The dark side of referrals

Everyone knows that employee referrals are the best way to hire. Your employees are not going to introduce and welcome a psychopath to work at their own company. As the referred person already is acquainted with some of the other people in the company, the new hire fits in faster and is a good cultural match. What is there not to like about referrals?

Job boards and recruiters can be expensive and they are introducing you to strangers, which is a gamble. Sure the person looks good on paper and the interview went well, but did the interview go well because the candidate has had so many interviews and knows how to answer your questions? 

I am here with a warning: be very careful about referrals. Hiring someone in your, or your staff’s, network is often very successful; however, employing a friend or one of your employee’s friends should be avoided. There is a fine but important line between a qualified referral and cronyism. 

When a manager pulls in someone too close from their network, the manager often shows, or appears to show, favoritism. Your employee that referred the candidate has a vested interest in having the new employee succeed. No one wants to hear “the person you introduced us to is a lazy idiot.”

The dangers of referrals are: 

  1. Impossible to manage – it is difficult for your managers to discipline (manage) friends.
  2. Favoritism – whether this exists or not, if your other staff feel that there someone is getting preferential treatment, the cooperative atmosphere in your company will plummet. 
  3. Hedge your risks – if one member of your staff feels disgruntled, I am sure the friend is going to go out the door with them, or at least not far behind.
  4. Diversity of opinion – while people like to work with people who are like them, you don’t want a team of clones. Diversity of ideas and opinions makes a company stronger.

In my experience, the closer the relationship, the worse the result.   I had the privilege of having to directly manage a “super qualified” friend of the boss at one of my previous companies. Because the owner believed his friend was a professional and could perform the work duties easily, he did not have to go through our regular training program. Why should we waste time and energy to put this “natural closer” through our training program. This “closer” did more damage to the relationships with our clients, company culture and made so many blunders that company morale plummeted, and all they had to do was skip over the chain of command and go straight to his friend to complain about his co-workers and managers. It was a disaster for the company and could have been avoided. 

Your office is not a club and while it is nice when people like and respect each other, be careful that there is some distance between those in power over others. Make sure all referrals go through the same hiring process and are treated fairly.

I am all for using referrals if done correctly. While I operate a jobs board now, I have found the majority of my jobs through my network. People that have offered me positions have been former competitors, former bosses, industry association contacts as well as referrals via friends; however, I have never worked for or with a friend. 

How have referrals worked at your company? Do you offer staff incentives to make referrals?


Peter Lackner operates the employment website
He was a former director at GPlus Media (GaijinPot & CareerEngine) as well as a director at
In addition to being active in the English Teachers in Japan (ETJ) organization, Peter serves on the Board of Directors for Tokyo Association of International Preschools.

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