Disadvantages of Employee Referral Programs


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[aa_subtitle_display]As we discussed in a recent post, there are an array of benefits to using an employee referral program in your office. From increased employee retention to a faster recruiting process, it is certainly something to consider for your organization.

However, there are disadvantages to consider as well. Like any other decision that involves your business, it is important to consider both sides of the issue.

Here, we will take you through the disadvantages of these programs to give you a well-rounded view in order to assist in making your choice.

The Disadvantages of Employee Referral Programs

It could lead to hard feelings

When you are relying on employees to refer candidates to you, when their referrals do not get hired, it could lead to hard feelings in the office.

This could create an awkward situation between hiring managers and employees, leading to strained relationships. Because their referrals are important to them and they obviously want to see them onboarded to the team, conflicts could arise if interviews do not go as planned.

This scenario will need to be handled with sensitivity and thought to avoid inter-office issues.


It could lead to employees being isolated

If an employee refers a friend as a candidate, and they eventually get hired, it could lead to these individuals being “isolated” from the rest of the team.

It is likely that if people are friends outside of the office, once they work together they will be friendly and socialize inside of the office.

These relationships could lead to “cliques” forming among a team, strained relationships among employees, or to people feeling left out. In turn, that could be damaging to your office culture, morale, and environment.

Putting together these programs takes time and resources

Deciding how an employee referral program will work initially will take time and resources. After all, there are a lot of decisions to make and questions to be deciphered from the start.

These questions include,

What will incentivize employees to refer candidates?

What are the policies and procedures around referrals?

And, there are many more. As a leader, you must weigh whether or not the initial expenses of this program will be outweighed by employees referring great, long-lasting candidates to your business. If not, it may not be worth investing the resources.

Decreased workplace ideas

When people refer candidates, it is likely that their referrals will be similar to them, their ways of thinking, and their ideals.

This could lead to a decreased diversity of ideas and innovation in your workplace, which could certainly have a negative effect on your business.

It is important to have a diverse group of employees that bring an array of ideas to the table.

How a PEO Can Help

Your PEO can be helpful in weighing whether an employee referral program is right for your business. While this could be a tough issue to navigate, a PEO has the skills and resources to make your decision easier and to answer all of your questions.

Let us place you with the best PEO for your business to help your organization thrive.