Employee Referral Programs, are they Beneficial ?

Employee Referral ProgramEmployee referral is an internal recruitment method employed by organizations to identify potential candidates from their existing employees’ social networks. An employee referral scheme encourages a company’s existing employees to select and recruit the suitable candidates from their social networks.

Before making a decision about investing in an employee referral program , let us take a look at the pros and cons of it

Benefits of employee referral program


  • Widens the range of potential candidates – Every employee in your organisation will be having a vast social network and getting candidates from their references opens up gates to a wide pool of talent which is authentic and reliable.
  • Reduction in time to fill the job – This is because you save time in posting a job and screening through a  large number of resumes. You just need to interview the candidate referred by your employee. A survey shows that a time taken by referred candidate to fill a job is about 25 days as compared to 36 days by a  regular candidate.
  • Reduction in Cost of Hire – Since you save on your expenditure in advertisements , staffing agency fees etc. the cost of hire goes down if you hire a referred candidate.
  • A referred candidate onboard faster – Since the job referral is made by your employee who is a true representative of your company’s working environment and the referred candidate has a bond of trust with him, it helps him to onboard faster than other traditional hires.
  • Reduction in turnover rate – A  referred candidate and the employee who referred him will tend to stay longer on the job as compared to a traditional hire , this automatically reduces your turnover rate.
  • Helps you to strengthen the bond with your current employees and also the referred candidates – Including your employees in the process of recruitment, the most crucial activity in any organisation, instills a sense of confidence and trust in your employees and they refer candidates among their network who will be  a right fit for the organisation. It also helps you to build a community of talented and authentic people in your organisation.

Drawbacks of employee referral program

  •  It can lead to favoritism, partiality and employee discrimination
  • A mismanaged reward policy system will lead to employee dissatisfaction.
  • Affects the workplace diversity.

But these loopholes can be minimised to negligible by proper planning and implementation of Employee Referral Program


Consider the following to make a successful employee referral program :


  1. Set a goal for the referral program -This should be a clear defined mission which you want to accomplish through this program and what skills you are looking for in your potential candidate. Make your employees have a clear understanding of it .


  1. Create a simple , user-friendly process for referrals- Make it simple for your employees to refer a candidate to recruiting team like just asking for name and contact number of the referred candidate to you and then the recruitment team takes over the process of recruitment. You can also invite them into making videos about the work environment in the company and how they feel to be a part of the company. This is simple yet exciting and rewards you with good talent.


  1. Keep your employees engaged – keep employees abreast of the open positions in the company. That can happen by sending out a weekly email with all open positions within your company or mentioning them during all-hands meetings. Encourage your team to comb through their Social media connections as a refresher and see if they know anyone who’s right for your company.


  1. Respond to the Referred candidates timely – Certain companies ask their employees for referrals but do not interact with referred candidates and don’t reply back to them in a timely manner. This attitude is not going to work in your favour and you also might loose your current employee.Give precedence to referrals and have specific and separate deadlines for interviewing these candidates.
    Allow these referred candidates to choose the time and date of their interview, and/or offer online assessments. These flexible options are enticing to candidates, as everyone is interested in saving time.


  1. Acknowledge the efforts of your employees in making referrals – This can be done by a personal Thank you note to your employees or rewarding them with a  referral bonus. Apart from monetary benefits,  you can also reward them with other benefits suitable for the person . This will encourage him to refer more candidates for your organisation.


  1. Assess your efforts in employee referrals – There should be a certain data to assess your efforts in such programs like
  • Percentage of hires coming through referrals
  • Percentage of qualified referrals
  • Percentage of your workforce involved in referrals

If despite all these efforts you are not getting your expected amount of referred candidates , it indicates your current employees are not satisfied with the work culture in your company and don’t want to refer it to their friends. So you need to first revise your company culture before setting up an Employee Referral Program

How Does An Applicant Tracking System help in Employee Referral ?

It will be too difficult to make your entire workforce cognisant with uploading their referred candidate details into ATS. The simplest way is to ask your employees the name and source of the referred candidate and you can directly extract his details from that source directly into ATS.


So the benefits of Employee Referral program outweighs its disadvantages and you should not miss on this opportunity to hire the right talent for your organisation.

Wish you Good Luck With Your Employee Referral Program !




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