Dear Pranati,
Let us understand why a referral program will help the organization.
1. It would help you get your numbers
2. Probably the tenure of people coming through referral programs be longer (I have no data to support this though)
3. The cost probably be a little less, since you don't have to invest time in screening the resume, call up to line up the interview etc, also the chances are that the person referring shall refer some one who has similar experience (I call these as friend followers), which may save you some time and hence cost as compared to a fresh recruit.
Normally, the compensation or referral bonus, as is popularly known, is the same for all the referrals for a particular position.
My view is that it can be different based on point 3 above. For example, if two persons are referred by an employee one is a fresher and the other one is experienced, the referral bonus may be a little less in case of fresher than in case of the experienced person.
Further, generally referral bonus is paid in one go after a few days, weeks or month of the joining of the person referred. I suggest that it should be deferred in parts and paid till the confirmation of the person referred.
You may pay 50% of the referral bonus at the time of joining of the person referred and rest when the referred person if confirmed. You may incentivise in kind (give gifts or movie tickets etc) if the person referred completes one year in the organization.
Movie tickets of dinner coupons for two i.e. the person who referred and the person who was referred would be an excellent idea by this they both will relish the relationship within the organistion.
Hope this makes sense.
Best wishes,
Sunil Joshi
PGCHRM - XLRI