Human Capital & Careers

Referral Programs Cheapest Way to Find Talent: Survey

Eighty percent of HR pros say they're more cost-effective than headhunters.
CFO.com StaffJune 26, 2001

Eighty percent of human resources professionals responding to a new survey say that employee-referral programs are a more cost-effective recruitment tool than job-search firms.

Further, 70 percent of the 586 HR professionals responding to the survey say referral plans are the most cost-effective way to recruit employees.

Each salaried employee hired through an employee-recruitment program costs an organization about $900 in incentives and rewards, while each worker paid hourly costs about $400, according to the survey by the Society for Human Resource Management (SHRM) and Referral Networks, a company that manages and hosts online employee-referral programs for Fortune 500 companies.

At least 65 percent of respondents said their organizations have either a formal or informal employee referral program, according to a SHRM press release.

Among the incentives offered in an employee-referral program, financial rewards were the most frequently used (77 percent for salaried positions and 78 percent for hourly-wage positions), followed by cars (23 percent and 22 percent)and gift certificates (8 percent), according to the release. In most cases, the amount of the award was predetermined and distributed after a required tenure period of the new hire, usually three months.