Ask HN: Why does most hiring happen through referrals?

The scientific (though old) answer is that 1) referred candidates stay longer 2) referred candidates are better informed and so more likely to succeed at the interviews, which means less time waste for the employer 3) referring employees stay longer for they feel 'responsible' for the referred candidate for some time

(source: http://en.wikipedia.org/wiki/Mark_Granovetter)

Adding the cost aspect, it's clear why companies like referral programs

Trust and cost. Referrals even if the company pays $1-5k to the referrer are fair less expensive then paying 15-30% of the first years salary to an agency. And the trust: if the referral is coming from an inside person that has knowledge of the systems etc, they are referring someone that they feel will work well in that environment and that will fit in with the team. Team fit is almost more important than having all the skills day 1 most of the time.

For new grads, this means using your friends and connections (professors etc) from school to help land a job. In the absence of that ability, get out and meet people and show employers you are awesome. For developers, creating a public git repository is an awesome way to let them see your skills.

It is almost impossible to assess someone efficiently in a few hours through multiple interviews. So if someone you trust tells you someone is good (or bad) based on a long period of work in common, this is much more representative of how the candidate will work in the long term.

People are (mostly) more reluctant to refer unqualified candidates they know personally than unqualified candidates are to apply to jobs. Hence the ones with insider references tend to be more qualified.

Also, judging skill through interviews or whatever is hard at best. Insiders know the people they are referring much better than the company does, even after interviews.

My guesses, anyway.

Basic sales premise, people buy from people they know and like. The same is true in recruiting talent. Getting referred into a job opportunity, implies the stamp of social proof and reciprocity.

Recommend reading Influence by Robert Cialdini > http://www.amazon.com/Robert-B.-Cialdini/e/B000AP9KKG

It's the evil you know vs taking a chance on the unknown. Plus the short-term thinking that plagues most people.

This is why most companies fail eventually. Hiring and promoting based on relationships instead of skills. You can grow a relationship. But a bad employee will never get any better. Especially if you bump him up to management.

If you have connections, you can land the job before it is advertised publicly; therefore the job won't be advertised publicly.

If you don't have connections, you can't land a job that isn't advertised publicly.

Publicly advertising a job is tedious.

Candidates referred by employees also tend to be of higher quality because the employee's reputation is somewhat on the line with every person he or she refers to the company.