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19 January, 2016 - 15:28

Most recruiting plans include asking current employees, “Who do you know?” The quality of referred applicants is usually high, since most people would not recommend someone they thought incapable of doing the job. E-mailing a job opening to current employees and offering incentives to refer a friend can be a quick way of recruiting individuals. Due to the success of most formalized referral programs, it is suggested that a program be part of the overall HRM strategic plan and recruitment strategy. However, be wary of using referrals as the only method for recruitment, as this can lead to lack of diversity in a workplace. Nepotism means a preference for hiring relatives of current employees, which can also lead to lack of diversity and management issues in the workplace.

For example, the University of Washington offers $1,200 any time a current employee successfully refers a friend to work at their medical centers. Usually, most incentives require the new employee to be hired and stay a specified period of time. Some examples of incentives that can be used to refer a friend might include the following:

  • A gift card to the employee
  • A financial incentive
  • Raffles for most referrals

These types of programs are called employee referral programs (ERPs) and tend to generate one of the highest returns on investment per hire. 1 To make an ERP program effective, some key components should be put into place:

  1. Communicate the program to existing employees.
  2. Track the success of the program using metrics of successful hires.
  3. Be aware of the administrative aspect and the time it takes to implement the program effectively.
  4. Set measureable goals up front for a specialized program.

Accenture recently won the ERE Media Award for one of the most innovative ERPs. Its program has increased new hires from referrals from 14 percent to 32 percent, and employee awareness of the program jumped from just 20 percent to 99 percent.  2 The uniqueness of their program lies with the reward the employee receives. Instead of offering personal financial compensation, Accenture makes a donation to the charity of the employee’s choice, such as a local elementary school. Their program also seeks to decrease casual referrals, so the employee is asked to fill out an online form to explain the skills of the individual they are referring. The company has also developed a website where current employees can go to track the progress of referrals. In addition, employee referral applications are flagged online and fast-tracked through the process—in fact, every referral is acted upon. As you can see, Accenture has made their ERP a success through the use of strategic planning in the recruitment process.

Table 4.1  Advantages and Disadvantages of Recruiting Methods

Recruitment Method



Outside recruiters, executive search firms, and temporary employment agencies

Can be time saving



Less control over final candidates to be interviewed

Campus recruiting/educational institutions

Can hire people to grow with the organization

Time consuming


Plentiful source of talent

Only appropriate for certain types of experience levels

Professional organizations and associations

Industry specific

May be a fee to place an ad



May be time-consuming to network

Websites/Internet recruiting

Diversity friendly

Could be too broad


Low cost

Be prepared to deal with hundreds of résumés




Social media


Time consuming


Overwhelming response


Access to specific target markets of candidates

Can be expensive


May not be the right target market


Industry specific

Research required for specific SIGS tied to jobs


Higher quality people

Concern for lack of diversity




Unsolicited résumés and applications

Inexpensive, especially with time-saving keyword résumé search software

Time consuming

Internet and/or traditional advertisements

Can target a specific audience

Can be expensive

Employee leasing

For smaller organizations, it means someone does not have to administer compensation and benefits, as this is handled by leasing company

Possible costs


Can be a good alternative to temporary employment if the job is permanent

Less control of who interviews for the position

Public employment agencies

The potential ability to recruit a more diverse workforce

May receive many résumés, which can be time-consuming


No cost, since it’s a government agency


2,300 points of service nationwide


Labor unions

Access to specialized skills

May not apply to some jobs or industries


Builds relationship with the union