We introduced ERS in our organization over 5 years ago primarily to fill certain niche requirements which could not be closed using the standard recruitment process, i.e. hiring done by the recruitment team using web applications, job portals, advertisements, reference network and executive search firms. The uniqueness about this program is that:
a) We do not take referrals only for published (open) positions but also for perennially required niche positions/skills,
b) Unlike many other referral programs, which just pays a one-time referral bonus, we also pay the employee a bonus amount when their referred candidate completes six months (1st milestone) and one year (2nd milestone) of service with Four Soft, and
c) We generally do not use employee referral for hiring anyone in the post of a Manager or upwards designation.
Trends in our ERS
Starting from the end of 2004, presently around 20% of our staff has been hired through the ERS. In the near future, we expect this trend to continue. As our projected head count, which is directly linked with our aggressive sales focus, is set to see significant increases in this and the next two years, employee referrals will be primarily used for filling all urgent and/or niche positions.
Our employee referral activity was slightly affected during the economic downturn, especially between the months of April to October last year (2009). However since November last year, hiring in general have been as per our usual monthly average. The referral program currently is around 10% of our total hires but we expect this figure to reach around 20%-30% by the next quarter.
The Reasons for having an ERS
An employee has a better understanding about the unique requirements of the organization and usually refers only such candidates who are likely to be selected. Generally employees themselves want the best people to be hired, as they have to work with them. A candidate referred by an employee also is likely to have a good knowledge (in advance) about the existing work conditions, organizational culture, policies and processes, hence he/she is more likely to transition into their respective roles easily. For the organization there are two distinct advantages, which are – a) an expected longer tenure of such candidates, and b) a lower cost of hiring; we find it to be approximately 70% cheaper than any hiring done through external executive search firms. Used properly, we find employee referrals a very effective hiring tool.
Employee referral programs used properly are always a win-win solution. An employee benefits in a lot of way by referring a close friend to Four Soft. Apart from the direct monetary rewards, which he/she gets over a period of 1 year, they also get other non-monetary benefits. The organization benefits as the candidate referred by an employee has a good knowledge in advance about the existing work conditions, organizational culture, policies and processes, hence he/she is more likely to transition into their respective roles easily. Having a friend in the system also helps, especially during the early period of joining a new organization where chances of separation (voluntary or involuntary) are high.
Incentives to staff for a successful ERS
We can categorize our reward’s program into 2 parts – monetary and non-monetary. For the monetary part, the employee gets a certain percentage of the joining person’s salary at the time of joining of that candidate. He/she also gets two more additional payments once the referred candidate completes 6 months and then 1 year with the organization. The non-monetary part involves being nominated for special trainings/seminars and other special awards (lucky draw – vacation deal, gift passes etc.). The other indirect benefit the employee gets is having a say in hiring the type of people they want to work with.
ERS – the downside
It is often seen that a certain employee/set of employees make the maximum number of referrals. Here HR needs to take an active role and see that the candidate being referred to – a) matches the job description closely, and b) knows the referring employee closely. Sometimes to get the referral bonus, the employee might want to influence the hiring manager especially if he/she knows them well. We try to discourage this practice by having a mandatory panel interview before the candidate is evaluated by the hiring manager. Other issues that are often seen in employee referral programs are a possible lack of employee diversity. For example we have often seen that a male employees aged between 35-40 years often tend to refer male candidates in the same age bracket and sometimes from the same native place or ethnic/social background. This trend if not checked and corrected right at the start can lead to groupism and hamper competitiveness and new idea generation, both of which are highly essential for an IT product development organization like Four Soft.
The Present and the Future
The employee referral program is likely to continue in the same manner over the next few years. We will primarily be aligning such programs to hire candidates with niche skills and mostly at the junior to middle levels. To make such programs more attractive we plan to introduce more non-monetary awards like additional vacation time or an all expense paid trip for two to a destination abroad etc.
Presently our head count is around 650 out of which 500 are based in our corporate office at Hyderabad in India and the rest overseas. During the current financial year, we shall be recruiting another 100 people, majority of which will be based in our corporate office. We expect at least 30-40 of these positions to be filled through our ERS.
Excerpts of this article has been published in Business Standard - http://www.business-standard.com/india/news/it-employee-referrals-gather-steam/397530/
a) We do not take referrals only for published (open) positions but also for perennially required niche positions/skills,
b) Unlike many other referral programs, which just pays a one-time referral bonus, we also pay the employee a bonus amount when their referred candidate completes six months (1st milestone) and one year (2nd milestone) of service with Four Soft, and
c) We generally do not use employee referral for hiring anyone in the post of a Manager or upwards designation.
Trends in our ERS
Starting from the end of 2004, presently around 20% of our staff has been hired through the ERS. In the near future, we expect this trend to continue. As our projected head count, which is directly linked with our aggressive sales focus, is set to see significant increases in this and the next two years, employee referrals will be primarily used for filling all urgent and/or niche positions.
Our employee referral activity was slightly affected during the economic downturn, especially between the months of April to October last year (2009). However since November last year, hiring in general have been as per our usual monthly average. The referral program currently is around 10% of our total hires but we expect this figure to reach around 20%-30% by the next quarter.
The Reasons for having an ERS
An employee has a better understanding about the unique requirements of the organization and usually refers only such candidates who are likely to be selected. Generally employees themselves want the best people to be hired, as they have to work with them. A candidate referred by an employee also is likely to have a good knowledge (in advance) about the existing work conditions, organizational culture, policies and processes, hence he/she is more likely to transition into their respective roles easily. For the organization there are two distinct advantages, which are – a) an expected longer tenure of such candidates, and b) a lower cost of hiring; we find it to be approximately 70% cheaper than any hiring done through external executive search firms. Used properly, we find employee referrals a very effective hiring tool.
Employee referral programs used properly are always a win-win solution. An employee benefits in a lot of way by referring a close friend to Four Soft. Apart from the direct monetary rewards, which he/she gets over a period of 1 year, they also get other non-monetary benefits. The organization benefits as the candidate referred by an employee has a good knowledge in advance about the existing work conditions, organizational culture, policies and processes, hence he/she is more likely to transition into their respective roles easily. Having a friend in the system also helps, especially during the early period of joining a new organization where chances of separation (voluntary or involuntary) are high.
Incentives to staff for a successful ERS
We can categorize our reward’s program into 2 parts – monetary and non-monetary. For the monetary part, the employee gets a certain percentage of the joining person’s salary at the time of joining of that candidate. He/she also gets two more additional payments once the referred candidate completes 6 months and then 1 year with the organization. The non-monetary part involves being nominated for special trainings/seminars and other special awards (lucky draw – vacation deal, gift passes etc.). The other indirect benefit the employee gets is having a say in hiring the type of people they want to work with.
ERS – the downside
It is often seen that a certain employee/set of employees make the maximum number of referrals. Here HR needs to take an active role and see that the candidate being referred to – a) matches the job description closely, and b) knows the referring employee closely. Sometimes to get the referral bonus, the employee might want to influence the hiring manager especially if he/she knows them well. We try to discourage this practice by having a mandatory panel interview before the candidate is evaluated by the hiring manager. Other issues that are often seen in employee referral programs are a possible lack of employee diversity. For example we have often seen that a male employees aged between 35-40 years often tend to refer male candidates in the same age bracket and sometimes from the same native place or ethnic/social background. This trend if not checked and corrected right at the start can lead to groupism and hamper competitiveness and new idea generation, both of which are highly essential for an IT product development organization like Four Soft.
The Present and the Future
The employee referral program is likely to continue in the same manner over the next few years. We will primarily be aligning such programs to hire candidates with niche skills and mostly at the junior to middle levels. To make such programs more attractive we plan to introduce more non-monetary awards like additional vacation time or an all expense paid trip for two to a destination abroad etc.
Presently our head count is around 650 out of which 500 are based in our corporate office at Hyderabad in India and the rest overseas. During the current financial year, we shall be recruiting another 100 people, majority of which will be based in our corporate office. We expect at least 30-40 of these positions to be filled through our ERS.
Excerpts of this article has been published in Business Standard - http://www.business-standard.com/india/news/it-employee-referrals-gather-steam/397530/
Comments
Post a Comment