What are the risks for employers in relying on employee referrals and other word-of-mouth recommendations when seeking to fill vacant positions?

Author: Linda Segall, Segall Enterprises

When employers limit their recruitment to only word-of-mouth and employee referrals, they risk reducing the opportunity to consider individuals in protected categories, such as minorities, women, older workers or individuals with disabilities. It should be noted that according to Executive Order 11246, employers that are federal contractors are obligated to consider and hire qualified applicants from protected categories. Reliance on only word-of-mouth referrals could put these employers at risk of losing federal contracts if these categories are not represented on their payrolls.

Aside from the possible legal ramifications of relying solely on referrals to fill job openings, employers that do so narrow their scope of qualified applicants and deny themselves the enrichment that a diversified workforce offers.