It's a hiring technique that's increasingly common. And in general, I don't think there's anything wrong with it.
Today's New York Times carries a report on the trend by Nelson Schwartz. He notes,
Some [firms], like Ernst & Young, the accounting firm, have set ambitious internal goals to increase the proportion of hirings that come from internal referrals. As a result, employee recommendations now account for 45 percent of nonentry-level placements at the firm, up from 28 percent in 2010.The company’s goal is 50 percent. Others, such as Deloitte and Enterprise Rent-A-Car, have begun offering prizes like iPads and large-screen TVs in addition to traditional cash incentives for employees who refer new hires.
What's wrong with that? Well, imagine a slightly different scenario from the first.
Imagine that, rather than looking to hire, you are looking to be hired. Imagine that you are one of the long-term unemployed. Schwartz writes, "Nearly 4.8 million Americans have been out of work for 27 weeks or more, according to the Labor Department, three times as many as in late 2007. The typical unemployed worker has been jobless for 38 weeks, compared with 17 weeks before the recession."
You may have had a great network while you were in your last job, but how great is that network after 27 weeks?
I still don't believe that referral hiring is inherently unethical ... but there's got to be some way to offer a helping hand to those who don't have the connections. "It's who you know" is not the marker of a vibrant economy.