47% firms offer referral bonuses to encourage current employees
As per the 2013 Employee Benefits - A Research Report by Society for Human Resource Management (SHRM), an association of HR professionals, 47% organisations offered employee referral bonuses to encourage current employees to refer others to the organisation. Referral bonuses can both expand the applicant pool and potentially reduce recruiting costs. It is one of the most effective recruiting strategies available to firms.
For many companies, employee referrals form a significant recruitment channel.
“Candidates usually know about company culture, processes and policies in advance and that helps in quicker on-boarding. It also cuts down significantly on costs. We currently have a 55% to 60% conversion for referrals and six out of 10 referrals are hired. We usually target 30% of annual hiring numbers to be closed through buddy referrals. We have as of now closed 28% of our hires this year through this process,” says Ameya Ayachit – senior manager, talent acquisition at Directi India.
Consulting firm Deloitte allows employees up to senior manager grade to participate in the employee referral scheme.
“The overall quality of referred recruits is superior to that of other sources such as job portals, advertising, employment agencies or executive search firms. We are able to reach talent who may not be on any of the portals or those who are not actively seeking change. The average conversion rate of referrals is around 45%,” says Rani Desai, chief people officer, Deloitte in India.