An overview of employee referral program “rules”

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Q: I recently referred a friend to work at my company.  My friend was hired.  I thought I would be entitled to a bonus for referring my friend.  I asked my HR Rep and she said that I was not qualified to receive the bonus.  I am not sure what disqualifies me.

A: Employee referral bonus program are an effective way of broadening the candidate pool.  Employers are fighting for talent.  Every employer wants to hire the best and the brightest.  These programs are often cost-effective too.

Usually an employee referral program has rules.  Some of the most common rules include that the candidate must be a “new” candidate.  If the candidate had already been referred through another channel (e.g., another employee, a placement firm, an online posting, or had applied to the company directly), then your referral would not qualify for a referral bonus.  Or, if you are the manager of a department and the new employee is working within your department, many companies will not pay a bonus for this type of referral.  Many employers also exclude senior leaders from this type of program.  When we design an employee referral campaign for our clients, we suggest excluding Vice Presidents and above.  Some companies allow independent contractors and consultants to receive a bonus, while others do not.  Finally, most companies have a sentence or two in the “fine print” which states that they reserve the right to make all hiring decisions, whether an employee referral is in place or not.

With unemployment in the Boston area hovering around 3%, most companies who have aggressive hiring plans, are relying on employee referral programs.  Some employers launch these programs in a splashy way, with balloons, hot dogs and a lot of bling.  Others will post the info on an intranet.  I know the employer is really serious about these programs when I see posters in cafeterias, bathrooms and elevators.

Employee referral programs can be a valuable source of talent.  Employees tend to pre-screen candidates a bit, before the candidate is referred.  Current employees also can share information with the candidate.  Information might include details about the culture, how long the commute might be, what the dress code is or how supportive management is of employees.

It would be ok to ask why your referral didn’t qualify for a bonus.  It would be helpful for you to understand this as you sound like you might be a good source of future referrals.

Pattie Hunt Sinacole is a human resources expert and works for First Beacon Group in Hopkinton, an HR consulting firm. She contributes weekly to Boston.com Jobs and the Boston Sunday Globe Money & Careers section.

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