Case Analysis: Are employee referral policies fair enough?

Industry leaders share their perspectives on a case that involves glitches in the employee referral process.

Case

Vikas Sharma is an executive at a large global consulting firm with a rewarding employee referral policy, which makes referees eligible for a lucrative cash bonus,  if the candidates referred by them are hired. The bonus is given three months from the joining date of the hiree.

Well aware of this referral scheme, Vikas refers his cousin Rohit Verma, an engineering and management graduate with over six years of work experience across consulting. He uploads his resume on the company ATS (application tracking system) and awaits progress.

After a few months, Rohit excitedly informs Vikas of his scheduled interview. Voila! Soon after, Rohit gets a confirmation call from the company. Following his appointment, Vikas follows up with the HR team for the referral bonus. To his utter dismay, the HR team declines his request for the bonus, stating duplication of resume in the ATS, as the reason.

Owing to lack of clarification from the HR team around the duplicity, Vikas continues to believe that he was the first to share Rohit’s resume. He further checks with Rohit if he had unknowingly shared his resume with some other employee of the company. Again to his disappointment, Rohit admits having shared his resume with another friend working for the same company. In his eagerness to get placed, Rohit had only wished for a faster response.   The system had rightly shown duplicity.  Rohit, however, specifies that the resume was first shared with Vikas.

Argument

Although, it is true that copies of the resume may exist on the system, is it fair on the part of HR to not keep track of who shared it and when? Isn’t it the HR’s responsibility to provide deserving credit to the one who shared it first? Is HR justified in simply stating that the resume already existed on their system, after the candidate has been selected? After all, the resume did not exist in the system at the time Vikas had shared it with them. Therefore, is it not unfair that nobody  receives a referral benefit, while the company actually gains a suitable candidate?

Perspectives

SV Nathan, senior director & chief talent officer, Deloitte

An ATS, in any organisation, normally files the date, time and name of the person who recommends a candidate or shares a resume – if not time, each ATS at least registers a date for the same. That said, it is not fair on the part of HR to simply cite duplication of resumes as the reason for declining the referral incentive without revealing other details regarding the duplicity.

In this particular case, Vikas or the other person who recommended Rohit, should have been informed about the resume having already been shared, by whom and when.  HR could have either rewarded the one who shared it first or at least offered a shared bonus. In addition, query handling in the workplace requires a lot of sensitivity, which seems to be missing here.

Such situations will only lead to mistrust in the programme, which will end up losing its sheen. Employees refer candidates only because they believe in the organisation. However, if this experience is anything to go by, the organisation will have to suffer loss of confidence in the long run. Disheartened employees are bound to spread the same message across the organisation and may also begin doubting various other aspects in the company. This way, the internal brand will suffer irreparable damage.

It is important for a referral programme to be administered well in terms of handling duplicity, ensuring transparency and dealing with employee concerns, if any, otherwise the organisation runs the risk of losing employee trust.

Vaijayanti Naik, head – HR, ICICI Securities

Employee referral programmes are built on trust and the good feeling that an employee enjoys in the organisation. Happy and engaged employees are likely to refer good candidates because they want their friends in a similar environment; and their own reputation depends on the candidates’ success in the organisation.

However, organisations have to run the referral process with stringent and transparent guidelines. Such programmes are most successful when they are run for a specific time period and skill. This not only helps the employees to recommend for a specified job but allows employers to run a systematic process that prevents duplicate resumes. There is correct recognition of the employee who referred the candidate first.

As for the case study, before people rush and make judgements on the integrity of the HR team in not rewarding the employee, I feel we should also consider another scenario:

When organisations primarily run their recruitment basis referrals, there is a possibility of mass resumes entering the database with only primary skills being tagged. As a result, cross- functional skills of a candidate could go unnoticed in a search. In all likelihood, another person could refer the same candidate for a skill not mentioned in the ATS, thus resulting in duplicity.

Besides, maintaining the database for updated information continues to be a challenge.

Therefore, if organisations are running mass referral programmes, my advice to HR professionals is to create a solid database system that allows employees to multi select skills for a referral and also filters resumes for various roles on a timely basis. But the most important task would be to build a strong intelligent team of professionals, who would check the resumes, select the candidate and evaluate and recognise the employee who first referred the candidate.

To sum up, employee referral programmes can only be successful if the process is intense and transparent and the employee is made to be part of the referral journey through timely communication.

Lalit Kar, vice president & head – HR, Mumbai International Airport

A clear and comprehensive policy and an enabling process should be put in place when any reward is involved. In the present case,  the policy should reward on a ‘first come, first serve’ basis and the ATS should have tracked whether Rohit’s resume was available in the repository, and alerted Vikas on a real time basis or at a short interval. The inadequacy of the stated policy and the inefficiency of the process have led to a trust deficiency in the employee in the HR practices of the company.

Similar issues also happen when a company works with multiple recruitment consultants. Normally when a CV is sent by one vendor, but has already been received from another vendor, the HR of the company is expected to immediately raise a flag to avoid any potential problem with the vendors.

Archanaa Singh, senior vice president -HR, Reliance Broadcast Network

Employee referrals have recently proven to be an effective and efficient talent acquisition tool, which is instrumental in catering to the most critical aspect of new-age organisations — ‘culture building’. Candidates hired through referrals are known to adapt to company culture, function and teams faster and most importantly, the expectations of the candidates remain in sync with the larger organisational vision.

In reference to the case, HR should have owned up for the negligence, in case the resume was missed. Alternatively, if the resume was received from multiple avenues, an acknowledgement to both the sources should have been followed by splitting of the referral benefit. This would have helped to strengthen the faith of the employees in the policy and the process. It is imperative that HR drives the effective implementation of the policies. Hence, it is important to regularly review and update HR policies and processes, to accommodate changes, so that the model is implemented efficiently.

Most importantly, HR as a function should constantly step up and act as custodian— capable of maintaining the fine balance between achieving the organisational goals as well as safeguarding the interests of people who work for it.