Bonus referral programs: Do they work?

By Gerry Crispin, |  Career

Duplication of effort makes more work, not less

Automated referral systems facilitate posting job content, track and report referral
activity, and manage the payouts and acknowledgements. But they do not cover every
situation. Make sure employees can easily find these bonus positions via their
intranet. Make sure bonus referral job openings are distinctly separated from those
that don't offer a bonus.

Measure results and employee satisfaction

What is the real cost benefit of hiring via referrals? Do larger bonuses yield more
qualified candidates than other sources? If the percentage of new hires from this
source is increasing, which are decreasing? If agency hires are not significantly
affected, savings might not be an appropriate measure. Are employees who have made
successful referrals satisfied with the program or do they resent being paid only a
portion of a placement fee?

Valuing diversity requires diversity

How many professionals who are female or persons of color will a typical white male
refer? If your referral program results in a significant number of new hires, be sure
to learn about the demographics of the referral population.

The potential for conflict of interest

Imagine you are a CEO and you discover that several of your rising marketing stars are
making a significant bonus income by surfing to referral bonus sites and recommending
talented friends for jobs with other companies. Some of these friends are their
coworkers. How do you feel about an employee helping some of your best talent connect
with your competitors? What will you do?

What message are you giving your employees when you publicly encourage your
competitors' employees to send you their coworkers in return for $1,000, $5,000, or
$10,000? That is what third-party firms do, but they tend to be a tad less intrusive.
Do you wait until you discover that one of your corporate recruiters has set up a
friend outside your company (with the resumes he has mined from third-party Websites)
before you ask the secret of his success in hiring outside referrals?

Less than 100 years ago, a referral was someone who showed up at the door with a
letter of recommendation from someone you knew and trusted. Today, we have a multitude
of tools to expand and develop the concept. Let's not forget the fundamentals nor
overlook the pitfalls. Limit the downside and measure your results carefully.

Mark Mehler also contributed to this article

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