Cash carrot leads to excellent employee referrals

Tag : carrot

Why do it?
Ultimately, it's easier for the HR department, says Eric Papp,chief executive officer and founder of Generation Y Consulting, LLCin Tampa, Fla.
"Your most successful employees hang around other successfulpeople, so you look to your top performers and say, 'Do you knowanybody who is like you?' " he said.
Studies show referred employees are superior workers. In 2006, BoozAllen Hamilton, a strategy and technology consulting firm, surveyed73 major employers, and 88 per cent reported that employee referralhires performed better on the job than other candidates whenmeasured by performance appraisal systems.
Looking for one more benefit? It's a way to reach employees whoalready have jobs, says Alan Booth, associate partner, nationalhuman resources for Deloitte & Touche LLP in Toronto.
"It's very difficult for our recruiters to get to them, but thischannel makes it much easier," he said.
How much money are we talking about?
Although some companies with employee referral programs still offerfees in the $300 to $500 range, others, like Sierra Systems, forkover $3,000 for a typical successful hire. A hard-to-fill jobwarrants $5,000.
The carrot seems to work for the 1,100-employee company.
"Last year, we paid out just over $150,000 to employees forreferrals for that one-year time frame," said Ms. Bahry, who addedthat about one-third of all hires were from referrals.
To make the money, employees hand over the candidates'résumés and fill out a form detailing why they thinktheir candidates are a good fit.
Garry Deol, a business analyst with Sierra, has referred twosuccessful candidates since he started three years ago. (One is hisown manager.)
"At the end of the day, if you know that someone would be a goodfit and they would get hired, if you have to fill out a form for$3,000, why not?" he said.
When do they get it?
Ligia Farnum, manager in risk operations for American ExpressCanada in Markham, Ont., found an extra $500 tacked on to herpaycheque a few months after she helped her friend land a job withthe company last year.
"I have to say I quite enjoyed getting that. It was a windfall,"she says now.
Waiting 90 days before payout makes sense. Who wants to shell outthe finder's fee only to see the newbie leave the company a coupleof weeks later? Yet, waiting to pay just doesn't seem fair, Ms.Bahry says. Sierra pays the bonus as soon as the new employee signson.
"It's no longer the referring employee's issue if there is aproblem down the road. Why should they have to wait for the personto pass the probation period?" she said.
Sandy Seliga, talent management co-ordinator for Xerox Canada Ltd.in Toronto agrees.
"We believe that if the employee does make it through our interviewprocess and they do sign the offer letter, they're going to stay,"she said.
Reputation is everything
But what happens when the candidate turns out to be a clunker?
Mr. Papp lived this hard lesson years ago when he referred astudent to a dental office. He knew the young man's mother, but nother son. "I referred him and it turned out to be a disaster. Heshowed up late and even fell asleep on the job," he said.
How to run a bad employee referral program
Foster a slow (or no) response rate to employee referrals.
Delay bonus payments for 90 to 180 days post-hire.
Encourage general referrals. (Recruiters love sifting throughthem.)
Exclude senior managers and HR professionals. They're neitherhighly visible, nor able to talk up the firm.
Offer equal rewards for different jobs. Hard-to-fill jobs willeventually find a candidate, right?