Can Employee Referral become Counter Productive for Organizational Health

Employee referral is an ideal source to get your prospective employee. The advantages of employee referral are far too many to ignore it. The referred candidates are those who have been dealt  by your employees from close quarters over a period time as a result these candidates have been naturally screened for their competency, integrity, discipline, performance and cultural fit. This is an ideal situation where you get the right candidate quickly  at a reduced recruitment cost.


In a nutshell the Benefits of Referral are :


  1. 1.       Reduced Recruitment cost
  2. 2.       Quick and Relevant Resources
  3. 3.       Better Cultural fit


So far so good. However when the employee referral goes beyond a mythical ‘Laxman Rekha’ and it seems you are over dependent on referral scheme then it is time to do a reality check to see if it has caused any systemic errors. There is a possibility of an overzealous approach to employee referral becoming counter productive. Here are 3 adverse effects.


1.       Limits diversity :True referral is to refer someone known to you personally over a period of time. The saying goes that ‘birds of the same feather flock together’. In effect through referral you get people who are similar in age / background / culture /outlook/language etc..  beyond a certain point adding more of similar people would adversely impact diversity in the organization which would be counterproductive in the longterm.


2.       Plateaus Competency : It is natural human behavior not to bring in someone who is smarter than you in the same group lest you risk losing your importance or standing in the group. Most people safely refer someone who are less capable than themselves or someone who are  just about the same competency as themselves.This way you may lose out on the best people in the industry and in the long run it may result in gradual reduction of competency within the organization.


3.       Compromises Integrity : Referral system has scope to promote unscrupulous practice. Many a times the person being referred is not even remotely known to the employee. There are agencies who mobilize and collect a fee from prospective referral candidates promising them job through referral scheme.  The employee doing the referral gets to keep his referral incentive, while the agency has already collected its moolah in advance. In this scenario chances of things going awry is very imminent. It could get murkier if anyone in the selection process is part of this chain. Then a preferential treatment is given to the referred candidate, sometimes critical skills could be compromised. Resulting in average candidate being recruited as against the best in the industry. Further it breeds the cancer of unethical practice in the organization.


So If Employee referral is going beyond a certain point - watch out – and look out for tell tale signs.


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