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July 2001

Companies Continue to Tap Internal Network for New Talent

With the increasing cost containment measures having to be taken across most industries, companies are looking at ways to still be successful in attracting new, high-caliber employees. One way to cut recruitment costs is to utilize current employees in the job search arena. For upper management positions, the most costly group to recruit for and generally having to pay significant headhunting fees for, has shown to be added to the referral bonus programs in more than 40 percent of the participating companies.

In the recent Second Annual WorldatWork Referral Bonus Survey, nearly 400 companies participated in outlining their current referral bonus programs. Rewarding the recruitment efforts of their own employees has been successful in more than 90 percent of the participating companies. The following are highlights of the survey:

  • 70% of the total participating companies had a referral bonus program
  • 92% awarded recruitment bonuses for professional staff positions
  • 32% of the participants that do not currently have a referral bonus program are considering implementing one
  • Those that awarded a bonus for recruiting for an upper management position increased from 22 percent in 2000 to 62 percent in 2001
  • A 90-day employment period is the most widely used payout date, with 40% of the respondents doing so
  • A 30-day time minimum and a 6-month completion are the most commonly used bonus split markers
  • 92% of the participants felt their referral bonus program was successful.
Question 1 .Does your company award referral bonuses? (If No, participants proceeded to question 8)

Yes

No

70%

30%

Question 2. Your company awards referral bonuses for recruiting which of the following positions:

Yes

No

Upper Management

62%

38%

Middle Management

78%

22%

Supervisors

81%

19%

Professional Staff

92%

8%

Sales

70%

30%

IT Staff

90%

10%

Technical Staff

89%

11%

Administrative Staff (non exempt)

80%

20%

Part-time Employees

38%

62%

Question 3. Do you split the payout so part is given upon hire (or first payout date) and remainder after a set period of time? (If no, participants proceeded to question 6)

Yes

No

Upper Management

18%

82%

Middle Management

25%

75%

Supervisors

27%

73%

Professional Staff

32%

68%

Sales

24%

76%

IT Staff

30%

70%

Technical Staff

29%

71%

Administrative Staff (non exempt)

26%

74%

Part-time Employees

13%

87%

Question 4. How long does the new employee have to stay before the (first) payout is given?

No Waiting

30 days

90 days

6 months

1 year

More than 1 year

Upper Management

32%

13%

39%

15%

0%

0%

Middle Management

29%

15%

41%

14%

0%

2%

Supervisors

30%

13%

41%

15%

0%

0%

Professional Staff

31%

14%

40%

15%

0%

0%

Sales

29%

15%

40%

15%

1%

0%

IT Staff

30%

14%

40%

15%

0%

0%

Technical Staff

30%

14%

39%

16%

0%

0%

Administrative Staff (non exempt)

29%

14%

42%

16%

0%

0%

Part-time Employes

31%

13%

41%

15%

0%

0%

Question 5. When the bonus period is split, when is the completion of the payout given?

30 days

90 days

6 months

1 year

More than 1 year

Upper Management

2%

19%

55%

21%

3%

Middle Management

3%

24%

54%

16%

3%

Supervisors

3%

25%

56%

29%

1%

Professional Staff

2%

22%

49%

25%

1%

Sales

3%

23%

52%

20%

2%

IT Staff

2%

22%

56%

17%

2%

Technical Staff

3%

21%

49%

25%

3%

Administrative Staff (non exempt)

3%

21%

54%

20%

1%

Part-time Employees

7%

20%

57%

15%

2%

Question 6. What is the actual dollar payout on average for each group for the entire bonus value (e.g., if new hire stayed through the bonus period)?

<$250

$250-499

$500-999

$1,000 +

Upper Management

10%

9%

17%

64%

Middle Management

9%

8%

20%

63%

Supervisors

10%

11%

24%

56%

Professional Staff

9%

10%

22%

59%

Sales

10%

14%

23%

54%

IT Staff

8%

9%

20%

63%

Technical Staff

9%

10%

24%

57%

Administrative Staff (non exempt)

15%

23%

28%

34%

Part-time Employees

24%

19%

28%

29%

Question 7. Do you feel that your company's referral bonus program is working?

Yes

No

92%

8%

Question 8. Are you currently considering implementing a referral bonus program?

Yes

No

32%

68%

 

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