Final answer:
Employee referral programs offer reliable, cost-effective recruitment, with a faster onboarding process and potential for higher employee retention. However, they can also lead to reduced diversity in the workplace and possible biases, making professional human resources practices essential to mitigate these concerns.
Step-by-step explanation:
The advantages of utilizing an employee referral program include tapping into the networks of current employees, which can result in a more reliable and trustworthy recruitment process, often at a lower cost compared to other recruiting methods. It leverages existing relationships to identify potential candidates who, if hired, tend to have a faster onboarding experience and higher retention rates. Moreover, referred employees often contribute from day one as they already understand the company culture through their referrer.
However, the disadvantages of employee referral programs can be significant. They may inadvertently lead to a less diverse workforce, as employees tend to refer candidates from within their own networks, which may not be diverse. This can perpetuate homogeneity within the organization. Such programs might also result in internal politics where current employees could be biased in referring friends or acquaintances over more qualified candidates. Professionalizing human resource functions is crucial to mitigate these biases.