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‘It isn’t what you know but who you know’

The advantages of knowing someone inside an organization

By Brian Kreissl 

Most people are probably familiar with the old adage “It isn’t what you know but who you know” that will get you ahead. While this tired old cliché may sound rather cynical, in some respects it isn’t entirely a bad thing — and organizations would do well to capitalize on the concept to some extent when it comes to finding and retaining talent. 

This saying is often used to explain nepotism, class snobbery, racism, sexism and “the old boys’ network.” It’s also sometimes said by bitter job candidates to explain why they weren’t hired or why someone who appeared to be less qualified was hired for the role. 

Those who follow this line of reasoning believe people are rarely hired or promoted based on merit alone. Taking a somewhat less cynical approach, others use it as a way to promote networking as a job search tactic or a means to get ahead and help climb the corporate ladder. 

I have definitely seen this type of thing happen in several organizations, with friends and family members of senior leaders sometimes securing interviews for jobs they weren’t necessarily qualified for — or at least they weren’t as qualified as some other candidates were. In one organization, we even referred to these as “political referrals.” 

Negative impacts on diversity 

There’s no question nepotism and preferential treatment can and do narrow an organization’s talent pool and negatively impact diversity. After all, people tend to recommend and hire people who are like them. This can lead to a workforce that’s more homogeneous in terms of race, sex, age, ethnicity, social class and educational background. 

We sometimes associate nepotism with a certain type of snobbery not usually seen in this country. In the United Kingdom, for example, people are sometimes thought to be hired based on their “old school tie” — they are hired by other people who attended the same fancy private school they did. Some types of senior appointments are even staffed almost exclusively with “Oxbridge” (Oxford or Cambridge) graduates. 

But just because we don’t think of Canada as having that type of class system doesn’t mean a certain amount of class snobbery doesn’t exist in the labour market. We’re also fooling ourselves if we think people from higher socioeconomic backgrounds don’t have an easier time finding meaningful work and securing promotions. 

On the other hand, it seems rare that people with absolutely none of the required skills and background would get hired for a job simply because they have a senior-level contact within the organization. While they may be able to secure an interview more easily than other people, that doesn’t necessarily mean they’re going to get hired. 

I could even imagine situations where someone’s connections could work against the individual, with the hiring manager saying something like: “Who does he think he is? Just because he’s the CEO’s nephew doesn’t make him qualified for this job.” 

The effectiveness of employee referrals 

It’s also true this kind of thing isn’t all that different from employee referral programs, which I have already noted in a previous post can be quite effective. Apparently, while something like seven per cent of all applicants are employee referrals, they account for 40 per cent of new hires. Several studies have also found employee referrals often have higher retention and engagement rates than other hires. 

Research conducted by Stanford University Business School assistant professor Adina Sterling even found that having personal connections at an organization helps candidates get hired and be promoted. Such individuals have an easier time being socialized into the organization and establishing robust networks within the company. They also tend to stay with the organization longer. 

Sterling, who has researched social networks extensively (not necessarily the online kind), also found candidates with contacts within an organization tended to take job offers from that company more seriously and were less likely to shop around the offer to their current employers as a means of securing a counter-offer because it would make their friends look bad. 

While there are definite drawbacks to employee referrals and they should not be used as the only means of sourcing candidates, there are significant advantages to hiring people who already know someone within the organization. However, this shouldn’t be restricted solely to candidates who know the CEO or members of the senior leadership team.

© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.

Brian Kreissl

Brian Kreissl is the product development manager for Thomson Reuters Legal Canada's human resources, OH&S, payroll and records retention products and solutions.
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