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.


Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 8Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 16Kristen Rampe will give tips on how to bring confidence into the room and build a valuable network.