Many companies pay a referral bonus to employees when they recommend a friend for a job down the hall. But do they carefully consider the implications of this common practice?
I have an advantage when playing Six Degrees of Separation. In the '80s I worked for TV Guide, where I had the opportunity to interview such luminaries as Delta Burke, Martin Mull and McLean Stevenson. Consequently, I can arrive at Kevin Bacon in a couple of jogs, and from there the world is my oyster. (Readers: you all have permission to claim to know me, and to shorten your own path to celebrity accordingly.)
When the playwright John Guare first floated the Six Degrees trope in 1990, the term "social networking" had yet to enter the popular lexicon. Now, of course, networking in its myriad forms is what we do all day. We have become a race of prepositions linking people to people, things to things. Companies are just learning the power of networks for marketing, but in the world of recruiting networks are venerable, tested tools. Employees have long nominated their friends and relatives for open positions, and many companies offer finders' fees when those referrals take. It's an elegant idea. After all, employees know both their friends' talents and personalities and their employer's culture. Who better to spot matches made in heaven?
Employee referrals presumably reduce risk in the same way that Amazon referrals do: managers who liked Martin will also like Isabelle. But I wonder whether the practice has unrecognized drawbacks. Biodiversity is one sign of a healthy ecosystem; mutts tend to be sturdier than purebreds. Companies that hire lots of people who know one another—because they attended the same schools or play golf together every weekend or used to work together someplace else—may reduce the diversity of their workforces' experiences and perspectives. Innovation flourishes in the interstices of unlike ideas. How many surprises will emerge from a half dozen people who pal around in the Facebook groups "I Love Beer," "I'd Rather Be Skateboarding," and "South Park Lovers of America"?
Companies rich in pre-existing networks can also seem insular and unwelcoming to outsiders. Joining established workplace cliques is tough, but joining cliques that also thrive outside the office and share long personal histories is truly daunting. When the CEO and other leaders belong to those cliques—startups, after all, are often seeded with friends and family—issues of favoritism may arise. A manager friend who recruited several people from her college alumni network has heard the group referred to—not fondly—as "the Cornell Mafia." She sometimes holds her old friends at arms' length for fear of seeming biased.
Of course there are good reasons to shake employees' personal networks when hiring. People who play together well are likely to work together well. (Henry Jenkins, a professor at M.I.T., has suggested that companies may one day recruit whole groups that form around online games.) In addition, an employee understands that a friend's performance affects their own reputation, and consequently will avoid referring incompetents and perpetual procrastinators. Nothing kills a relationship faster than working all night to correct the screw-ups your gormless chum introduced into a major project.
The compromise is to use referrals, but limit the number of hires from any one employee's circle. Welcome the former roommate. Draw the line at quads.
LEIGH BUCHANAN is an editor at large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan