Benefits of Employee Referral Programs

Whether you’re a hiring manager, currently work for a company or you’re on the job hunt employee referrals are worth exploring. Getting a referral by an existing employee could make transitioning into a new position much more simple and efficient. On the same token, if you refer another person to a job at your company it could benefit you financially as well as boost your reputation. The process often makes life easier for busy hiring managers.

Employee Referral Definition

An employee referral is a hiring suggestion by an existing employee of a firm. The referrer (the employee) identifies and suggests someone he knows to fill an open position at the business. The referred employee must then apply for the job, noting who referred him on his application, and interviews if he meets the employer’s desired qualifications.

Referral Programs

Some employers sponsor formal employee referral programs to attract talent to the business. An employee referral program encourages existing employees to actively seek friends, family, associates and colleagues who qualify for available positions. An effective program makes recruiting simpler for human resources. As human resources expert Dr. John Sullivan confirms, “Employee referral programs are the most powerful corporate recruiting tool, bar none.”

Benefits for Employees

To inspire employees to search through their Rolodexes for potential new hires, the referring employee is commonly offered some type of compensation. Compensation commonly comes in the form of monetary rewards, but sometimes the business simply recognises and thanks the employee for his contribution to the workforce. In some cases, if the employee’s referral turns out to be very beneficial for the company the firm may even reward him with a promotion of some kind.

Benefits for Employer

The cost of hiring due to referrals is less than the cost of recruiting in the traditional way. Companies must place advertisements, pay to attend job fairs and hire headhunters to find workers otherwise. If a company employs its own workers to find new hires the only cost is the referral fee (if applicable). Finding workers via employee referrals is also often more reliable since current workers have a familiarity with needs and standards of the business.

Ere.net; Employee Referral Program Killers; Dr. John Sullivan; May 5, 2008 ere.net/2008/05/05/employee-referral-program-killers