The Effectiveness of Employee Referral as a Recruitment Source

Abstract

An employee referral scheme encourages a company’s existing employees to select and recruit the suitable candidates from their social networks. As a reward, the employer typically pays the referring employee a referral bonus. Recruiting candidates using employee referral is widely acknowledged as being the most cost effective and efficient recruitment method to recruit candidates and as such, employers of all sizes, across all industries are trying to increase the volumes they recruit through this channel.The present study has made a comparative assessment of various recruitment sources utilized by the organizations. The study attempts to evaluate the effectiveness of Employee Referral program in one of the esteemed organization dealing with IT and ITES. The data was analyzed using Correlation, Ratio analysis and Chi Square. Results indicated that the quality of applicants generated by E-referral is comparatively better or equivalent to other sources.Research concluded that Employee Referral as a recruitment source in the organization has highest conversion rate, offer rate, and offer acceptance rate.

Overall the research has provided evidence to support the need for organizations to develop recruitment strategy which incorporates a diverse range of sources to reach quality applicants in the desired target market. The organization should also improve the awareness and satisfaction level among the employees about the Employee Referral Program in order to gain maximum advantage from this source of recruitment.

Keywords: Recruitment; Employee Referral, Offer Acceptance rate, Conversion rate