This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

October 14, 1998

Companies Handsomely Reward Employee Referrals

In the face of shrinking labor pools, some employers are resorting to unusual forms of compensation for employee referrals. Rewards range from days off with pay to a brand new Jeep Wrangler that sells for $20,000. Some employers have been so disappointed with traditional recruiting that they no longer run advertisements in the local newspapers. They use employee referrals—exclusively!

Many firms from trucking companies to high tech give cash rewards for referrals. Most often, an initial sum of money is given when the new employee starts work, with more given at three months, six months and one year.

But as it was reported in the Wall Street Journal October 6th, iCube, a small information technology consulting company, offers the most generous of these referral bonuses: Workers receive a television set for each referral that results in a hire. If they’re desperate, like they were in August, iCube adds a VCR to "grease the skids." Three new hires within a year earns the employee two fully-equipped top-of-the-line bicycles or free housecleaning and laundry services for one year (We know what we’d pick!); five successful referrals earn the happy employee a $5,000 vacation for two—anywhere! After eight hires, the employee recruiter receives a 1998 Jeep Wrangler, with unlimited options.

The bottom line is that employers save a lot of money with these employee referrals. When you consider the costs of running newspaper ads and paying headhunters, most of these employers believe they’re way ahead. According to Cathy Fyock, a fellow of The Workforce Stability Institute and author of Get the Best, the only caveat is that since "like attracts like," you will be replicating your current workforce. If you’re happy with the values, educational levels, and diversity of your current employee roster, that’s great. If not, keep in mind you’ll need to employ other recruiting measures as well.

© Copyright 1998- by The Herman Group, Inc. -- reproduction for publication is encouraged, with the following attribution: From "The Herman Trend Alert," by Joyce Gioia, Strategic Business Futurist. 336-210-3548 or To sign up, visit The Herman Trend Alert is a trademark of The Herman Group, Inc."

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