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Employee referral programs have caveats

Q. My company is hiring. They are offering employees a referral bonus if we refer qualified candidates for open jobs. I referred my neighbor, who was just hired. I was told he had applied several months ago online so my “finder’s fee” will be zero. Is this a common practice? I feel like I should be paid the money.

A. Employee referral programs are often used by employers to access a wider pool of candidates. Some companies only use them for “hard-to-fill” positions like software developers, engineers, or similar roles. Employees, like you, may have colleagues, friends, or acquaintances who would be well-qualified for opportunities within the company. Further, employees often “screen out” candidates who might not be a good fit, because of commute, experience, or other factors.

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Most companies have good intentions when an employee referral program is introduced. They would prefer to reward their employees, rather than pay a recruiter or place costly advertisements. Usually, however, here are some basic guidelines for a successful referral.

One of the most common rules for a successful referral is that your introduction of a candidate must represent the first contact with the company. In other words, the candidate should not have applied before through another source, such as a placement firm, an advertisement, or referral by another employee, etc. Some companies also have rules that exclude executives, hiring managers, or members of human resources and recruiting teams from receiving a bonus based on an employee referral.

It sounds like your neighbor should have told you that he had applied online to your company several months ago. This information would have likely reset your expectations.

I can understand your frustration but I also understand why you were excluded from receiving the bonus. Keep looking for qualified candidates. Your next referral could pay off.

Patricia Hunt Sinacole is president of First Beacon Group, a human resources consulting firm in Hopkinton.
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