Employee Referral Schemes

Employee Referral Schemes [ERS]

Employee Referral Scheme (ERS) comes from an employee referral. Employee Referrals refer to “a current employee referring a candidate for a vacancy in the organization”. Since the current employee suggests an eligible candidate he will receive benefits in return, if the referred candidate is selected.

There are many organizations that give lot of preference to ERS and make sure that the employees participate. This is like a dual bonus from the point of view of the organization and the current employee.

1. Organization point of view:

• With the help of this scheme, the employee can gain employee attention i.e. the employee will be interested in earning some money by referring a candidate
• The employees will feel that the organization needs them and this will increase job satisfaction amongst the employees
• It reduces the sourcing cost for the organization i.e. the cost on advertising on job portals or through consultant or classifieds
• The employees understand the organizational culture and hence the organization expects them to refer candidates that they feel will be able to jell in the organization
• Monetary benefit helps in increasing the level of loyalty and also the organization can be assured that the employees will stick together

1. 2. Employee point of view:

• The employees get to earn some extra money can by referring a friend or relative
• If their referred candidate is selected, the employee has a known person amongst his colleagues
• The employee knows the organization and it becomes easy for him to refer a candidate

ERS has been widely used across organizations. An employee has the liberty to refer more than 1 candidate but few organizations also place a restriction at the same time.

ERS Process:

There is no obstinate process that is followed in case of ERS. This process is illustrated to clear the understanding of ERS.

i. The organization has a vacancy that it would post on the organization bulletin, notice board or send across a mail to all the employees

ii. The post will also have all the guidelines that the employee need to follow before referring a candidate

iii. The monetary benefits that will be gained by the employee when his referred candidate is selected shall also be mentioned

iv. There could also be an attachment of the scheme

v.The scheme should also mention all the terms and conditions that will come along the scheme. The employees will have to follow all the terms and conditions mentioned

vi. The organization shall mention a time frame within which the employee has to submit a CV of the candidate it wishes to refer. The time frame could ideally be for 10-15 days maximum

vii. Once the employees are done referring the candidates, the process of short listing these candidates takes place

• The referred candidates if short listed will have to go through the standard selection procedure

ix. If a candidate is referred by more than 1 employee, in that case the employee the referred candidate mentions on his CV will be eligible for the ERS benefits

x.The candidate has to complete the mentioned probation period only then the employee shall be eligible for benefits

xi. In case the organization does not find a suitable match from amongst the referred candidates, it can also look at different avenues while sourcing candidates like Job Portals, Consultants, etc.

There are also a few guidelines that the referred candidate needs to follow, these are:

• The referred candidate has to submit the CV by deadline
• The top right of the CV should mention the name of the employee that has referred him / her
• In case the name is missing, even if the candidate is selected, the employee will not be eligible for benefits
• The candidate should not influence the interviewer / panel during the selection process by mentioning the employee’s name that referred him / her
• The candidate should adhere to all the guiding principle that he needs to follow during the selection procedure

There are a few set of rules that the employee should keep in mind while referring a candidate. These are:

• The employee shall not refer his family members, but if there is no policy of referring a family member then the employee can refer family
• The employee shall refer only that candidate that fits all the qualifying criteria as mentioned in the job description
• Any employee that is in the position to influence the selection decision shall not be eligible to refer a candidate. These employees could be:
  • Members of the HR department
  • Employees holding a position of great responsibility like: CEO, VP, MD, etc.
  • Any other employee as mentioned in the ERS policies
  • The employee shall make sure that the candidate referred mentions his / her name in the CV.
  • The employee shall be eligible for benefits only if the candidate referred by him / her is selected and completes the mentioned  probationary period

• The following document is one example of the ERS of an organization:

Employee referral scheme

Purpose

Employee Referral Bonus Policy (ERBP) is developed with the intention of awarding the employees for their efforts towards recruitment.

Policy Statement:

• This policy is applicable only for those employees who are hired as full time permanent employees
• All permanent employees are eligible for the referral bonus except for those in the human resources department and the hiring manager or any person on the hierarchy level of the open position
• Bonus amount will be paid only when the referred employee completes 90 working days in the company
• Bonus of Rs. 10,000/- will be paid lump sum after 90 days of referred employee joining
• Both referred and referrer should be in employment at the time of availing the bonus

Guidelines:

• Referrals will not be accepted if a resume or application has previously been submitted directly by the applicant or by an outside agency
• Mail containing the resume of the applicant should be sent to the Human Resources Department. This mail should be saved
• Employee referral form to be duly filled by referrer and submitted to Human Resources Department after referred applicant joins
• Referrals of candidates who have worked with Ms. X in the past will not be accepted
• Referrals of employees currently employed as temporary employees will not be accepted
• If a temporary employee referred is later made full time permanent employee the referrer is eligible for bonus, 90 days after completion of service as permanent employee
• Referrer and interviewer cannot be same
• In the event of any disputes, all final decisions will be made by the management
• Fix up an amount acc. to the exp. of the candidate.

• Such as: If an employee refers a candidate from 1-2 yrs. of exp. – X amount will be given (if the referred candidate is finally selected). If the exp. is from 2-5 yrs. – Y amount and so on. Or fix up according to the Levels

• Fix up a period as to when the employee will be given the amount. Say, after the referred candidate (now an employee) completes 1 month with the company, then only the employee who referred him/her will be given the said amount
• Also to keep a check that this scheme is not misused, keep a clause such as “That if the new joinee leaves within 3-4 months of joining, the amount given to the employee who referred him/her will have to pay back the amount”
• Also keep a track about the different sources from where you receive a CV. It so happens that an employee refers a candidate, you screen the same CV from a Job Portal and the same CV also comes to you from a consultant or direct. According to me it should be considered on the “First come First serve” basis

• This is a specimen of the Employee Referral Form that needs to be filled by the candidate and needs to be submitted along with the CV:

Tags: CEO, CV, Employee Referral Scheme Form, Employee Referrals, ERS, HRD, Monetary Benefits, Money, Policy, Policy Statement, Process, Referral Programs, Responsibility, Specimen, VP