In a job hunt, who you know often is crucial

New York TimesJanuary 28, 2013 

Riju Parakh wasn’t even looking for a new job.

But when a friend at Ernst & Young recommended her, Parakh’s resume quickly was separated from the thousands the firm receives every week because she was referred by a current employee.

Within three weeks, she was hired.

“You know how long this usually takes,” she said. “It was miraculous.”

While whom you know has always counted in hiring, Parakh’s experience underscores a fundamental shift in the job market. Big companies like Ernst & Young are increasingly using their own workers to find new hires, saving time and money but lengthening the odds for job seekers without connections, especially among the long-term unemployed.

The trend, experts say, has been amplified since the end of the recession by a tight job market and by employee networks on LinkedIn and Facebook, which can help employers find candidates more quickly and bypass reams of applications from job-search sites like Monster.com.

Some, like accounting firm Ernst & Young, 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 non-entry-level placements at the firm, up from 28 percent in 2010. The company’s goal is 50 percent.

“The long-term unemployed and other disadvantaged people don’t have access to the network,” said Mara Swan, executive vice president for global strategy and talent at Manpower Group, which provides temporary help and job-placement services. “The more you’ve been out of the workforce, the weaker your connections are.”

Although Ernst & Young looks at every resume submitted, “a referral puts them in the express lane,” said Larry Nash, director of experienced and executive recruiting there.

Indeed, as referred candidates get fast-tracked, applicants from other sources like corporate websites, Internet job boards and job fairs sink to the bottom of the pile.

“You’re submitting your resume to a black hole,” said John Sullivan, a human resources consultant for large companies who teaches management at San Francisco State University. “You’re not going to find top performers at a job fair. Whether it’s fair or not, you need to have employees make referrals for you if you want to find a job.”

Even getting in the door for an interview is becoming more difficult for those without connections. Referred candidates are twice as likely to land an interview as other applicants, according to a new study of one large company by three economists from the Federal Reserve Bank of New York.

In particular, LinkedIn has altered the hiring landscape, making it easy for recruiting departments to trace connections between job candidates and their own employees by using LinkedIn’s database and software.

Even as the rise of social media changes the landscape for job seekers, the depth of the last recession has eroded labor networks in both the white- and blue-collar worlds, said Judith K. Hellerstein, a professor of economics at the University of Maryland. Skills decline, she said, and friends become reluctant to recommend people who have been out of work for months or years.

Swan cautions that although employee referrals are a valuable tool, “you have to watch the ultimate long-term result in terms of diversity and skills.” Otherwise, she warned, “you’re going to get people like you have.”

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