Question # 2: What are the advantages and disadvantages of using an employee referral
campaign for recruitment purposes?
Employee referral campaigns have been around for years. This is just another one of the
many options that can be used in the recruiting process. It is estimated that about thirty (30)
percent of all recruiting stems from employee referrals . All recruiting processes have their good
qualities and bad qualities, employee referrals are not immune from this.
Most employee referral programs have some sort of benefit or bonus for the referring
employee. These benefits are usually in a bonus (monetary) type package, but can also range
from stock options, vacation trips to just extra days off. The reward or benefit should be large
enough to motivate employees to refer only qualified people for these positions. Many
companies limit the number of referrals to one in a calendar year (per employee), to make sure
only qualified people are referred.
Another benefit to employee referral is the cost, most referrals have little to no cost to the
company, except the normal hiring costs. Referral’s can cut out advertising costs, employment
agencies and Job fair expenses. I believe this process is becoming more and more popular in
these times of economic downturn and recessions.
There are some aspects of employee referral programs that can cause issues for
The Business plan on Marginal Benefit / Cost and Scarcity Paper
Define the concept of scarcity: Scarcity: The goods available are too few to satisfy individuals' desires. Scarcity is a central concept in economics. Resources are scarce if any individual would prefer to have more of that good or service than they already have. Most goods and services are scarce - those that are not are known as free goods. Where goods are scarce it is necessary for society to ...
companies. They range from employee dissatisfaction (when their referral is not used) to
lawsuits.
I believe the biggest danger comes from when overreliance of the employee referral
program results to underrepresentation of certain protected groups. This can lead to possible
lawsuits from rejected or non solicited candidates.
The basic objective of any Employee Referral program is to make the complete
recruitment process more effective by increasing the sources of good candidates . Employee
Referral programs are generally driven and quantified by organizational culture. In order for
referrals to be successful, requests should be specific, including qualifications. The process
needs to be completely transparent and reach out to all employees. When these guide lines are
followed you are sure to have qualified applicants to choose from.
