Advantage of employee referral system

2. Focus of discussion
Meaning
Introduction
What motivates the referral?
What demoralize the referral?
Relevant suggestion of different
IT firms
Advantage of ERP
Disadvantage of ERP
CONCLUSION

3. Meaning
Employee referral is an internal recruitment
method employed by organizations to identify
potential candidates from their existing employees'
social networks.
An employee referral scheme encourages a
company's existing employees to select and recruit the
suitable candidates from their social networks.

4. Introduction
An Employee referral scheme encourages a company’s
existing employees to select and recruit the suitable
candidate from their social network.
As a reward, the employer typically pays the referring
employee a referral bonus.
Thoughtfully implemented employee referral plans are
excellent way to attract the best people at lower cost.
In addition to cash reward for referrals, the company
offers non monetary and also a raffle for those
employees who have made referrals.

5. What motivates the referral
According to the survey, the following result is
obtained-
1) 45% of responded wanted to help a friend to
find a good job.
2) 24% of responded wanted to help the company.
3) 31% of responded are motivated by the reward.

6. What demoralize the referral
1) 37 percent ->Don’t know anyone suitable
for the position.
2) 42 percent ->Afraid of the consequences of
referring a bad candidate.
3) 21 percent ->process is too much of a
hassle.

8. Infosys is an Indian multinational
corporation that provides business
consulting, information technology,
software engineering and
outsourcing services. It is
headquartered in Bengaluru,
Karnataka.
CEO: Vishal Sikka
Stockprice: INFY (NSE) Rs. 3,595
.00 -35.55 (-0.98%)
Founded: July 2, 1981, Pune
Headquarters: Bangalore,
Karnataka, India
Founders: N. R. Narayana
Murthy, K. Dinesh, Nandan
Nilekani, Ashok Arora, S. D.
Shibulal, Kris Gopalakrishnan, N.
S. Raghavan

9. Infosys feature
Do you know someone that would be a good addition to the
Infosys Consulting Group team? Through the Infosys Employee
Referral Program, employees can earn up to $500 for each
successful placement.
Employees who submit a referral for a successful placement will
receive $250.00 after the employee referred completes their
first three consecutive months on the job. After the completion
of six consecutive months, the remaining $250.00 will be paid
to the employee. If the referral candidate is placed as a full-time,
permanent placement employee instead of hired by Infosys for a
consulting position, the bonus will be paid in a $500 lump sum
is paid.
The Infosys Employee Referral Program is a great way to
continue to expand the Infosys team with the quality people
we’re known for, while YOU earn extra cash!

11. Infosys' employees will get an iPad for successful onsite referrals.
Incentive at Cognizant Technology Solutions ranges from Rs. 5,000 -
50,000 per candidate, depending on the level at which the candidate is
referred and inducted. At PayPal India, an employee even stands a chance to
win a motorcycle.
During the financial year 2012, 56 per cent of Infosys' lateral hires across
the globe came through employee referrals. In India, 62 per cent of its
lateral hires were employed through referral programs, she said.
Take the case of PayPal India. Nearly 20 per cent of its recruitment happens
through referrals. No one knows what suits PayPal better than our own
employees. So far we have been hiring people through employee referrals,
social networking and job portals.
: Computer hardware giant Intel Corp. uses a abomination of monetary and
nonmonetary incentives to get employees to refer others. In addition to a
cash reward for referrals, the company also offers a raffle for those
employees who have made referrals. Last year, the prize was a choice
between a $1,000 travel voucher or a home-entertainment system. About 50
percent of the company's new hires come from referrals.

12. Advantages
1) An opportunity to strengthen the bond with
existing employees-
Referral programs acknowledge and reinforce the
company’s commitment to rewarding the individual for
helping the company.
2) Reduction in Recruitment expenditure-
All the expenditure such as(Advertisement, venues, consulting
firms etc.) that is wasted for recruiting of employee is
minimized. Although the incentive and reward(non monetary
benefits) are given to the referring employees, there is cost
saving for the firm.

13. Advantages
3) Improved canditate quality and retention-
The existing relationship between the referring employee and
the candidate allows the candidate in following ways-
1- To understand the culture of the firm.
2-To better prepare to face interviews and other steps in
selection.
3- To access his/her own livelihood of success at that firm.
There is also a matching of expectations between
employer and the candidate, resulting in increased
level of staff retention.

14. Advantages
4) Higher candidate quality –
Referral candidates can be five times more likely to get hired than
other candidates. This is because educated employees know that
their role is to seek out individuals with superior skills and
experience.
5)Less recruiter time required —
whenever recruiters are overburdened, any new recruiting
program should minimize the use of their time. Employee referral
programs leverage the time and the networks of your employees,
so for referral candidates a significant portion of the finding,
screening, and candidate selling is done by someone other than
recruiters. And since nearly 50% of all hires at top-performing
firms come as a result of employees’ time spent on networking and
social media, recruiters’ time can then be focused on the remaining
50% of the positions.

15. DISADVANTAGE
1) An employees social network is limited-
It may compromise the diversity of the workplace
2) Detrimental from responsibility-
Actively referring candidates increases an employee’s
workload and may be detrimental to their main
responsibilities.
3) Elimination of suitable candidate-
The hugh talent pool that is available is not exploited.
In this manner a less capable candidate is selected.

16. DISADVANTAGE
4) Referral spamming and flood the system-
The primary disadvantage is that it will lead to referral
spamming and flood the system with irrelevant resumes as
employees are motivated due to the incentives. HR teams
without robust screening processes or experience will find it
difficult to identify the right candidates.
5) “groups” or “factions”
creation of “groups” or “factions” within the organization and
in the long term lead to a phenomenon called “inbreeding”,
where the candidates referred are virtual clones of the
existing employees. This could impact the culture of the
organization in a big way.

17. CONCLUSION
Employee referral provide a win-win-win situation to
all the parties involved i.e.- Employer, Employee and
the referral candidate.
Now a days more and more IT firms are involved in
employee referrals and are reaping the benefits.
The survey shows that the employees hired through
referrals have a retention rate that 25% more than that
of employees hired through other methods.