Review — How companies are doing it?

Research shows there is a positive correlation between highly engaged employees and the number of referrals they provide. And that the programme works best in niche and hot skill areas because this is a very close-knit community. Such employees network very well and move in packs. “The influencing ability of such individuals is also very strong,” says Naveen Narayanan, global head, talent acquisition, HCL Technologies.

So, how can you do it well? It is important to design a referral programme that is fair and visible to all the employees. Also, the programme must be reviewed from time to time and changes must be made as and when necessary. “At Accenture we offer various incentives to employees. The referral amount may not be monetary benefit, instead, it could even be a promotion or other incentivised perks. It differs from each business unit to another and also depends on the candidature,” says Manoj Biswas, lead, human resources, Accenture India, which fills a substantial chunk of its positions through referrals any given year.

“To encourage more women workforce, Round One offer bigger benefits to the employee for referring women candidates. Referral programme is critical for niche skills and executive positions,” Biswas adds.

At Infosys employee referrals is one of the key channels for lateral hiring. “We encourage use of technology for the employee referral process. There is a portal where employees can view requirements and directly submit the profiles of candidates. They can track the status of their referral in real time. We have monetary rewards defined for different job levels,” says Richard Lobo, AVP & head, employee relations, Infosys.

Why is employee referral such a big deal at one of the most respected IT firms in India? Simply because it operates in an industry known for high employee turnover. “The biggest advantage of the employee referral system is that the employee acts as a brand ambassador for Infosys right from the day the candidate expresses her interest in joining the organisation. It leads to reduction in cycle time spent by the recruitment team in addressing the softer aspect of queries from the candidates as the referring employee will be addressing the same,” he adds.

However, Lobo warns that there is a danger that employee referral programmes will end up stripping an organisation of its diversity and lead to nepotism. The selection decision in case of a referral should be by an independent panel and the company should have processes to ensure that only a candidate who meets the norms is selected. “An employee referral programme is just a sourcing strategy and should be backed up by a strict evaluation and hiring process,” he adds.”

To ensure that the recruitment process is transparent, HCL Technologies ensures that the referred candidate is not hired in the same department or project as that of the referrer.

HCL’s Narayanan says, “A strong policy to process referrals is a must to ensure the right candidate is sourced at the right time. The person referring should not be part of the selection processes and there should be checks and balances in place to ensure credibility of the process.”

HCL also has an internal networking platform, which works just like any other social networking platform and 85 per cent of the workforce actively uses it. This ensures employees are constantly connected to like-minded and like-skilled people, which makes the job of making recommendations so much easier.

At auto major Maruti Suzuki India, the recruitment process is divided into two categories: campus recruitment and lateral recruitment. For lateral recruitments the job of sourcing is done with the help of internal job postings and employee referrals, besides using the reach of the corporate website and job portals, and the good offices of placement consultants. “The first preference for lateral recruitment is given to employee referrals and internal job postings, which together comprise 40 per cent of the lateral recruitments, says SY Siddiqui, chief operating officer (administration), Maruti Suzuki India.

“This also helps in better connect with company’s ethos, a stronger employee bonding and better retention, ” adds Siddiqui.

Likewise at Ernst Young, employee referral contributes to 55 per cent of the total hiring which a benchmark in this space. Says Sandeep Kohli, national director, HR, Ernst Young, “Referral hiring lowers the cost of overall hiring by approx 50–75 per cent across levels.”

Cutting hiring cost in the organised retail sector is a different ball-game altogether. Here the majority of the hiring happens at the store level because attrition levels are the highest there. GR Venkatesh, head, people office, Future Group, explains how it works in his sector: “Eighty per cent of our workforce is at the front-end and most of the recruitment happens through referrals or walk-ins. This particular category of staff is required to clear their school leaving examination. On the other hand, 60 per cent of the vacancies at the back office — zonal offices and the headquarters — get filled through employee referrals.” “ review also use recruitment consultants, but most of the time we know people from the industry. Networking always helps in this sector,” he adds. However, the company prefers consultants for specialised positions, for which the company may be hiring for the first time. A consultant can charge from 5 per cent to 25 per cent of the potential recruit’s salary, depending upon the position. That’s a huge cost — something that can be cut down dramatically if it were to use referrals.

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