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Wom Can Build Internal Staff Loyalty Through Referral Bonuses. Maxwell ...


WOM can build internal staff loyalty through referral bonuses. Maxwell (2004, p. 160) tells us this is a win-win situation for companies: companies gain valuable employees and employees experience their own financial gain through bonuses, which are often much more cost effective for corporations than ad placement or the use of independent recruiters. Maxwell (2004, p.160) states that as a general rule, employees do not refer poor quality sources as their own reputation is seen as being on the line; additionally, employees prefer not to work with poor performers. Min and Lambert (2002, p. 9) studied 3,000 trucking firms and found WOM was the most frequently used method of recruitment at 53.8 percent. Researchers believe the practice is used more frequently than others are in the industry due to the employee bonuses offered for new hires based on referral (Min & Lambert 2002, p. 9).
Pitfalls of WOM use
As Taylor, Keelty and McDonnell (2002, p. 16) point out in their study of recruitment practices in 200 large corporations in New Zealand, virtually all recruiters need to be concerned about changes in employment related legislation. Similarly, Club (n.d., p. 4) tells us that those belonging to ethnic minorities can be excluded from some WOM networks. In the United States, court cases such as the one by the US Court of Appeals against the FCC (Albinaik 1998, p. 93) where the FCC outreach to minorities program was deemed unconstitutional when it was applied to a virtually all Caucasian staff who would only relay WOM recruiting opportunities to their all white friends. Similarly, recruitment checklists caution against perpetuating gender and racial imbalances through the use of WOM (Planning the recruitment process 2001). Segal (2006, p. 56) also cautions against WOM considering it a risky recruiting procedure, especially since those most frequently associated with WOM recruitment are the least diversified within a traditional corporate structure. Segal (2006, p. 58) notes that many executives, for example, require significant numbers of years experience, thus many minority candidates may not have the adequate skill set to match the requirement, whether or not it is legitimate.
Buttell (1998, p. 15) states that attribution theory is an inherent part of WOM; the receiver interprets the message through their own filter. Often this filter is locally based, as in the case of minority cultures. For example, a divorced Iraqi Muslim in London seeking part time work will interpret the message through their own set of cultural filters based on the potential for familial and cultural shame in their job search and in their interpretation of WOM messages.
Hogarth and Wilson (2003 as cited by the Department for Work and Pensions 2005) stated that a primary pitfall of WOM use in recruiting is one of association, stating, those without contacts in the workplace are unlikely to hear about job opportunities.

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