Pros and Cons of Referral Programs from Snelling Georgia Group
What does it take to find top-notch employees? Of the many techniques utilized by employers, internal referral programs are a popular choice. Many employers offer their staff members a cash bonus as an incentive for referring qualified candidates who could be a good fit for open positions. Some employee referral programs even take it a step further, offering additional money to employees if their referrals are hired and stay with the company for a certain amount of time.
Since money talks, employee referral programs catch the attention of your workforce and allow you an extra layer of strategy for finding new talent. However, before implementing a referral program, it’s important to review the pros and cons.
Benefits of an employee referral program
You can realize multiple benefits from an internal referral program, including, but not limited to the following:
- It takes one to know one. Chances are, if a high-caliber staff member highly recommends a colleague, friend or family member, the person they are referring is also a strong candidate. This gives you a great edge for tapping into the “hidden” job market.
- High rate of retention. Research shows that referral programs lend themselves to longer-term employment. This is probably because your new staff member needs to exert less effort to assimilate into your culture; they already know someone in your company.
- Low cost/low effort. It’s far cheaper and easier to offer a reasonable cash incentive than expending time and money searching for new talent on your own.
Additional Reading: Three Questions to Determine a Candidate’s Reliability
Drawbacks of an employee referral program
Unfortunately, no solution is perfect. Along with the advantages, you’ll have to consider several disadvantages, such as:
- When you hire employees who know each other, your workforce is no longer on an even playing field. You run the risk of cliques that may alienate other members of your staff.
- Decreased synergy. When employees feel threatened or uncomfortable that their ideas may go against the common thought of a clique, they may be less inclined to share them. This can rob your team of the benefits of varying viewpoints. Also, you’ll need to consider what happens if a referred employee does not work out and must be let go. This can have a negative effect on the productivity of the staff member who referred him or her.
- Weakened end product. With decreased idea sharing comes fewer innovative concepts. This can decrease the quality of the product or service your business delivers.
It’s not an end all be all recruitment solution
To help balance out the benefits with the drawbacks of an employee referral program, use this technique to supplement your recruitment strategy, rather than as your only recruitment strategy. Remember the saying: everything in moderation.
Looking for new employees?
Working with a staffing agency is another great way to find talented, cream-of-the-crop new staff members. To learn how Snelling Georgia Group can help you find exceptional new workers in the Atlanta area, contact one of our recruiters today.
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