Should there be a penalty for wrong recommendations?

The Employee Referral Programme or ERP, is a rather common programme across organisations. Many of firms inspire their existing employees to refer candidates who can suit the organisation, and in return earn rewards in cash or kind. A few years ago, InMobi promised Royal Enfield motorcycles to employees in India and Vespa scooters to those in the US if the candidates referred by them get hired. They sweetened the deal further by also giving an option between a trip to Bali and the Enfield! Sometimes, the rewards are immediate and at other times, they are divided into stages — from referring to getting hired.

As gratifying as this is for the referee, it is a goal accomplished for the organisation. But what after that? Despite an exhaustive interview process and thorough scrutiny, the referred hire may turn out to be a misfit. The reasons could be many — from underperformance to misconduct. In such a case, like the referral rewards, should there also be a referral penalty for recommending a wrong hire? That’s the question we asked HR leaders, who unanimously agreed that the referees should not be held at fault.

“It is important to remember here that the person who is deciding has faith in the person who is recommending. If irresponsible references are made, it may break this trust and at times even affect relationships”

Adil Malia, HR leader and chief executive, The Firm

SV Nathan, partner and chief talent officer, Deloitte India, believes that the blame, if at all, should fall on the hiring manager and the reporting manager. They are the ones at fault for hiring the wrong candidate and failing to develop him or her. “People are good, but circumstances change their performance and managers are responsible for that. The referees should never be blamed. When employees recommend someone, they put their reputation on the line. By taking the referees to task, one burns the bridge of talent referrals for good. A reference is a reference. It is for the HR and managers to check out their worth,” Nathan asserts.

Recommendation is a representation made in favour of a person, a party, a process, a resource or a programme, strongly suggesting its consideration to the decider for use or appointment. It is the prime responsibility of the decider to ensure that the right resources/ processes are used or the right person is employed for the task, irrespective of recommendations.

Adil Malia, HR leader and chief executive, The Firm, segregates the whole process between two people — the ‘recommender’ who recommends and the ‘decider’ who takes the decision to hire a referral. He says, “The deciders have the option to accept the recommendation or not. However, having accepted the recommendation, the decision is solely theirs, and therefore, they continue to be responsible for the outcome of the decision. They cannot pass the buck to the poor person who recommended a candidate during a crisis. Why the decider accepts a recommendation will remain the rhetoric.

“The referees should never be blamed. When employees recommend someone, they put their reputation on the line. By taking the referees to task, one burns the bridge of talent referrals for good. A reference is a reference. It is for the HR and managers to check out their worth”

SV Nathan, partner and chief talent officer, Deloitte India

However, Malia does outline some responsibilities for the people who recommend. First, they should recommend only if they have first-hand experience and knowledge. Second, due diligence to the referral’s relevance and suitability to the role should be considered before making a recommendation. Third, there should be full disclosure of facts to the decision maker to whom the recommendation is being made. “It is important to remember here that the person who is deciding has faith in the person who is recommending. If irresponsible references are made, it may break this trust and at times even affect relationships,” cautions Malia. He finds a penalty unnecessary as it can kill the culture and spirit of recommendation altogether.

In the opinion of HR leaders, there shouldn’t be a penalty because it is a learning. The organisation makes decisions based on interviews and background checks to gauge whether a candidate is suitable for the position or not. So how can a person who has recommended the candidate be penalised? The referees do not influence the hiring manager. They merely provide a talent source. It goes without saying that a person who has been an underperformer or has been found to indulge in some kind of misconduct, will not be referred anywhere else.

“People tend to go on recommending people irrespective of whether they know the candidates well or not. When such referrals turn out to be bad choices, future referrals from such reckless or incautious referees will be viewed cautiously”

Anil Mohanty, head of people and culture, Medikabazaar

Anil Mohanty, head of people and culture, Medikabazaar, shares that many people working in organisations that give out referral rewards, tend to go on recommending people irrespective of whether they know the candidates well or not. When such referrals turn out to be bad choices, future referrals from such reckless or incautious referees will be viewed cautiously. “Alternatively, the referee too will be cautious while referring in future.”

Clearly, HR leaders are against any kind of penalty on the person who recommends candidates. After all, at the end of the day, it’s the job of the hiring manager to find out whether a person is fit for the profile or not.