Discuss the potential problems that might creep

Reference no: EM132765861

Question

The growing importance and popularity of employee referral scheme (ERS) is mainly due to wide range of benefits it offers to employees and employers. Some of the benefits that organizations derive from ERS are lowered costs of recruitment, a better cultural fit between the organization and the incumbent, reduced cost of training new recruits, enhanced employee motivation. The cost of hiring a new recruit through ERS is around 70% lower than the cost incurred through conventional hiring sources like placement agencies. The selection and induction programs would also be simpler as the prospective candidate would already be aware of the organization's values, norms and practices.

Organizations have also witnessed low turnover rates among those employees who were recruited by the ERS when compared to those absorbed by other sources of recruitment. The employees also benefit immensely from this scheme. For instance, an associate at Cognizant earned more than Rs 2 lacs, over and above her salary within a year by actively participating in ERS offered by the firm. Another employee at Polaris won a free trip to Singapore for referring six employees. The cash incentives doled out by these organizations range from Rs 5000 to Rs 50,000 depending on the level of the incumbent in the organizational structure.

The employee referral schemes offer an opportunity to recruit and retain the best people in the industry and thereby obtain an edge over their competitors. However, many organizations do restrict the number of employees sourced through referrals as the scheme has few disadvantages. Companies are therefore, striking a balance between the various sources of recruitment to ultimately win the war for talent.

Question:
Organizations are cautioned against ERS despite the variety of benefits offered. Discuss the potential problems that might creep in while implementing ERS in organizations. What other methods of recruitment can an organization use for middle/top level employees?

Reference no: EM132765861

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