RECRUITMENT. The referral conundrum

Hiring is a critical decision for firms, with substantial time and resources spent on finding the right people. There should be a fine balance between understanding diverse requirements and finding the right talent. Most organisations still struggle with a flood of unbefitting resumes, long recruitment cycles and hires that are a poor-fit to the company culture.

Over the years, vhas undergone a paradigm shift where traditional methods like recruitment advertisements have found complementary partners in the recruitment channel mix. The arrival of new recruitment practices like employee referrals, online job boards and social networking sites have helped lessen the talent gridlock and catalyse referral recruiting for organisations. In fact, one is seeing the evolution of an assortment of staffing and referral start-ups like RoundOne, GrownOut, Whistletalk.com , Mynoticeperiod.com , and so on.

In recent years, recruiting candidates by using employee referrals has been widely acknowledged as a cost-efficient method to recruit candidates through trusted contacts. According to certain media reports, employee referrals and direct hiring channels such as LinkedIn, Facebook, Twitter and company Websites, contribute approximately 70 per cent to 90 per cent of hires for companies. The once-dominant HR consultants now hire only for critical and niche roles, adding just up to 20 per cent of the overall pool of hires and resulting in huge cost savings for organisations.

Aside of cost savings that organisations derive, there are other advantages that the Human Resource function in any organisation can capitalise on. Dr. John Sullivan, internationally renowned HR thought leader considers referrals as an extremely powerful tool in recruiting. His research has found that well-managed employee referral programmes can produce high volumes of qualitative hires that are a better cultural fit and understand the requirements of the position at hand. Certain industry reports also indicate that employees who are hired as a result of a referral are normally committed to their employers, perform better and stay with the company longer, giving organisations the confidence to embrace this process. At Synechron, about 16-18 per cent of our annual hiring consists of employee referrals.

In my personal experience too, I have seen that empowered employees help sell a company both internally and externally. If a referral program is well-designed and well-managed, it boosts an organisation’s image because it turns employees into brand advocates.

Apart from the paybacks a good referral program brings, there are certain challenges that also come with it. A common pitfall that many HR professionals have witnessed or contend is that hiring this way can give way to accusations of favouritism and at times lead to the formation of unhealthy groups within the organisation. Another predicament is that while some referrers bring quality leads vis-a-vis others, they will need to be consistently recognised if you expect them to align with your efforts. This could have an unpleasant rub-off on the remainder of the organisation. Yet another challenge that several organisations face is defining the scope of their referral programme and executing it. Limiting the network to a constricted group usually yields limited results and engagement. Once a programme has been well crafted, it is equally essential to execute it satisfactorily. A branded and well-run employee referral program acts as a good morale booster for the larger organisation.

The writer is Senior Director, Global HR, Synechron

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