bonus too low.
- **Too many low-quality referrals:** Add a brief "why are you recommending this person?" field to encourage thoughtful submissions.
- **Duplicate referral claims:** Establish a first-come-first-served rule with timestamp from the submission form. Document in policy.
