Employee referral program is increasingly becoming popular among companies today. It has rather become a de rigueur recruitment tool for the companies. Companies are aware of the positive spin-off, employee referral program generates. Besides being the most cost effective recruitment tool, referral programs also bring in high return on investment. Though employee referral program offer a host of advantages to the organizations, it has its own share of disquieting consequences. This article outlines the business impact of employee referral program and the slew of steps, organizations should initiate to make the program truly a world-class one.

Imagine the following hypothetical situation. You step into a high-rise, imposing, glitzy, plush, and swanky hotel in the town. You are treated to excellent service, mouth-watering, exotic food and absolutely wondrous accommodation. When you leave the hotel, the front-office clerk at the reception slips a package in your hand. While on the move, you open the package to see three gift items and touching notes from the hotel manager saying, "A big thanks to you for checking into our beautiful hotel. We would like to present these gifts as a gesture of appreciation for having extended your patronage towards our hotel. To demonstrate how much we value and care for our customers, we would like to present you these gifts". In the gift package, you find an outlandishly cool T-shirt and a freaky cap with the hotel's logo inscribed on it. Dig deeper into the package. Lo and behold, you also find a redeemable coupon for Rs. 1,000 off your next visit, if you get your friend to stay at the hotel. Let us face it—the cute gifts and the touching note left you inexorably impressed. Before you know something, you are going to tom-tom about the hotel to your charmed circle of friends. In the process, you also get to redeem your Rs. 1,000 coupon in the event of your friend checking into the hotel.

Let us superimpose this hypothetical scenario on the corporate terra firma. Companies of all hues and sizes roll out their employee referral program in a pretty much the same manner, the hotel tries to woo its loyal customers and generate the customer traffic. Companies are pulling out all the stops in encouraging their own employees to recruit people known to them. Companies of all stripes call upon their employees to leverage on their social and networking capital so that they can rope in their friends and colleagues. With the economy showing signs of slowing down, HR practices in recent times have undergone a sea-change. In today's competition-driven sweepstakes, it has become a compelling necessity for companies to choose an optimal combination of recruitment sources that will result in lesser recruitment cost, decreased hiring time, and selection of multitude of candidates. Employee referral program helps in accomplishing these objectives in good measure. Little wonder, employee referral program has gained currency amongst HR practitioners in recent times.

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