The Job Doc Blog

The ins and outs of employee referral programs

Q: Earlier this year, my employer announced that they were going to pay referral bonuses if we, the employees, referred candidates who get hired for an open position. I have several questions for you. Are these referral programs popular? What if I refer someone who is offered a job but is not hired? What if the employee is hired several months later? Should I still receive the bonus? Last question, what if my referral never gets a call from my employer?

A: Employee referral programs are often successful recruiting tools for many companies. Employee referral programs encourage current employees to refer qualified friends, colleagues, relatives or others for available positions within the company. Often times, the employee who has made the referral will be eligible for a “finder’s fee” if the referred candidate is hired for a position with the company. The company will likely establish guidelines and rules for the program. For example, only certain positions may be eligible for the financial reward. Or the monetary reward may be subject to a waiting period to ensure that the new employee is a good fit.

In response to your specific questions, employee referral programs are a successful recruiting tool and are often used when a company has several “hard to fill” opportunities. Hopefully your company acknowledges all employee referrals but honestly sometimes companyies underestimate the number of referrals that this type of program will generate. Often times, a referred resume will be retained in the event another position becomes available (assuming that the referral is not qualified for one of the existing openings). Your employer may offer you a reward if your referral is hired several months later, but it depends upon the rules that your company has established with respect to their employee referral program.

An employee referral program also sends a few additional messages to the employees of a company. One is that “we are hiring.” This is a positive message especially after the last few years of sluggish hiring. Two, is that "we want to reward employees who tap into their networks that these efforts should be rewarded." Three, "we think our employees are a good judge of talent." It is encouraging to hear that employers are using employee referral programs in 2011.

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