Fixing a Damaged Corporate Culture

Abuse of the referral-reward system is indicative of a deeper problem. But don't put all the blame on employees; management sets the tone

by Liz Ryan

A friend of mine is a professor. She's working on a research project studying employee-referral bonus programs. These are the programs where employees suggest friends and acquaintances for jobs in the company, and get cash rewards if a successful hire occurs. Employee-referral bonus programs are among my top 10 best corporate practices). Appropriately designed and administered, they're win-win-win propositions: Someone gets a new job; the employer gets a new employee who's already been vouched for by another team member; and the referring employee gets some extra cash.

My friend called a number of human resources practitioners to get their views on these programs. Reactions were mixed. A typical reply was along these lines: Sometimes the people employees refer are perfect strangers. They'll post our job openings on bulletin boards and Internet forums and refer anyone. We can't rely on employees' recommendations when they game the system like that.

I sigh when I hear this kind of story. Yes, these incidents are deplorable. Employees who would participate in a cash-for-referred-friends program only to abuse the system are not the sorts of people you want on your team.

Relying on Trust

The HR people trying to administer such plans must tear their hair out when employees misuse a mechanism that's designed to enrich them and give employment to their friends. But the problem isn't the program itself, much less the overall philosophy.

If the environment isn't healthy, then all the best-intentioned schemes and mechanisms will falter or fail. Employee-referral bonus programs, like so many other management practices ranging from old-fashioned suggestion boxes to cross-training initiatives to flextime mandates, rely on two critical elements: communication and trust.

A carefully designed tool—such as the employee-referral bonus program—can succeed only if the environment is ready for it. If employees like their work and value their reputations in the workplace, they won't sell their credibility for a $500 bonus by handing in the résumé of someone they found on Craigslist and calling that person a trusted colleague.

Getting to the Root of the Problem

An employee who squanders his credibility in the office for a $500 check is not a good representative for your organization. And you could make it clear that anyone who abuses the employee-referral bonus program will be disciplined or fired. But that's a short-term fix. If the culture is so damaged that people think nothing of telling perfect strangers, "Look, give me your résumé, I'll give it to my boss and pretend we know each other, and I can make $500 if you get hired," then you've got bigger problems than one unethical employee.

Of course, employee-referral bonus programs don't pay a cent unless a referred candidate is hired. To defeat the system, an untrustworthy employee not only has to refer an "instant friend" for an interview, but that false friend also has to be hired. So, there is responsibility on both sides of the equation. Presumably, a good screening process would uncover these not-so-close friendships before an offer gets extended, but understaffed HR groups and time-pressed hiring managers may not learn about the deception until the ink is dry on the newcomer's offer letter.

It takes time, hard work, and consistency to build trust. People won't believe in their leaders and what they tell them until they're convinced they're being told the truth. Building trust in an organization is much harder than implementing another HR program. Wielding a new hammer is easy, but if the wood is rotten, the hammer—any hammer—will fail.

Is Dissatisfaction the Issue?

I had a conversation with a corporate middle manager not long ago that illustrated this. "We do a lot of good things for our employees at my company," he said. "We give them their birthdays off, we help with their tuition, and we have regular employee meetings.