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Referral recruitment programs are successful due to social networking and lower costs, with higher quality candidates. However, downsides include personal issues and cliques, and poorly managed programs can waste time and encourage over-participation or declining performance.
Companies often offer payments to employees who recommend qualified candidates. This form of referral recruitment has been around for decades but has become much more successful with the advent of social networking. Today some organizations hire over half of their new employees from these types of programs. The success of this type of program, however, sometimes comes with unexpected results.
Costs of employee recruiting initiatives are generally much lower than traditional recruiting methods. While referrers are paid per rental, there is no money wasted on broader types of advertising. In short, there is a guaranteed rental for every payment made.
The quality of potential employees and the likelihood that people will fit well into the company are often much higher with hiring referrals. Essentially, these candidates have already passed a preselection. The contact usually knows the prospective employee and has shared first-hand information about the position with them. Because the referrer also has in-depth knowledge of the job, he’s in a good position to recommend candidates who are truly qualified.
Referral recruitment programs can be powerful tools in certain situations. Companies with high turnover rates or rapidly growing organizations can benefit from the influx of new leads. Additionally, organizations with low employee morale can often improve employee relations by hiring new workers with established relationships with the existing workforce.
This type of program is not without its downsides. Problems can occur when employees with outside relationships bring personal issues to the workplace. Likewise, cliques can develop rapidly among groups of these workers. This often makes other staff feel left out and lowers morale.
Poorly managed referral recruitment programs come with their own set of problems. Those programs that allow unlimited referrals, for example, can find themselves overwhelmed. Often, an employee will flood an HR office with stacks of resumes, seemingly from every person that employee knows. Since all, or even most, of these referrals are unlikely to be qualified for the position, this flood of applicants only serves to waste an HR manager’s time.
Programs with exceptionally high referral bonuses encourage this type of over-participation. Additionally, programs that pay premiums equivalent to half or more of an employee’s monthly salary can expect performance to decline as it becomes more lucrative for a worker to hire than to do their job. Conversely, low paying referral recruitment programs can be largely ignored.
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