The Great Workplace Toolbox

Self Assessment - Exercise - Perspectives - Examples - Back to the Toolbox

Self Assessment

1. What are your top three most successful sources for new hires?
   
2. How much do you spend on classified advertising annually?
   
3. How much do you spend on placement firms and/or "headhunters" annually?
   
4. Do you have an employee referral bonus program?
   
5. If yes, how much do you pay employees for successful hires?
   
6. Do you provide a stipend for successful hires referred by customers or partners?
   
7. If you don't have an employee referral bonus program, why not?

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Exercise: Return on Investment

Determine the annual cost of each source you use to advertise open positions. Include classified advertising, online advertising, fees to professional firms, costs to maintain your own Online Career Site, the total amount of bonuses paid out to employees/customers for successful new-hire referrals, etc. Next, estimate approximately how many new hires were the result of each source. Divide the total cost of each source by the number of new hires attributed to that source. Which source appears to be the most cost effective? Are you surprised by the results?

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Perspectives

NorthCoast 99 winners identified employee and client referrals as their most effective source for new hires (online/internet recruiting ranked second). It isn't surprising, then, that 78% also have an employee referral bonus program, offering an average of $1,354 per successful new hire.

Compared to other forms of recruiting advertising, employee referral programs can be an extremely cost-effective and effective method of recruiting. A referral bonus encourages employees to refer qualified candidates for employment, and the expense of the bonus payment can be defrayed by lower advertising expenditures and efficiencies in the screening process.

Camaraderie and Co-Worker Performance were ranked 13th and 14th behind Rewards for Individual Performance as key motivators by Top Talent who completed the 2005 ERC Job Attributes Importance Survey. Top Performers want to work with other employees who share similar values and attitudes toward work. Referral bonus programs provide an opportunity for top performers to be rewarded for finding other people who exhibit the same qualities that make them successful.

Encouraging or rewarding successful employee referrals for new hires could be an excellent way to help enhance your organization's ability to attract, retain, and motivate great employees.

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Examples

• NorthCoast 99 Winners such as Kingston of Vermillion, The Federal Reserve Bank of Cleveland, and Altercare of Ohio, Inc. provide employees with business cards that can be distributed to individuals who they think would make great employees. The cards include information about how to apply for a job and who to contact. Not only are the cards distributed to the Human Resource department and staff Recruiters, but they are given to other department leaders and staff members throughout the organization as well. All are empowered to be an extension of the organization's recruiting effort and this trust affirms the value that the organizations place on the judgment and opinions of their employees.

• NutriScience Technologies rewards employees for referring qualified candidates who are hired. The referring employee receives a bonus of $1,000 for non-exempt level positions filled and $1,500 for exempt level positions.
  
  Employees must complete an Employee Referral Form and submit it to the Manager of Staffing. The employees are also responsible for informing the candidate of the vacancy, obtaining consent from the individual to submit their name, and having the candidate submit a current resume. The Staffing Manager or his staff will respond to the employee and the candidate and then, if qualified, move the candidate through the interview and selection process. The employee is then notified if the candidate is hired once the process is complete.
  

• FedEx Custom Critical rewards team members with a $300 bonus for referrals who are hired and work a minimum of 90 days. Through a program called “Critical Connections”, former employees are given $200 for successful referrals who work a minimum of 90-days.

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