An employee referral scheme can be a successful way to recruit skilled staff whilst saving valuable time and money in the process. If your client is thinking of introducing a scheme in their own organisation, then there are several elements that need consideration to make the scheme run smoothly.
A referral scheme will allow your client to save a significant amount of money that would otherwise be spent on recruiting externally. Studies have shown that employers spend an average of £5,000 on the logistical costs of hiring a new employee when factoring in agency fees and management time. Reducing this expenditure will ultimately benefit your client and lead to increased profitability for their organisation.
Having said this, your client should keep in mind the impact this could have on the workplace as hiring a large number of employees’ friends or family could create an overly social environment which has a detrimental impact on productivity. Your client should also keep in mind that just because an employee has recommended someone through the scheme, they are under no obligation to hire them. Your client should make sure that their employees aware that they have the final say in who is recruited and that the referring employee is not able to challenge the final decision.
For the scheme to work effectively your client should consider appropriate incentives to drive participation amongst staff. Many organisations choose to provide cash to employees when a hire is made on the back of their referral. However, when doing so your client should consider introducing a qualifying period, perhaps in line with the new employee passing their probationary period, before issuing any funds to ensure referrals are truly ‘successful’.
It is also advisable for your client to implement other stipulations around financial rewards for referring a friend. As an example, it is common for organisations to try and recoup costs if either the new starter or the employee who made the initial referral, leave the business within a certain time frame. Your client could consider introducing this obligation to increase retention and discourage staff from using the scheme frivolously for their own financial gain.
Ultimately, recruiting new staff can be an onerous and expensive task, therefore your client should give consideration to any solution that would make the process easier and more cost effective. A referral scheme should make up just one of your client’s recruitment methods to avoid claims of indirect discrimination. The concept of ‘similarity attracts similarity’ may mean that this type of scheme results in a workforce that is not as diverse and inclusive as it could be.
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