Seven Pitfalls to Avoid When Using Employee Referral Programs

Seven Pitfalls to Avoid When Using Employee Referral Programs

There are of course many different ways of going about hiring a new employee. These can include speaking to agencies, direct advertising, and even word of mouth.

One such word-of-mouth route is to set up some kind of referral program. Generally this is considered one of the best, surest, and safest ways to hire. The person who is referred is often in a pretty strong position, because someone they know has vouched for them.

The best benefit from the employer perspective of course is that you tend to get the highest quality candidates this way. That’s because the current employee is motivated to put forward strong candidates and they are also naturally “pre-screened” for cultural fit to an extent because of their relationship with an existing employee.

Although this can be an effective way of hiring there are still some pitfalls that should really be considered.

1. General Responsiveness to the Program

Even the best thought out employee referral programs will inevitably come crashing down if they are not very well received. Some of the reasons that this might occur could be:

  • If the referred person doesn’t hear something within a day or so of the referral being made.
  • If the employee making the referral doesn’t hear a similar response. They will begin to wonder about the legitimacy of the program and may stop referring people.

To help prevent these potential situations from cropping up, a good way is to highlight the referral resumes. A system should be developed that can notify the applicants immediately with a goal of screening them within five days. Responding to both the referrer and the applicant in this way will often help this program from faltering, especially in its early days.

2. Low Quality Referrals

This is something that could affect the vast majority of referral programs. Though employee referral programs are still often the best way to find quality applicants, they can still suffer from low quality referrals. It can also be one of the most difficult elements to protect against, with no easy solutions. Very often when the referral program carries a financial reward to the referrer, they will provide details of a larger volume of people. Some of these people will be under-qualified for the position that the company is looking to fill. Having to spend time wading through these applicants and setting up interviews is likely to result in lost productivity for the company concerned.

Therefore, the moral here is that the part that the referral system should play is to facilitate the finding of potential employees and not in the final decision-making process. Moreover, ensure of course that your system is set up to pay only when a candidate is hired, and not just for the act of referring one.

3. Don’t Make It Too Complicated

Another area that often causes a referral program to fall down is if it is seen as overly complicated. The best ones are very simple in the way that they work. Of course there are likely to be some rules or regulations that govern how the scheme will operate; however, these should be made as easy as possible for people to understand.

4. Employee Productivity and Retention

Very often the employee that is hired will demonstrate a high degree of productivity, not least of which because their friend or family member referred them to the company. They will not want to do anything that can show the referrer in a bad light. From a company point of view, this loyalty of the referrer is great; up until the point that the person who referred them leaves the company. Therefore, be careful that the fact that the “referree” works there isn’t the only reason the candidate is coming to work with you.

5. Don’t Exclude People

Ensure that your referral program doesn’t exclude certain departments or individuals. This will act as a surefire way of upsetting people and causing resentment to the program. They should be open for everyone to take part in — this will encourage a greater cross section of potential employees.

6. Pay the Right Amount

Assuming that you are going to offer a financial incentive for the employment, it is vital that a reasonable figure be offered. In most cases it is sensible to link the rewards to the position itself, but if the payments aren’t in line with employee expectations then the program will struggle to work.

The referral “fee” shouldn’t be too high either, as this could potentially detract from an employee’s productivity. It can be very easy for them to not have the correct balance between the referral program and their normal job role, if for example a referral fee works out to much more pay than their regular duties!

While we’re on the subject of payment to the employee, it is important that these payments are never ever delayed. The most effective referral programs will be the ones that pay their staff immediately upon hiring, not the ones that wait until after a set probationary period elapses. The latter of these are often seen by employees as their company trying to avoid making payments, especially in the case of an employee leaving before the probationary period is finished. Is it the fault of the referrer that this happens? Or should the “blame” lay closer to the manager of the new recruit?

7. Provide Feedback to the Referrer

This is especially important when it comes to dealing with weak or poor referrals. Without feedback, the employee will have no way of knowing that they have made a particularly weak referral. How on earth can they be expected to improve future results if they’re not provided with this valuable information?

The Wrap up — Pitfalls to Avoid When Using a Referral Program

An employee referral program can be a great way of getting new employees on board. But it is not without its drawbacks and potential pitfalls. One important thing to bear in mind is that like anything, there will be some costs involved. These are not just measured financially; the program will also eat into one of the most valuable resources of all. This is of course time.

Even when you have managed to get a shortlist of potential candidates together, you are not home and dry just yet. It is important to make sure that you have the skills that are required to eliminate the lesser individuals. This is perhaps where we come in, being able to provide our expertise in the profiling of potential candidates. The use of our personalized interview techniques and patented scoring system will take the fuss out of making the right decision, in turn helping you to focus on some of the more important aspects of running your business.

Original content

Article Posted: April 16, 2013
Author: admin
Found In: Recruitment