Employee referral bonus programs have been around for a long time. However, companies expanded their use of this practice over the past ten years, responding to increasing labor and audit regulation.
Why Do Companies Use Employee Referral Programs?
- Centralized Collection of Resumes: Nearly all employee referral bonus programs require that the employee send the referred resume into HR. This allows HR to collect the nearly 50% of the resumes a company receives through their own employees’ personal networks.
- EEOC: In order to comply with stronger EEOC regulations, companies had to build procedures to show that they give all applicants an equal chance at employment, including those that apply through their personal contacts. Employee referral bonus programs incent employees to forward resumes that come into their inboxes.
- Auditors: Public and regulated companies saw strengthened audit rules about the same time as EEOC regulations were strengthened by The Patriot Act. Auditors typically recommend that companies use employee referral bonus programs as part of their EEOC compliance, as procedures to equally consider all resumes submitted – including the average 50% of all resumes submitted directly to individual employees through personal networks.
- Reduce recruiter fees: Paying an employee bonus is less expensive than recruiter fees
Not all companies have implemented employee referral bonus programs, but companies many have increased the use of these procedures. Here’s how to tell if a company is likely to have a referral program, so you can better plan your approach.
How Can I Tell If A Company Uses Employee Referral Bonus Programs?
- Public or Private: Most publicly traded companies use employee referral bonus programs
- Size: Most midsized and large companies use employee referral bonus programs
- Regulated: Most companies (except the really small ones) in regulated industries use employee referral bonus programs
- Company website: Many company websites list full employee benefit programs, and may include employee referral bonus programs
- Ask a contact at that company: Since employees have a monitary advantage (some might say a “bribe”) to submit resumes to HR, it’s in your contact’s self interest to encourage you to submit your resume to directly them individually.
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