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July 11, 2001
Employees Want $1,000 For Referrals
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urvey of 2,300 workers by Referral Networks, a New York firm that manages employee-referral programs, reveals that 85 percent believe $1,000 is the appropriate monetary compensation for helping their company attract new employees.

And two-thirds of those surveyed said they might be willing help recruit for smaller rewards, like airline tickets and extra vacation days.

ERPs appear popular with employers and employees alike. Referral Networks and the Society for Human Resource Management found that four in five HR professionals believe they are a more cost-effective way to recruit new employees than job-search firms.

Moreover, the survey found, 70 percent of HR pros believe ERPs beat all other recruiting tools in cost effectiveness.

More specifically, the survey revealed that each exempt hire made through and ERP costs an organization about $900 in incentives and rewards, and each non-exempt hire costs about $400.

Regarding program effectiveness, a total of 37 percent of the responding employers indicated employee referral programs were more effective or extremely effective compared to other recruiting methods.

In addition, 36 percent said that employee referral programs were effective or extremely effective in increasing retention of current employees. More than one-third (34 percent) indicated the programs increased the number of interested candidates.

At least 65 percent of respondents said their organizations have either a formal or informal employee referral program. Among the incentives offered in an employee referral program, financial rewards were clearly the most frequently used (77 percent for exempt positions, 78 percent for nonexempt positions).

Cars were second (23 percent and 22 percent) and gift certificates and raffles came in a distant third (8 percent for both). In most cases, the amount of the award was predetermined and distributed after a required tenure period of the new hire, usually three months.

When asked if their organizations placed enough emphasis on and/or investment in their employee referral programs, 44 percent of respondents agreed or strongly agreed that enough emphasis was placed on employee referral programs for exempt positions.

Respondents also cited challenges such as lack of program awareness (36 percent) and stimulating employee participation (33 percent) as impacting the success of their organizations' employee referral programs.

"Increasingly, companies are realizing the value of employee referral programs as a recruiting tool that generates high-caliber talent and increases their bottom-line, which is particularly important in a slowing economy," said Richard Adams, CEO of Referral Networks. "But to ensure the greatest return on investment, companies must also proactively promote these programs. The ultimate success of ERPs is directly linked to a company's efforts to increase employee awareness and drive participation in the program."
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