Seeking Advice: How Do I Start an Employee Referral Program for My Project?

A big hi to the HR fraternity,

Can somebody please tell me how to implement an employee referral scheme in an organization? My summer project is about that. Any inputs or suggestions are more than welcome. Also, if possible, please let me know what are the various internal and external sources of recruitment. It'll be of great help.

Thanks,
Ishita

Hi Ishita,

One of the best ways to get people into organizations has been through referrals, traditional yet effective. What you do is tap into a vast network of passive/active candidates through your existing employees who spread the word out to their friends and ex-coworkers. The foundation of the referral scheme is "trust" because we trust our friends/colleagues, we are more keen to listen and try the opportunity they present us.

There is surely a carrot as well; each successful referral is rewarded with either a cash bonus or in-kind (gift certificates) to the referrer.

Referral schemes (RS) should have clarity on the objective and possible conflict situations (like in cases you see the same resumes from two/three different sources). Mostly, the referral bonuses are paid out in parts (e.g., 30% at the time of the candidate joining and 70% in six months/9 months, etc.). This, in a way, also ensures that the referrer will make sure the referee continues employment, although there are no guarantees.

RS is an internal source of recruitment; other internal sources also exist within the company, and internal ads can tap into that pool.

External sources are online job boards, staffing firms, newspaper ads, etc.

Thank you very much, Mr. Borah, for your reply. The company where I am tasked with implementing the employee referral program is very cost-conscious. They are looking for an innovative solution that emphasizes non-monetary benefits and minimizes costs. I am struggling to come up with such a scheme and would appreciate any suggestions.

Currently, the employee referral process is quite informal, with individuals simply referring their acquaintances for job openings. However, this method remains largely untapped as a potential source.

I am considering designing a matrix to outline various levels, skills, and incentives. Do you have any guidelines on how to approach this aspect?

Thank you,
Ishita

The company where I am to implement the employee referral program is very cost-conscious. They want me to come up with an innovative solution where non-monetary benefits should be emphasized, and costs should be kept to a minimum.

What kinds of non-monetary benefits do they have on board? What would be the minimum cost? Referral schemes can bring in candidates at one-third of the cost of a staffing company (that's a major saving). Regarding rewards in kind, you can be creative with ideas such as covering the cost of airfare for an outstation employee referring a successful candidate or sponsoring a family dinner, etc. If the company does not wish to spend anything, I am not sure how much you can stretch your imagination; I suppose the time to think also costs. :-))

Should I also design a matrix for the various levels and assign skills and incentives? Any guidelines on that one?

Yes, the rewards should reflect the job levels. For example:
- For Programmers: Rs. 8000
- Programmer/Analyst: Rs. 15000
You can determine a figure that aligns with affordability and the willingness to pay that amount.

Hope this helps.

Rajnish