Employee Referral Schemes: Should We Rethink Monetary Incentives for Better Engagement?

Hi,

I would like to have a professional's thoughts on an interesting topic "Employee Referral Scheme & Incentive".

As we know, it is common practice to reward employees monetarily under a referral scheme, but my point is, is it really necessary? Aren't we pushing our employees to think about monetary benefits and pushing their referrals to get placements by doing this? What are other ways to reward an employee under a referral scheme?

Should we have a PUSH approach for employee referrals where we force employees to refer candidates to earn money?

Or

Should we have a PULL approach where an employee refers a candidate because they find the culture, policies, processes, service, and work profile best in the industry?

I am sure that if we opt for the PULL approach, we in HR will have a major role to play in creating the working environment, culture, and nurturing talent. In other words, HR will always strive to work on improving E-Sat and getting referrals who will, in turn, work with the company for a longer time.

I would like to have your thoughts on this, please.

With Regards,

Anup

Hi Anup,

We give some rewards points at the selection stage and additional rewards points if the new candidate referred completes the probation period (six months) successfully. Our rewards points are linked to a monetary value that is decided every month. The sales force also earns rewards points for achieving targets.

For the payout of incentive rewards, we do it in a deferred manner. 60% of the incentive earned is paid out in the next month, and 40% is deferred as a lock-in. For example, 40% will be placed in an account with the condition that if the employee remains employed with the company until a future date, such as the Financial Year Ending in March 20**, they will receive it; otherwise, they will not.

This system serves a dual purpose of attracting and retaining employees.

Regards,
Rnky

I think any employee will refer his or her friend to an organization only if he or she finds the organization a great place to work. Any referrals made out of compulsion or force will never materialize.

Thanks,
Ligy Jose

I am not into HR but here are some of my comments :-

If the organization is really good (ideal to work??) employees irrespective of monitory benefit will try for their friends.

Adding referral bonus adds more value to it, because it genuinely works out in getting appropriate candidates(Candidates selected through the referral system stand high on quality and perform better as they are in an organisation which includes their friends and known colleagues).

We think referral bonus as a token of appreciation and even employee understands it. I think there is no harm in giving referral bonus because it is good to pay your own employee rather than paying 3rd parties or investing in advertisements.

Even if employee thinks in monitory terms it is ok because end of the day organization is getting likeminded candidates without much trouble.

I think referral bonus is an acceptable way because in these days no organization is ideal, even they think in terms of monitory benefits at each step so what's wrong if employee thinks that way.

Every company keeps track of employees and their referrals. If the quality of the candidates referred are not up to the mark such employees referral weightage/image-index reduces over the time. This way companies are able to control employees who are referring candidates just for the sake of seeking money.

Companies also track the performance/loyalty of referrals so that in future they can take appropriate decisions about whose referral to be given more priority.

Regards,

Ritesh

Thank you all.

I understand the importance of rewarding an employee for a good referral, and I agree with your views on this topic. I hope that you all would agree with me that any process would be beneficial when it is framed appropriately, administered, and put under control. Rinky has suggested a few valuable points to check its effectiveness.

Thanks once again and wish you a very Happy Independence Day.

Jai Hind...
Anup Srivastava