The pros and cons of instituting an employee referral program
Employee referral is an existing form of recruitment that many recruiters have used over the years. It is a strategy that continues to survive due to its advantages. The process of recruitment can be very long and daunting, and at the end of it all, you might not be sure that you have recruited the right person.
This is why some employers continue to turn to their existing employees for referrals. This is a simpler process and turns the whole team into one big recruitment team. It also helps when, as a recruitment manager, you need individual departments to take charge of their recruitment processes, since they know their particular departmental needs better.
Some companies have introduced reward schemes for those employees who refer successful candidates. This encourages them to bring you the best candidates and keep the exercise alive.
Why employee referral works
It is faster and less time-consuming
The process of recruitment can drag on for weeks or even months with lengthy processes meant to screen candidates and finally hire the best candidate. This means that open positions take much longer to fill and this means more work for the existing employees.
On the other hand, long recruitment processes that drag on for weeks can discourage candidates and inadvertently weeds out good candidates. Apart from taking up much of the candidates’ time, it also takes up so much of your time, as a recruiter.
When you have a referral program, you will have fewer CVs to read and you are likely to shorten the recruitment process as all you have to do is interview the referred candidate.
If you have to follow the long process, you will have to draft an advertisement, post it, review CVs and shortlist candidates before finally carrying out interviews. This is a long and tedious process that no recruiter really enjoys.
It helps to improve your brand’s visibility
When your employees are proud to refer their friends to your company, it shows that they are proud to be working for your company and are willing to have other qualified people working for you.
This creates a positive image for your brand as it shows that your employees have confidence in the company. It also demonstrates to potential recruits that the company is a good employer, something that is important when trying to create a positive brand image
You get good quality hires
When you are referring someone for a job, you do not want to wreck your reputation. When employees refer a person to a recruiter, especially one who happens to be their own manager, they tend to do a thorough pre-screening to ensure that their skills, experience, and qualifications fit well within the profile of the potential candidate.
On the other hand, the person who has been referred does not want to let the other party down. As such, the candidate tends to be very hard working and delivers very well so as to guard the other party’s reputation as well as their own.
This ensures that you get the best candidates referred to you and you end up recruiting some of the best talents in the market. It also eliminates the long process of recruitment so as to get the best candidate.
Employee referral programs boost staff morale
As a bonus, employees tend to be well motivated. The fact that they find the company good enough to be able to refer a candidate to you means that they trust the company, its values, goals and enjoy its culture enough to have the confidence to refer a good candidate.
The employees understand the company is a good place to work and that is why they do not mind referring another person.
Such employees also tend to feel good about the company and do not leave as often as other candidates. Employee retention continues to be a problem for most employers and finding a good strategy that makes employees stay, such as an effective employee referral program, is a welcome idea.
Referred employees tend to stay longer than other employees
When you successfully recruit a candidate via an employee referral system, the employee tends to stay longer. This is a huge advantage as the process of recruitment is tedious and you want recruited employees to stay on board for as long as possible.
This is because such a person probably knows about the company’s culture from the person who referred them and they know what they are signing up for. This is as opposed to a completely new person, who has to learn about the company from the inside and probably dislike the culture, prompting them to leave at the earliest opportunity. A referred employee is someone who is already willing to work in your company and thus, tends to stay longer.
It cuts costs
If you have to go through the process of placing an advertisement and probably having an agency do the recruitment process for you, it will cost you a lot of money. This is a costly process and even if you do your own internal recruitment, you have to spend in order to successfully undertake the entire recruitment process.
This is a process that can be cut down by undertaking an employee referral process which ensures that you get a list of potential candidates to interview within a short period. Even if you have a reward system, it still tends to cost less to recruit via employee referral.
The process of inducting a person recruited via employee referral is faster
When a person is successfully referred to your company, it means that they already have an understanding of the company’s culture. This makes it easier for the person to settle down within a short period of time.
Additionally, the person has someone to turn to for assistance, which means that the person gets to learn the company’s processes fast and settle down to work within a short period.
You can get good talent without going through the process of head hunting
To get good talent, most recruiters tend to use head-hunting as the people they target are tried and tested. This process can be long and very tiresome and it tends to consume a lot of time.
One advantage of hiring through employee referral is that the person who is being referred is tried and tested but may not necessarily be looking for a job although they might be open to the idea of moving. This gives you access to a good candidate, who is already pre-screened and at a much lower cost in terms of time and money.
The disadvantages of recruiting via employee referral
While employee referral is a good hiring strategy that can lead to good quality hires and savings in terms of time and money. It has its own disadvantages.
It can lead to nepotism
Nepotism and more specifically, tribalism, is an issue that has plagued our society for a long time. This is something that every organization is trying to eliminate through transparent processes.
However, as much as hiring through employee referral is effective, it can lead to nepotism as people tend to refer people known to them whom they share something in common such a tribe.
It can lead to alienation
When you hire someone who has been referred to you, the person tends to associate with the person who referred them. This can cause the person to stay away from other colleagues, limiting their ability to interact and this can eventually cause them to be alienated.
This is negative as you are trying to build strong teams and such ties are formed both formally and informally.
You are still exposed to poor quality hires
One big advantage of hiring through employee referrals is that you get the best since people want to refer people who will also make them proud.
But the reverse is also true. In some cases, an employee might just refer a person who wants a job or one who is looking to change jobs, without really caring about their ability to do the job. This can cause you to lockout potentially good candidates for one who will not be so good after all.
Employee referral can result in a lack of diversity
The truth is, people tend to refer those they know closely and those they have something in common with. This can limit the very core of great teams, which is diversity. It can also lead to a lack of creativity as too much similarity often causes people to think and behave the same.
Hiring through employee referrals is one of the oldest forms of recruitment. Though it has its disadvantages and can lead to such bad practices as tribalism, it is still a great way of recruiting. To ensure that it works out well, you should also introduce incentives such as monetary rewards when the referred employee is successful and performs well for a given amount of time. This way, you cut the cost and time of recruiting, get good quality hires and you get candidates who have been pre-screened effectively.