Putting a Good Word in; Are Employee Referral Schemes Taking over from More Traditional Methods of Recruitment? Not Likely, Says Wendy Ledger

Article excerpt

Byline: WENDY LEDGER

FINDING the right people for the right role is not getting any easier and employers are using every carrot imaginable to tempt skilled workers to sign their contracts. Attractive advertising and professional recruiters are vital in the search but one of the oldest methods in the book is now being utilised.

Employers now recognise that existing employees can provide a successful and cost- effective source of candidates. In 1999 employee referral schemes were listed by US employers as one of the top five methods of recruiting new staff. According to more recent research conducted in the US, 80 per cent of companies felt that strategic employee referral schemes were more cost-effective than many other sources of recruitment.

Growing numbers of companies are now introducing programmes that actively encourage existing staff to recommend people by awarding prizes and bonuses to the staff who find new recruits. From holidays and cars to cash rewards, employee referral programmes are becoming increasingly popular.

There are several reasons why these schemes prove successful.

Firstly, candidates sourced through employee recommendation are more likely to accept an offer and stay longer, primarily because they have an instant network when they join the company, through their acquaintance.

Secondly, candidates are far more likely to already have an understanding of how the company works through their association.

Thirdly, there is a strong motivation for employees to recommend good people, in order to avoid feeling responsible for someone who does not make the grade.

Ultimately, existing employees are likely to know others in the same field or specialisation through past work or professional associations.

Schemes are easy to establish and publicise. No payments are made until the new members of staff have passed a probationary period.

Prices and bonuses or cash rewards are usually arranged on a sliding scale, so the higher up the corporate ladder the candidate introduced is placed, the higher the reward,.

"People have been introducing former colleagues and friends to their employers through goodwill long before such ideas were introduced, but incentive schemes have proven very successful for many organisations," says David Hughes, MD of Executive Connections. "Although we invest significant resources in marketing and advertising we still earn a huge proportion of our business via personal recommendation."

With the competition for talent so fierce, especially in the City, where specific skills are at a premium, employee referral schemes can offer a realistic alternative in the recruitment game. …