The Job Doc Blog

The "fine print" of employee referral programs

Q: My employer is hiring. They announced an employee referral program requesting employees to refer candidates for the open positions. They are willing to pay the employees a “finder’s fee” for referring them quality candidates. Here is my complaint: I referred them a stellar candidate, a former co-worker. This co-worker could do an incredible job for my company. However, I received a call that said that my former co-worker had applied last year in December of 2011 when we were not hiring. Since my former co-worker had already applied, HR says that my referral does not qualify. Does this sound right to you?

A: Employee referral programs are a creative way of expanding the applicant pool. The concept has been around for years and many companies use them to attract candidates especially for opportunities which are challenging to fill with qualified talent.

However, most employee referral programs have rules, conditions and “fine print.” Employer can choose to exclude some referrals for a number of reasons. Rehires, or candidates who once worked for your employer, may be excluded. Candidates who have been previously introduced by an employment agency or a search firm may be excluded.

Some companies even limit paying a referral bonus to candidates referred and hired only for certain “hard to fill” positions. As an example, engineers may be difficult and costly roles to fill for your employer. In this instance, your employer may choose to only offer a referral bonus for engineering candidates but not for referrals who are hired in accounting, sales, HR, purchasing or other areas.

Additionally, some employers will not allow senior leaders or HR to participate in such a program. Some employers also exclude hiring managers from receiving a referral bonus if the vacant role is in within a hiring manager’s department.

Your company can also discontinue this program at any time. Perhaps they will use such a program for several months in 2012. If a referral is received in 2013, this referral may be ineligible for the financial reward even if the candidate is hired.

In your situation, your employer probably has “fine print” which disqualifies a referral who has previously applied to the company. From the company’s standpoint, they are looking to expand their applicant pool and if a candidate has already applied, they are really not expanding their applicant pool.

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