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Published September 11, 2013, 10:18 AM

Minnesota companies use referral bonuses as recruiting tool

Companies located in the sparsely populated corner of northwest Minnesota are investing more in what they hope will be an effective recruiting tool: their own employees.

By: John Hageman, Associated Press

Companies located in the sparsely populated corner of northwest Minnesota are investing more in what they hope will be an effective recruiting tool: their own employees.

Among them is Digi-Key Corp., the Thief River Falls-based electronic components distributor. There, current employees who recruit a new hire can receive a $500 bonus, said company President Mark Larson. Digi-Key started that program in the last couple of months, he said.

“We’re just saying, ‘How do we effectively recruit in a labor market that’s pretty tight?’” Larson said. “We definitely have to be positioned for additional growth, so that’s what this allows us.”

Digi-Key, which employs about 2,600 in Thief River Falls, could use an additional 100 to perhaps 150, Larson said. But because of competition from nearby employers and a housing shortage, they and other companies have been hard-pressed to find new workers.

Others that have had the referral program for some time recently increased the bonus. Polaris Industries, the all-terrain vehicle and snowmobile manufacturer in Roseau, Minn., boosted theirs from $500 to $600, said Brian Gunnell, the plant’s human resources manager. Marvin Windows and Doors in Warroad, Minn., has had the bonus since 1999, said human resources director Brad Knudson, but raised it from $125 to $400 in the last couple of months.

Gunnell said the bonuses are paid out once a regular employee, rather than a seasonal one, has stayed on for 90 days after being referred there. Marvin Windows also requires both employees stay on for 90 days before the bonus is given, Knudson said. Digi-Key requires the new recruit to stay on for six months.

Gunnell said Polaris still advertises for positions through traditional media like the local newspaper.

“But the way we look at it is … employee referrals are our best source of applicants,” Gunnell said. “So when you look at where can you spend your money to get the most return — advertising campaigns and all those different things — we thought it makes sense to invest a little bit more in the area that is bringing us in the most applicants.”

Other incentives

Gunnell said he wasn’t sure if the recent increase in the referral bonus has helped bring in more applicants. Likewise, Larson said it’s too early to tell whether it has worked for Digi-Key, and acknowledged some people may apply there whether or not they were referred by a current employee.

But the bonuses are another way companies hope to recruit new employees in less than ideal conditions. Digi-Key, for example, expanded its busing service to bring employees from Grand Forks in August. And about a month ago, Marvin Windows introduced a $400 new hire bonus and a $500 relocation bonus for those who move from more than 50 miles away, Knudson said. Digi-Key uses a similar relocation bonus to lure new applicants.

Knudson said the referral bonus increase has already had an effect at Marvin Windows, where they could “easily use 75 to 100 more people right now.”

“We’ve already seen an uptick in the number of referrals coming in from this program,” Knudson said. “I would say it’s definitely one of the main ways for recruiting, to have our employees talking to relatives, friends, people even outside of the area maybe looking for employment … which is why we increased it from $125 to $400, to help incent them even more to kind of get the word out.”

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