Referral Hiring: a matter of risk or comfort?

If you are given two option to choose your workplace, option one: a workplace where your friends are also working and option two: a workplace with strangers, then which one will you choose?

The answer may be simple for many and that would be ‘Option One’. It is really nice to have friends in the workplace. However, in other cases, you make friends among strangers but that is more like a professional relationship. So, if your HR ask you to suggest a name for any vacancy then you will be happy to do that.

The process is called referral hiring. Your Human Resource team gets benefitted by finding talent easily and that too at very low cost or zero cost. There are many companies who award the referrer by a decent incentive. Still, the incentive is much lesser than the fees being paid to a recruitment agency.

If prima facia, it appears like a win-win situation for all. The referrer gets a friend in the team in addition to an incentive, the candidate gets easy and transparent opportunity and the HR gets right talent easily. But the story is not that good always. The referral hiring process is having it’s own merits and demerits.

The good

  1. Transparent Opportunity for the Candidate: In most of the cases the candidate’s knowledge about job profile and work atmosphere is limited to JD (Job Description). They lack an authentic feedback source which can tell the real condition inside the organization. In referral hiring, the candidate is well aware of everything as they have a feedback source who is working in the same organization. This reduces the surprise factor and creates a reason for a longer stay in the organization.
  2. Creating better work environment: HR is not only responsible for hiring a talent but also retaining the talent by creating a better work environment. The known people for good reason create a better environment.
  3. The employee stays for long: It is observed that if the candidate is hired by reference, then they stay long in the organization. Also who referred them, also tend to stay longer.
  4. Low cost or Zero Cost affair: Overall expenses by HR is less in this case. They need not pay any fees to Recruitment Agency. And if they don’t have a policy of incentive to the referrer then it is almost zero cost. Only background verification will be a cost attraction. But companies use to give incentive (which is much lesser than agency’s fees) to keep the referrer motivated.
  5. Less time-consuming process: It is practically less time-consuming. Since the referrer knows the company as well as a candidate in a better way so it is a quick process to find a right match.

The bad

  1. Less diverse atmosphere: The process causes accumulation of similar thought in the organization and creates a less diverse atmosphere which is required for being competitive and continuous learning.
  2. Chances of Fraud: Since the process works on single reference so chances of fraud are very high. However, this can be controlled by a thorough check of background and qualifications.
  3. May spark internal politics: The referred candidate is most likely to be interviewed by the boss of the referrer (if that is for the same team) and this may spark the internal politics within the team.  The referrer may try to influence the interview and it will be more about the chemistry between the boss and the employee. But in case of reference for another team, it may not be a hindrance.

Referral hiring is increasing every year. Now in the age of social networks, it has different terms like employee referral, network referral or connection’s referral etc. The process is good but the need of utmost care is required while making the past check of the candidate.

Blockchain and referral hiring

When we say Blockchain, the first thing which comes to our mind is Crypto-Currency or Bitcoin. But it is much more than that. It is a technology which is being adopted widely. The blockchain is now being adopted for referral hiring as well. The technology can help in profile validation which is so far the biggest challenge of referral hiring.

Once the inscribed data of candidate is validated by Blockchain, it will be available to employers. The technology is building a robust platform for the profile validation through its complex mechanism.

Post Author: SimplyVedant

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