The Advantages and Disadvantages of Employee Referral Programs

For companies in Thailand both large and mall, finding high quality candidates is a huge piece of the employee staffing puzzle that often creates high pressure on Recruitment Departments in companies. In Thailand there are many ways to go about recruiting the right person for open positions in a company such as hiring a well-known recruitment company like Smart Search Recruitment, advertising roles, reviewing applications, and networking events are just some of the ways to go about finding external candidates.

 

But looking inward is another way many companies struggling to find new employee in Thailand can improve your hiring efforts. This does not just include internal promotions but is more in regards about leveraging your existing talent in another way. Your employees’ personal connections can make for a great resource for bringing in new talent to organizations in Thailand.

 

So, what are the advantages and disadvantages of employee referrals? Investing time and money on recruiting is inevitable—but it’s money well spent when a quality candidate is hired and retained, and that is why companies like Smart Search Recruitment in Thailand have become one of the more successful ways for companies to find new employees.  Still, there are some employee referrals disadvantages too. As HR Experts in Thailand, we have outlined through both the advantages and disadvantages of employee referrals so that you can decide how best to utilize them as a part of your overall recruitment strategy.

 

Employee Referral Advantage

 

Employee Referrals Advantages

It can mean a great deal for a candidate-in-question when they are referred by an existing employee. Not only will the current employee “the Referrer,” likely want to add to—and not detract from—company culture, but they’ll also vouch for required skillsets and competencies. Here are the top advantages of employee referrals:

 

1. Your company will save time and money.

Sourcing candidates requires a lot of effort, which means it can cost a company both time and money. Employee Referral Programs have been proven to be a faster way to hire, compared with employees sourced through other more traditional means. An advantage of employee referrals is that your current team member makes the connection and saves the Recruiter that initial time of sourcing the candidate. Further, the candidate could be a better match compared to other candidates who apply externally. This will also help expedite the process and cut back on the need to find alternative options.

 

2. Your company will receive qualified, quality candidates.

Employees will want to work with someone who will improve their own output and day-to-day workload. So, in most cases, you can have more confidence in the candidate’s ability to perform the necessary tasks. Further it has become common knowledge in today’s job markets that nearly three in ten employers have caught using fake references on an application. So, a personal recommendation that is already within the company can instill confidence that the reference is in fact valid and reputable.

 

3. Retention rate is typically better with employee referrals.

Employees who are referred into firms often have a better rate of retention compared to those recruited from other means. Employee referrals tend to stay around longer, most likely because they are personally connected to their work colleagues. That’s not to mention that the Referrer themselves may feel more respected and valued too after their company takes their recommendation. And when an employee feels respected and valued, they can become more dedicated in turn. You may also want to give an employee referrer a bonus to show your appreciation.

 

Employee Referral Disadvantage

 

Employee Referrals Disadvantages

The disadvantages of Employee Referrals must also be considered to properly outweigh the benefits. Here are some Employee Referrals Disadvantages to keep in mind when making a hiring decision:

 

1. You may get a recommendation based on bias.

While in most cases an employee’s motives should be transparent when referring new colleagues, but there may be circumstances where a person wants to just work with their friends or receive the referral bonus that is now becoming more and more popular in Thailand. “Referral Bonuses” especially for Technology Roles in Thailand, where supply and demand are mismatched can often generate a great deal of Employee Referrals. This can result in the candidate not being as qualified as either the Referrer or Referee said they were. The Referrer may think that they can make up for the candidate’s shortcomings or give them a coaching to falsely represent their skills. This can impact their own work performance in a negative way. And now your company may have two underperforming employees—and you may have to look to fill both of these positions as opposed to only one.

 

2. Employee referrals can invite opportunity for negative company politics.

While an advantage of employee referrals is that they can positively impact employee morale, they can also cause unnecessary tension. Both can be negatively received by their peers especially if the external hire was chosen over an internal promotion. Further, the Referrer may be afraid to offer critique to the person they referred. This kind of dynamic can negatively impact their work.

 

3. Your company could end up losing both the referrer and the referee.

When one goes, the other often follows in Thailand. Whether one decides to leave because of company politics, personal reasons, or a better opportunity, there is a risk that their counterpart will follow suit. This chance may heighten if problems with team dynamics aren’t addressed and resolved. So, it’s important to stay involved with a new hire, beyond any initial onboarding and ensure they are connected to the company and not just the employee who referred them.

 

An advantage & disadvantage of employee referrals

When considering hiring an employee referral, you’ll likely attract a like-minded staff member.  A like-minded team member can acclimate faster and therefore be productive faster as well as compared to an external hire. But it’s important that teams not lack diversity. Diversity can boost employee performance and the absence of it can limit creative thinking and detract from problem solving situations.

 

So, to summarized there are both advantages and disadvantages of employee referrals. If your employee referral works out, it can be great for all parties. But if it doesn’t, it can impact the team, the employee, and the new hire in a negative way.

While it’s good to ask yourself “What are the advantages and disadvantages of employee referrals?” it’s important to know that you’ll need to lean on other tactics too, as an employee referral program isn’t an end-all solution. Adding an Employee Referral Program should in our opinion be an additional part of a company’s overall talent acquisition strategy.

 

Smart Search Recruitment is Bangkok’s leading executive recruitment consultancy. We serve multinational and local companies, sourcing high-caliber candidates and placing them in mid and senior-level roles. For recruitment service inquiries contact us. We are committed to meet our client’s needs by delivering an exceptional level of service. We have insightful HR resources updated everyday. Please keep in touch with us via our social media.

Facebook: Smart Search Recruitment
Twitter: SmartsearchBKK
Instagram: SS.Recruitment

Get this resource