HR’s Big Dilemma : To Hire From Within or Beyond?

In the realm of Human Resources, the process of sourcing new talent is a multifaceted endeavour. Among the various recruitment channels employed, one prevalent practice is the referral of acquaintances or individuals known to those within the HR community. There are many organizations which solely rely on the traditional approach of sourcing candidates via references. This approach, while rooted in the desire for familiarity and trust, comes with its own set of pros and cons, and its implications on recruitment dynamics.

 Within HR circles, the preference for referring individuals known personally or professionally is often driven by several factors:

• Reliability and Trust: Referring someone known to other HR professionals instills a sense of trust and reliability in the hiring process. Since the referrer is familiar with the candidate's capabilities and work ethic, there's a perceived reduced risk of hiring the wrong person.

• Cultural Fit: Knowing the candidate beforehand allows the company to gauge whether they align with the culture and values of the organization. This familiarity can lead to better cultural fit assessments, potentially reducing turnover rates.

• Expedited Recruitment: Referrals often streamline the recruitment process by bypassing initial stages of sourcing and screening. This efficiency can be particularly beneficial in fast-paced industries where talent acquisition is time-sensitive.

• Strengthening Networks: Referring acquaintances not only aids in recruitment but also strengthens professional networks. It fosters a sense of community within the industry, facilitating future collaborations and exchanges.

However, despite these perceived advantages, the practice of referring acquaintances comes with its own set of challenges and limitations.

• Lack of Diversity: Relying heavily on referrals may inadvertently affect diversity within the workforce. An employee who provides a reference is likely to recommend someone similar to themselves, potentially hampering the diversity mindset within the organization. Since referrals often stem from existing networks, there's a risk of excluding candidates from diverse backgrounds or underrepresented groups.

• Limited Talent Pool: Depending solely on referrals can restrict access to a broader talent pool. This constraint may hinder the organization's ability to attract top-tier talent with diverse skill sets and perspectives. Scouting for talent outside of the organization helps in the capability assessment of employees within the available talent pool.

• Potential for Bias: Referral-based hiring may unintentionally introduce bias into the recruitment process. HR professionals may unconsciously favour candidates referred by individuals within their social or professional circles, overlooking equally qualified candidates from other sources.

• Strained Relationships: In cases where referred candidates fail to meet expectations or perform poorly, it can put a strain on relationships within the workplace. The referrer may feel a sense of responsibility or guilt, while colleagues question the validity of future referrals.

• Filling the seat: In situations of tight deadlines, professionals may choose to fill the seat with the referral on hand as scouting for the right talent could lead to a more time consuming process. 

While the practice of referring acquaintances offers certain benefits, it's essential for HR professionals to strike a balance between familiarity and inclusivity in their recruitment strategies. It’s not necessary to totally negate referral programs but it is important for HR leaders to look beyond references and complement it with various other sourcing channels such as job boards, headhunting, career fairs, social media, recruitment agencies etc. Having a multi-channeled recruitment process helps in benchmarking candidates; assessing capabilities effectively, and making informed decisions. Investing in a comprehensive hiring process is essential for long-term success, and taking the time to evaluate candidates from both references and the talent pool will ultimately lead to the hiring of exceptional talent. 

Additionally, implementing a transparent referral policy is crucial for fostering fairness and reducing bias in recruitment. By regularly assessing the effectiveness of referral-based hiring practices, organizations can cultivate a culture of meritocracy within the organization. 

If you are interested in this topic and would like to discuss it further please contact Rinkal Choudhary via LinkedIn or at rc@elliottscotthr.com. 

References: 

• https://www.forbes.com/sites/georgenehuang/2018/02/19/employers-beware-the-unintended-consequences-of-employee-referrals/?sh=2316e0e77916
• https://onlinelibrary.wiley.com/doi/abs/10.1111/peps.12097
• https://hbr.org/2019/05/your-approach-to-hiring-is-all-wrong