How could research firms and outplacement organizations help me recruit new hires?

As another alternative to traditional contingency or retained recruitment, research firms package their services into hourly paid increments. For example, you might enlist a research firm only to research and identify prospective candidates from competitor firms. The fee would then be based on the number of hours necessary to generate the candidate list. You, the client, could also pay extra for the research firm to approach, qualify, interview, and reference-check those candidates.

In essence, the firm ''unbundles'' the search process into its component parts, thereby providing you with significant cost control measures by allowing you to bring in-house parts of an activity that formerly had to be totally outsourced. As such, research organizations are a very logical and necessary component in today's environment of cost reductions and expense controls.

Companies that are downsizing sometimes pay outplacement firms to assist displaced workers in finding jobs. As far as the displacing company is concerned, the cost of outplacement for a former employee is far outweighed by the altruistic and practical benefits that allow it to continue its business operations without undue interruption.

It's in the outplacement firm's best interests to get its candidates placed as quickly as possible. It costs outplacement firms big bucks to provide services to displaced executives. As a rule of thumb, if the outplacement firm can get the candidate out of its office (and into yours!) within six months, it will make money on the deal. Therefore, these firms employ job developers to help their candidates find work. Remember that because the candidate's former company pays the outplacement firm, not you (the potential new employer), this free supply of talent could significantly reduce your cost per hire. In short, outplacement firms are an incredible source of free, highly skilled candidates, and it would be an absolute mistake not to list your openings with them.

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To locate a listing of research firms that handle ''unbundled'' search, purchase The Executive Search Research Directory ($125) from The Recruiting and Search Report, (800) 634-4548.

In addition, following are the corporate headquarters of the four largest outplacement firms in the nation with national job banks. Call them for their local office, and then forward your current job openings to:

Lee Hecht Harrison Corporate Headquarters 200 Park Avenue, 26th Floor New York, NY 10166 (212) 557-0009

Drake Beam Morin

Corporate Headquarters

101 Huntington Avenue, Ste. 2100

Boston, MA 02199

(617) 450-9860

Right Associates Corporate Headquarters 1818 Market Street, 33rd Floor

Philadelphia, PA 19103-3614 (800) 237-4448

Spherion Corporation 2050 Spectrum Boulevard

Fort Lauderdale, FL 33309-3008 (954) 351-8300

Will an employee referral program work for my company?

Most employers realize that employee referral programs are the most cost-effective way of attracting new talent. Still, there are some stubborn CEOs and CFOs who begrudgingly argue, ''I'm not paying for referrals now; why would I want to start paying for some-thing that I already get for free?''

At first glance, their arguments have merit. After all, it does appear like they'll be giving away money with no apparent return. What they don't realize, however, is that they're not really getting ''referred'' new hires for free. Your company's cost-per-hire will identify how much you're paying to hire exempt and nonexempt workers in your organization (see Question 2).

Your goal should be to lower the average cost-per-hire. To lower that aggregate cost, you've got to look at your overall recruitment expenses per hire—not just to your intermittent "freebie" employee referrals. Employee referral programs are the least expensive methodology for identifying and hiring new talent and reducing your company's cost-per-hire. Further, new hires tend to be more reliable and less likely to leave when they have friends or associates with a vested interest in making them successful. Such ''sheltered transitions'' ensure a smoother landing and an automatic social network within the company.

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How do you set up an employee referral program? The specifics of your program will depend on the types of hires you're trying to make, your company's current cost-per-hire, and the number of hires you project. Here's how some companies lay out their programs:

- Cash bonuses are given to current employees who refer new hires. Nonexempt cash bonuses range from $250 to $500. Exempt cash bonuses range from $500 to $2,500. In some cases, higher cash bonuses are awarded for information technology or finance candidates (say, $3,000 to $5,000 per hire) than for other exempt new hires.

- Most companies pay cash bonuses in one or two increments. Those that pay in one increment pay at the conclusion of the new hire's first six months with the company. Companies that pay in two installments pay 50 percent when the new hire starts and 50 percent when the new hire reaches the six-month period. (Note: Employees who refer new hires must be employed at the time the referral fee becomes due; if the referring employee leaves the company in the meantime, no fee will be due because the program sonly for existing employees.)

- Some organizations augment the cash bonus program by having lotto drawings for ''super'' prizes like trips or gift certificates at the end of the year. Other organizations pledge a monetary bonus (of perhaps $5,000 or $10,000) to the employee in the company who has referred the most new hires in the previous year.

- Program participation should be limited to regular, full-time employees who refer other regular, full-time employees. Although referring temporary employees or independent contractors may be beneficial to your company, it shouldn't necessarily warrant a referral fee. After all, your company won't receive the same return-on-investment for a casual or short-term worker.

Are there any downsides to an employee referral program? Yes. If you believe that your current employees would not feel comfortable referring their friends or business associates to work for your company because your organization has an ''unfriendly'' reputation, then don't implement such a program. After all, you don't want to have to implement ''PR damage control'' to overcome the negative feedback that could arise from suggesting that workers refer their friends. Timing is therefore a critical element of any employee referral program's implementation.

Second, if your organization suffers from a lack of diversity among its staff, encouraging internal referrals may be problematic, since people tend to refer people like themselves. If you want to broaden the spectrum of diverse individuals who contribute to your organization's success, then you may want to rely on external recruitment (through search firms and classified ads in minority publications) more than on internal referrals. After all, although the dollars and cents of internal referral programs can't be disputed, these programs won't necessarily fix perception problems related to your organization's diversity recruitment programs. Instead, documented minority outreach efforts will probably be a better route to recruitment success.

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