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benefits of employee referral programme - HR Help Board
Ranjan Arora
on 25 Oct, 2018

Benefits of Employee Referral Programme

Employee referral programme is one of the most effective and trusted means of the recruitment process. Employees hired through employee referral have better absorption rate which means that those who apply for any given position through employee referral have the higher probability that they are capable to make it finally to the organisation. The advantage of trusting this source of acquisition process lays with the fact that the candidate have a better retention rate, the cost of hiring reduces considerably. One of the added advantages is that such candidate adjusts with the organisation culture more easily as they are more or less known with company's environment through the employee who has referred them. It is a kind of win-win situation for both the company and the referee employee.

The  policy for employee referral program is explained below with details on the process and procedure to be followed for referring an employee.

Firstly, let's us understand how can employees be motivated to refer to their network:

  1. Provide proper training to the employees with respect to employee referral policy. Educate them. Explain to them why referring an employee is beneficial to both employer and employee.
  2. Keep employees updated about the vacant positions through proper announcement via email, posting job vacancies on the company's intranet, the discussion in meetings etc.
  3. Process simplification: Keep the employee referral program simple. It means that make the employees understand in simple ways what the company is looking for in a referred candidate.
  4. The job description should be made with commonly used words and not using tough technical jargons. This,in turn, will help employees to understand what exactly the demand of position is and accordingly they will source CV from their network.
  5. Communicate with referring employee:  Once the employee has referred a candidate the job is not over. It is an HR responsibility to involve the employee in all communication relevant to them. Tell them the timeline when can they expect a revert back.
  6. Send them Thank you email appreciating their effort of referring a candidate.
  7. Incentivize the referral programme by making  Employee referral bonus program lucrative one in the referral policy. Segregate bonus amount with the level and grade of employees. Referral bonus is given once a candidate has been hired finally. Link perks and other rewards with employee referral like an appreciation email from the head of the department.
  8. Conducive culture Try best from employer side to have the holistic culture in the organisation. When existing employee feel good in the company they refer to their network to have others experience the same.

Why employee referral is preferred in the organisation ?

               The employee referral advantages makes employee referral one of the important tool for recruitment.  Now let's see how it helps.

  1. Appreciable employer brand: with the implementation of employee referral policy, it encourages employees to think the greater part of the organisation they are working for. What is better in their employer than others makes them feel positive about their brand and thus they like to talk about it in their network thus making the way for employee referral.
  2. Quality Hiring: Better candidates are hired through employee referral. This has been observed severally by different surveys conducted in India or abroad. The reason behind it can be that employees notice skills and quality possessed by a person in their network and they refer them only after analysing what skills the organisation is looking for. Only if there is a proper match of demanding and supplying skills a referral is done. This has been studied and researched in various  employee referral examples.
  3. Fostering positive culture: The employees who are currently working with an organisation understand its culture well. They are aware of mission, vision, and cultural values of the company so while making a referral from their network they look for similar qualities, thus promote positivity in the organisation culture.
  4. Better employee engagement: Motivation among employee is increased with the incentive, bonus and other perks as given under employee referral policy thus it increases the motivation level in employees and improves upon the engagement.
  5. Reduced time to hire: Employee referral technique reduces time to hire. According to a data, hiring is general from a career site or through a recruiter takes around 55 days whereas with employee referral it is reduced to 29 days.
  6. Reduction in cost of hiring: Employee referral helps you to save money spent money on job advertisement, consultant, commission or agency fees.
  7. Lower turnover rate: Research shows that employees hired through "internal referral" reduce the turnover rate.
  8. Higher diversity: Well thought of and better-designed referral program has no negative effect on diversity. If clarity is given to employees that the company focus lies on diversity, it will help in the increase of diversity.

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