HR Forum

Put up more ERPs

WITH the constant battle for talent in every segment of industry, organisations often neglect what can be seen as an important recruiting source — their own employees.

Using a robust Employee Referral Programme (ERP) as part of a talent acquisition strategy offers employers four distinct benefits:

  • Cost savings: Based on many surveys done on human resource metrics, the cost to the company of an employee referral averages RM2,400 (S$1,000) per successful recommendation. Compared with other recruitment sources, this is a very low-cost method to recruit top candidates.
  • Quality candidates: Current employees understand the organisation’s culture and are likely to recommend candidates who will be a good fit. Outstanding referrals will reflect well on the referring employee, hence employees will endeavour to refer good candidates and avoid poor performers.
  • Increased productivity: Employees begin the process of “selling” the organisation to the candidate even before the interview. As a result, the company spends less time selling itself and the position and makes more efficient use of time during the interview process.
  • Employee engagement: Employees understand that their actions are recognised and appreciate the opportunity to contribute to the success of the company.

While many organisations have some form of ERP in their overall recruitment strategy, studies show that the effectiveness of their initiatives is woeful.

In a recent study done by a talent acquisition management firm, most ERPs account for only 5 to 10% of an organisation’s new hires.

Companies that put in place ERP best practices boast 60% of new hires from a well-run programme.

By considering the following tips, an organisation can increase the chances that its ERP will become a very productive recruiting source:

It’s not about the cash

The success or failure of an ERP does not hinge upon the amount of money paid to employees for successful recommendations.

Studies show that rewards of RM2,400 (S$1,000) or less are sufficient to motivate employees to make referrals.

Other non-monetary awards, such as gift vouchers, theatre tickets and days off, are also means to reward employees.

Continuous promotion

The most important factor contributing to the success of an ERP is marketing the programme.

Organisations must keep promoting the ERP to employees by advocating the programme through as many channels as possible.

Opportunities include new employee orientation, the employee handbook, corporate newsletters, notice boards and e-mail.

Organise incentive events, such as an annual lucky draw for larger prizes, and enter the names of those employees who make multiple referrals over the course of the year.

This will make the ERP not only enjoyable, but also continually keep it foremost in the minds of employees.

A successful ERP will always entice employees to review the latest job openings to get them thinking about making suitable referrals.

Organisations should publicise the new job openings in a variety of places. These include bulletin boards, the company intranet and corporate newsletters.

Have the job descriptions in an e-mail format to enable internal staff to forward them easily to friends and business contacts.


One of the common complaints I hear about poor ERPs is that after employees refer a candidate, they are not kept informed about the candidate’s progress in the recruitment process.

Create a structure to keep employees updated on the status of the decision-making process.

Contact all referrals in a timely manner. If a negative decision is made with respect to a candidate, notify both the candidate and the referring employee promptly.

When organisations ignore referred applicants, they embarrass their employees and discourage them from making future referrals.

Pay up!

Once the company hires a candidate as a result of an employee referral, pay the reward promptly.

It is reasonable to expect the new hire to remain with the company for a minimum period before the employee is entitled to receive the full reward.

However, do not make the reward totally contingent on a minimum period of service.

If the new hire leaves, it is not the referring employee’s fault. Withholding all payment will undermine the usefulness of the ERP.

Instead, the organisation might consider paying half upon hire, and the balance after the minimum period of service is met.

Commit to success

For an ERP to be successful, the organisation’s executives — from senior management to the human resource team — must be committed to using attainable metrics to measure the programme’s success and continually reinforce the principles that recruiting is everyone’s responsibility.

The proper execution of an ERP is key to its success.

An ARTICLE by Steven Yeong, chief talent evangelist at Hof Consulting, which helps firms develop talent acquisition strategies.