Employee Referral - Reduction in Recruitment Expenditure

Reduction in Recruitment Expenditure

Employee referral scheme’s allows existing employees to screen, select and refer only the best candidates to the recruitment process. This eliminates the often considerable cost of third parties service providers who would have previously conducted the screening and selection process.

The costs of operating an employee referral scheme extends to the cash bonus’ paid to employees and internal promotion and administration, the total of which is considerably lower than the expense of recruiting using traditional recruitment consultants, headhunters and online recruitment methods

As candidate quality improves and interview to job offer conversion rates increase the amount of time spent interviewing decreases meaning the company’s Human Resources headcount can be streamlined and be used more efficiently. Marketing and advertising spend decreases as existing employees source potential candidates from the existing personal networks of friends, family, acquaintances and associates.

The opportunity to improve candidate quality, ‘fit’, and retention levels, while at the same time significantly reduce recruitment expenditure has seen the emphasis employers place on increasing the volume of recruits by employer referral increase dramatically. Through referrals, employers can access employees' networks, through social media or personal networks, to find qualified talents to fill the open positions, according to Harpaul Samhbi, CEO of Careerify. However, there are number of obstacles to achieving the desired increase:

• An employees social network is limited – only a small proportion of the network may be suitable for referral
• Recruiting from an employee’s limited social network may compromise the diversity of the workforce
• Actively referring candidates increases an employee’s workload and may be detrimental to their main responsibilities
• The best and most relevant candidates may not be acquainted with an existing employee of the company and therefore cannot be recruited via the referral scheme

An employee referral scheme is only as good as the volume and quality of candidates applying through the channel.