When a company is receiving a thousand job applications a day through sources like Monster.com and CareerBuilder, how can it be expected to identify the best candidate for each open position?
This is the central question posed by a recent New York Times article on hiring practices. The solution, the article suggests, is to rely more heavily on employee referrals as a basis for hiring.
A recent study by Sullivan Walsh Associates confirmed the article's findings: some of the best organizations use employee referrals to fill more than two-thirds of their open positions. This practice has several advantages. First, the cost per hire is very low, even when the token bonus paid to the employee who made the referral is factored in. Second, the personal recommendation ensures that the new hire is likely to be hardworking and dependable (as the article notes, employees tend to recommend candidates similar to themselves). Third, candidates referred by employees tend to have a practical understanding of the business in question, so they will be more likely to accept a reasonable offer of employment—and less likely to quit early in their tenure.
Despite the many advantages of internal recruiting—some of which are touted in the article—I have found that few companies are willing to invest time, money, and creative energy in promoting it. Offering a bonus to employees who make referrals is so common and so paltry a measure that it hardly counts. More effective is the practice of "push selling," in which an internal recruiter schedules interviews with new hires, executives, managers, and employees with unique skills or backgrounds. The purpose of these interviews is to elicit referrals—or at least obtain leads on good candidates. .
It also helps to get the CEO involved in promoting internal recruiting efforts. During a project I conducted many years ago, a recruiter from Microsoft explained to me that their internal recruiting program had been enormously successful despite their policy of not offering bonuses to employees. Much of the success, she believed, was due to the advocacy of CEO Bill Gates, who promoted the internal recruiting program as a way of expressing loyalty to Microsoft.
With support from the CEO, an internal recruiter "pushing" for referrals, and a focus on Gates's concept of referrals as evidence of company loyalty, your company can leverage current employees to bring in and develop the talent your company needs.