What Is Employee Referral Program & How Effective Is This?

Employee Referral Program is not a new concept and it is being used for several decades now for filling up about 30% of the job openings.

Your company might already have such a program in place, but it might be under-supported or under-appreciated.

It is true that this program is a wonderful recruitment tool for companies, but a company that relies wholly on this type of program, should also consider the risk associated with such a program.

How effective is the program is the question that many HR professionals have in their minds.

But, before getting into the details about its effectiveness, it is better to get a fundamental understanding of what the program is all about:

What is employee referral program?

It is the recruitment method, wherein the present employees working for an organization are motivated and rewarded for bringing in suitable talents to the organization from their friends or family network.

employee referral

Effectiveness of Employee Referral Program

The effectiveness of this program can be understood from the huge benefits it can bring towards the development of an organization and they are detailed below:

Produces productive employees

Reports state that employees getting into an organization through referral programs show better performance and productivity as against those employed through other recruitment methods.

In addition, employees getting into the organization through this program stay longer as compared to others.

In addition to providing productive employees, this program will also improve employee-retention rate in organizations.

Filters non-qualified applicants

It is also found that referral programs produce only lesser number of non-qualified applicants. Generally, most of the recruitment processes experience screening delay in the process of identifying the right talents for the organization.

When the HR department will have to issue an employment notification in newspapers or other sources, they will receive a number of applications and then they will have to shortlist the suitable candidates to call them for interview.

All these processes consume a lot of time and money and they can be avoided when the rightly functioning employee referral program is in place in the organization.

Brings down the burden of HR

Generally, the HR department in an organization is always under pressure to bring in the right talents for the organization.

But, the burden of this department is greatly reduced with the help of a suitable employee referral program.

So, this department will not have to spend a huge amount of labor for finding the right talents, they can just screen the applications received through employee referrals and can shorten the long recruitment process, which will have to be followed otherwise.

Brings down the cost to the HR

Generally, when the HR follows other recruitment processes, the department will have to spend on advertising the positions in different sources.

But, when they choose to recruit people through employee referral program, they can just post the information on the notice board of the organization or can send mail to all employees calling them to refer suitable candidates to the positions available.

When this method is followed for recruitment of candidates to technical and executive positions, it will dramatically bring down the employment agency fee.

Of course, it is true that referral bonuses will have to be paid to the present employees, but it will not cost much for the organization.

Increase management satisfaction with HR department

As the HR can arrive at the best candidates through referral program, the professionals working for the department can earn good name and better positions from the management.

So, by all means, employee referral program can be the best option to choose for organization as it is an effective recruitment tool that has achieved great popularity and recognition.

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