Talent Management Strategies

Purpose of Process (see below how HRSource™ can help):

Employee Referrals are an excellent recruiting source. The advantages can include:

• Low cost per hire, even if referral bonuses are provided.
• Helps pre-screen candidates for cultural fit
• Employees typically refer good candidates to avoid being associated with a bad hire
• Functions as a team-building exercise
• Helps makes all employees feel a part of the recruiting effort
• Applicants hired through employee referrals tend to have a longer tenure than applicants hired from other sources.

Recommended Steps in the Process:

1. Establish a preliminary employee referral bonus program. (See the sample plan guidelines, and sample referral bonus amounts).
   
   
2. As necessary, justify the cost of referral bonuses by comparing them with the average cost per hire. The market cost per hire ranges from $3000 to $5000. Internal hiring cost data is even more relevant, if available.
   
   
3. Track data, from a central location, including who made the referral, the date of the referral, the name of the candidate, and pertinent data on the candidate (resume, etc.).
   
   
4. Publicize the employee referral system by using multiple sources including:
   • Company bulletin boards
   • Company newsletter
   • HR Portal/Intranet
     
   • Announcements at staff meetings
   • Announcement at employee meetings
   
   
5. Award the referral bonus immediately after the new employee's hire. This encourages referrals by placing the award close to the incentivised behavior. Make the award public (at an employee meeting or announce it in the company newsletter).
   
   
6. Continually publicize and educate employees on the employee referral program:
   • Suggest sources for the employees (e.g. people they knew from previous employers, college, seminars, professional associations, etc.)
   • Advise them not to assume these contacts are not looking for a new job
   • Personally invite new hires to refer new candidates, including brainstorming names of possible candidates with them

Process Tips:

Continuous publicity (at least quarterly) is very important for the success of this program. Openings must be clearly posted (on company bulletin boards, newsletters, the company computer network, etc.).

Consider promoting employee referrals by periodically sponsoring an employee referral contest. For example, the employee who refers the most candidates that are hired in a three or six month period, receives an award, such as a lap-top computer or a vacation for two.

How HRSource™ Can Help:

Who referred whom can be tracked in HRSource™.  The Online Employment Application can collect the name of the referring employee.  And if you do not pay the referral bonus immediately upon hire, then HRSource™ can automatically alert you to when a referral bonus is due for payment.