Employee Referral Programs Can Be Cost Effective

Employee referral programs (ERPs) are becoming one of the most cost-effective recruiting methods available, according to a survey released by the Society for Human Resource Management and Referral Networks.

Of the 586 HR professionals polled, the 2001 Employee Referral Program Survey found that a total of 80% of survey respondents felt that Employee Referral Programs are more cost-effective than job search firms, and almost 70% said that the programs are more cost-effective than other recruiting practices.

Program Effectiveness

  • 37% of respondents indicated employee referral programs were more effective or extremely effective compared to other recruiting methods.
  • 36% said that employee referral programs were effective or extremely effective in increasing retention of current employees.
  • (34%) indicated the programs increased the number of interested candidates.
  • 65% of respondents said their organizations have either a formal or informal employee referral program.

Program Incentives

  • Financial rewards were clearly the most frequently used (77% for exempt positions and 78% for nonexempt positions).
  • Cars were second (23% and 22%) and;
  • gift certificates came in a distant third (8%). In most cases, the amount of the award was predetermined and distributed after a required tenure period of the new hire – usually three months.

Overall Summary

When asked if their organizations placed enough emphasis on and/or investment in their employee referral programs, 44% of respondents agreed or strongly agreed that enough emphasis was placed on employee referral programs for exempt positions. Respondents also cited challenges such as lack of program awareness (36%) and stimulating employee participation (33%) as impacting the success of their organizations’ employee referral programs.

You may like these other stories...

Majority of House of Representatives urges leadership to preserve cash method of accounting for tax purposesA bipartisan majority of the House of Representatives – 233 members – has signed a letter urging House...
Tax friendly trusts swell under new rulesUS companies are latching onto an obscure real estate provision to avoid corporate taxes, widely adopting a financial maneuver that has been expanded under the Obama administration,...
The average annual salary for US finance and accounting professionals who have the Certified Management Accountant (CMA) credential has gone up slightly over the past year, according to the results of a new study from the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.