Over the last two years, Clearwater Electronics has been unable to recruit sufficient new talent to the organization. In the past, the HR recruiters have concentrated on external sources such as websites, employment agencies, newspaper ads, and educational institutions for their recruitment efforts. However, three months ago, the recruiters added an Employee Referral Program (ERP)—where current employees refer people they know for positions—to their recruiting activities and have seen an increase of potentially qualified applicants. Which reason best explains why this low-cost-per-hire method has produced results for the company?

  • A current employee can tell better than a recruiter can whether a new employee can be trained in a position.
  • A referral from a current employee allows recruiters to build diversity and avoid discrimination against women or minority groups.
  • A current employee understands job requirements and company culture and can tell people whom they feel will be a good fit what the job really requires.
  • A referral from a current employee allows the recruiters not to waste time on other recruiting activities.
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