RECRUITMENT VIA

EMPLOYEE REFERRALS

By Sourabh , 10HM30

CONTENTS

1. Introduction2. What motivates referrals ?3. Advantages4. Disadvantages5. Why employees don’t refer6. Ten steps for a successful employee-referral

program7. Conclusion

INTRODUCTION

• An employee referral scheme encourages a company's existing employees to select and recruit the suitable candidates from their social networks.

• As a reward, the employer typically pays the referring employee a referral bonus .

INTRODUCTION

• The employee referral system is the preferred source of recruitment for many IT organisations.

• Thoughtfully implemented employee referral plans are excellent ways to attract the best people at the lowest cost.

INTRODUCTION

• Intel Corp. uses a combination of monetary and non-monetary incentives

• In addition to a cash reward for referrals, the company also offers a raffle for those employees who've made referrals. Ex : a $1,000 travel voucher or a home entertainment system.

• 50 percent of the company's new hires have come from referrals.

WHAT MOTIVATES REFERRALS ?

• Based on a survey conducted by Referral Networks , employees refer because:

1. 42 % of respondents wanted to help a friend find a good job

2. 24% of respondents wanted to help the company

3. 24% of respondents were motivated by a reward

ADVANTAGES

1.Improved candidate quality, ‘fit’, and retention

2.Reduction in Recruitment Expenditure

3.An opportunity to strengthen the bond with existing employees

1.IMPROVED CANDIDATE QUALITY, ‘FIT’, AND RETENTION

• The relationship between the referring employee and the candidate allows the candidate

1. to understand the culture of the firm2. to assess his/her own likelihood of success at that firm3. to be better prepared to face interviews and other

steps in selection

• Also there is a matching of expectations between employer and candidate , resulting in increasesd level of staff retention

2.REDUCTION IN RECRUITMENT EXPENDITURE

• Even if incentives and rewards need to be paid to the referring employees , there are cost savings for the firm

• Ex : Referral programs cost $500 for employees, versus $2,884 and S726 for print advertising, and even more for agencies and executive recruiting firms, according to the 2000 Employment Management Association's cost-per-hire survey

• The company’s Human Resources headcount can be streamlined and be used more efficiently

3.AN OPPORTUNITY TO STRENGTHEN THE BOND WITH EXISTING EMPLOYEES.

• Referral programs acknowledge and reinforce the company's commitment to rewarding the individual for helping the company.

• Additionally, an Ohio State University study shows that employees hired through referrals have a retention rate that's 25 percent higher than that of employees hired through other methods.

DISADVANTAGES

• An employees social network is limited - It may compromise the diversity of the workforce

• Actively referring candidates increases an employee’s workload and may be detrimental to their main responsibilities

• The best and most relevant candidates may not be acquainted with an existing employee of the company

WHY EMPLOYEES DON'T REFER

• The top three responses for not referring, according to the survey by Referral Networks:

1. 78 percent: Don't know anyone suitable for the positions

2. 42 percent: Afraid of the consequences of referring a bad candidate

3. 21 percent: Process is too much of a hassle

TEN STEPS FOR A SUCCESSFUL EMPLOYEE-REFERRAL PROGRAM

1.Strong commitment from the top management

2.Simple minimum rules

3.Let everyone participate including senior managers and HR staff

4.Involve and reward outsiders like employees' friends and former business associates

TEN STEPS FOR A SUCCESSFUL EMPLOYEE-REFERRAL PROGRAM

5. Give VIP status to referred resumes

6. Let employees track progress on the the hiring process

7. Make it easy to refer by having a well designed Intranet

TEN STEPS FOR A SUCCESSFUL EMPLOYEE-REFERRAL PROGRAM

8.Promote constantly and motivate staff with company-wide congratulatory e-mails from the CEO

9.Pay a decent bonus - neither too high nor too low

10. Pay it fast

CONCLUSION

• Employee referrals provide a win-win-win situation to all the parties involved – Employer , Employee and the Candidate

• More and more firms are resorting to employee referrals and are reaping the benefits .

THANK YOU