Effective Referral Programs

By Jeff Griffin, Senior Editor | September 2008 Vol. 63 No. 9

The best way to find new employees is by referrals from an organization's current workforce, believes Wally Adamchik, president of FireStarter Speaking and Consulting, a leadership consulting firm based in Raleigh, NC.

"Hiring referrals from employees is a winning situation for the company," says Adamchik. "The cost of acquiring employees often is lower than other recruiting methods, and referrals usually stay with the company longer."

Even so, Adamchik says employee referrals are one of the most underutilized methods of employee recruitment and that most companies say they use but do not have a well planned system for gathering referrals and following through with prospects.

"Poor programs bring poor results," says Adamchik.

"One problem most companies have is failing to tap into their entire network for identifying prospective hires," he continues. "Evaluations are made about who may or may not be able to help with recruiting without really knowing enough to make smart decisions."

One of Adamchik's primary activities these days is helping clients develop effective internal referral recruiting programs, both as a consultant hired to work directly with a company and by presentations at industry events and trade shows (Adamchik presented a session on the subject as part of the educational program at the 2008 Underground Construction Technology (UCT) International Conference and Exhibition in Atlanta).

Adamchik says with typical referral programs in the construction market, an employee submits a name and often there is a long delay before any action is taken. Eventually the employee candidate is contacted and a lengthy evaluation process begins. If the candidate is hired, the referring employee received a token bonus. After the employee stays with the company six months or a year, another token bonus is paid.

Quality program characteristics

In what Adamchik calls a "Best of Class" referral program:

• An employee submits a name the human resources department of his employer;
• The employer takes action immediately; and
• The referring employee receives a significant finder's fee – as much as $1,000 – no strings attached.

To lay the groundwork for a successful program, employees are trained about how to effectively make referrals, explains Adamchik. E mails are sent to target employees to educate them about current hiring needs and to focus on referrals for specific categories of jobs.