What Are the Advantages and Disadvantages of Using an Employee Referral Campaign for Recruitment Purposes?

Question # 2: What are the advantages and disadvantages of using an employee referral  
                        campaign for recruitment purposes?


Employee referral campaigns have been around for years.   This is just another one of the
many options that can be used in the recruiting process.   It is estimated that about thirty (30)
percent of all recruiting stems from employee referrals .   All recruiting processes have their good
qualities and bad qualities, employee referrals are not immune from this.
Most employee referral programs have some sort of benefit or bonus for the referring
employee.   These benefits are usually in a bonus (monetary) type package, but can also range
from stock options, vacation trips to just extra days off.   The reward or benefit should be large
enough to motivate employees to refer only qualified people for these positions.   Many
companies limit the number of referrals to one in a calendar year (per employee), to make sure
only qualified people are referred.
Another benefit to employee referral is the cost, most referrals have little to no cost to the
company, except the normal hiring costs.   Referral’s can cut out advertising costs, employment
agencies and Job fair expenses.   I believe this process is becoming more and more popular in
these times of economic downturn and recessions.
There are some aspects of employee referral programs that can cause issues for
companies.   They range from employee dissatisfaction (when their referral is not used) to
lawsuits.





I believe the biggest danger comes from when overreliance of the employee referral

program results to underrepresentation of certain protected groups.   This can lead to possible

lawsuits from rejected or non solicited candidates.      

The basic objective of any Employee Referral program is to make the complete

recruitment process more effective by increasing the sources of good candidates .   Employee...