Employee referral programmes have been used for decades and are a great way of filling vacancies. Although the programme can be quite effective, it is often under appreciated and there are many pros and cons that come along with it.
It’s easy enough to ask employees if they know someone that might be interested in the position, but it’s really important that you have some kind of structure and communicate it well. One way of doing this is by informing employees that the programme has a benefit and a reward on a successful placement. A monetary bonus is normally offered when the new starter has been retained for a certain period of time. This award however, should be sufficient enough to motivate the employee but not too large that they they refer unsuitable candidates.
Here are some of the pros and cons of an employee referral programme:
Pros
- Referred candidates tend to be of a higher quality. The referring employee will normally screen the referral closely. After all, their reputation is somewhat on the line with every person they refer for the vacant position.
- The programme can be significantly cheaper than using recruitment agencies, newspapers etc.
- The programme is especially effective when you are recruiting for a specialised role. People tend to associate with other people in their profession.
- The monetary bonus can be seen as a morale booster for the referring employee.
Cons
- If you rely on the programme too much, this could lead to a “stick together” workforce and could create cliques within the organisation leading to friction with other employees.
- Competitors may retaliate against your company by thinking your are stealing their happy employees.
- The programme might lead to under representation of certain protected groups which could come along with charges of discrimination from rejected candidates.
As you can see, the benefits do outweigh the pitfalls of the employee referral programme and in my opinion, a well designed programme should be an essential part of any organisations recruitment strategy.