Feature

Employee referrals—the winning formula

Employee referral programs are emerging as cost-effective and safe mediums of recruitment— becoming a win-win situation for both the employees and the organization. By Renuka Vembu

With employee empowerment and engagement gaining momentum, coupled with companies on the cost-cutting track in the midst of hunting for talent, employee referral programs are increasingly been seen as the means for hiring the right fit. The need to find new candidates through the existing workforce has its share of benefits and flipside too. Almost all companies have a chartered employee referral scheme, with employees drawing the rewards in cash and kind, and companies cashing in on this relatively cheaper means of recruitment process.

The core

Each organization has its own policy in terms of recruitment and rewards. But the core here is not only drafting a strategy, creating awareness, communicating well, transparent dealing and spearheading the campaign along with HR and the workforce alike; it is about creating an ambience, an ethos and a work culture which employees can connect with and feel emotionally attached to and passionate about. Since the campaign is about an employee endorsing the company, it has to touch the right chord among them to take-off and become a success formula.

Rajkumar D, Head, Human Resources, RIMS, Microland Limited, explained about ‘Aim:Hire’, “‘We tell our people, ‘Turn Microland into a company of people like YOU! Refer them for jobs in Microland.’ If the friend who has been referred is selected, the employee who referred gets cash rewards. And that’s not all—his/her name goes into a lucky draw and one stands to win one of several super prizes, from exotic holidays to iPods and shopping vouchers. Not only this, as the number of referral increases, the prize coupon number goes in multiples, thus the more the number of referrals, greater the chances to win prizes.”

In Synygy, the employee referral program is called ENTICE—an acronym for Employees Networking To Increase Candidates for Employment. Chetan Shah, MD, Synygy India, said that it was a dual referral program where employees get monetary benefits along with referral points, which can be redeemed in return for their branded gifts.

Essential requisites

Transparency in handling the scheme, proper planning and execution of the same and timely disbursement of the benefits that needs to be accorded with, companies and the authorized people have to be deft and handle it prudently. Arun Rao, Vice President, HR, AppLabs, felt that it is the responsiveness and transparency from the HR organization more than the fiscal incentive which would drive successful employee referral programs, and that the core objective of the company should be not to pass cash rewards to employees but to use them as ‘screening agents.’

Communication, as in all cases, here too plays the key. Likewise is management agreement and endorsement. But some other areas that need to be carefully treaded are:

There has to be a timeline for the process from start to finish. Employees who have referred their friends should be kept abreast and up-to-date with the status on the referrals. This will keep them connected and motivated rather than they feeling clueless and secluded.

Companies need to give employees timely rewards without any delay, and do so proactively, not giving them any scope to be disappointed or complain or track for follow-ups.

The entire process should also be simple; it should be at the click of a mouse and readily accessible rather than employees having to go through tedious steps.

Naresh Vassudhev, Senior Director, HR, e4e Business Solutions, summarized, “It should be marketed well. While minimum bonus could be defined in the policy, the amounts should be dynamic and attractive. The scheme should be simple and easy for implementation, monitoring and payouts. They should be time-bound and should usher in a festive mood along with a competitive spirit.”

Vikram V Kallianpur, Director, Human Resource, Virtusa (India), highlighted, “An aspect that is often missed is ensuring recognition for the employee. Appreciation certificates, recognition mailers and monetary compensation form the key components of this initiative. This ensures employee interest, brings in a sense of ownership and effectively highlights the accomplishments of employees towards the program.”

Success and side-effects

At Synygy, 65% of the candidates are recruited through the referral program. Reduction in the cost of advertising and recruiting, finding employees who already have an idea about the company, its people, its culture and working so that assimilation becomes easier, having a sense of belonging because they know someone in the company and have enough information about it, are some of the benefits that can be leveraged from employee referrals. A known group of people in the company means a harmonious work environment and a comfort factor for both—the new joinees and the existing employees, and also a relative security cover for the organization.

At NCR, the short-listing process is the same for all candidates regardless of the source of resume. Sapna Sukhrani, Deputy General Manager, HR, NCR Corporation India, opined, “The advantages of the program are quicker and better assimilation and integration of new recruits into the system. Employees recruited via the referral program stay longer with the organization. However, any recruitment model has to have a blend of many sources to attract talent.”

At Virtusa, they do agree that 20%-25% of the referrals do not match the criteria required; this is because employees in an attempt to bring in their friends or acquaintances often overlook the actual requirement. People inhabiting in closed teams can give rise to groupism, and lead to lack of bonding with others. Bringing in people with similar traits can give rise to homogeneity and not unleash a wave of fresh air with new creative ideas. Also, employees should not look at this as a mere cost-making venture; they should rather understand the requirements and resources, focus on bringing in the best of talent to the company with a view to be associated with efficient colleagues.

Rao viewed aptly, “If properly implemented in letter and spirit, the kind of people walking in through the referral scheme should be good cultural fits and the concerned employee would have positioned the organization well. So conversion ratio should be higher, which means greater efficiency of the entire recruitment cycle. On the other hand, the flip side of a referral program is that the loyalties and bonding often remain mutual; the identification is often with the buddy and not the organization. So when faced with the scenario of attrition, there is a possibility of losing not one employee but more than one (based on his circle of influence).”

On similar lines, giving a more detailed view and deeper perspective, Gayatri Ksheerasagar, HR Manager, Carwale.com, said, “Some problems of employee referral are subtle, while others, like lawsuits, can literally slap a business in the face. Over-reliance on an employee referral program can lead to under-representation of certain protected groups in a company’s job-applicant pool. This can add credence to charges of employment discrimination from rejected candidates. Also, some competing businesses may retaliate against your company for stealing their happily employed workers”. Excessive reliance on it can lead to an inbred organization that can foster a ‘stick-together’ attitude that masks underlying problems in organizational behavior and create cliques within the company, leading to resentment and friction with other employees.

renuka.vembu@expressindia.com