Like most other things, the practice of hiring through referrals has its critics and its fans.  For some, it is the accusations of favoritism or nepotism that discourage them from taking on family members, friends, acquaintances, networking contacts or ex-colleagues of current members of staff.

While for others it is the prospect that unhealthy cliques might develop in the workplace.  Others still fear that this type of hiring practice will leave them open to allegations of discrimination from within the workforce, particularly if existing employees are overlooked for promotion in favor of someone who has been referred by a colleague.

On the plus side, despite the potential problems (which can be overcome if handled carefully), hiring through referrals represents a huge savings to employers, who can dispense with the often extortionate costs of advertising as well as the considerable time that is typically required to sift candidates and go through the interviewing process.

These savings, however, are minimal compared to the other benefits of hiring referred candidates, because the latter have been found to work harder and stay longer than candidates who are hired through other more traditional methods.  Not only does the employer win in terms of increased productivity, but in retaining the individual’s services for longer, she also avoids staff replacement costs, which can, in some cases, amount to up to ten times the employee’s annual salary.

Consider these facts the next time you hire.