I think part of the problem with referrals is that you want to know who among your employees' contacts are the better developers.
If you pay for your employees' contact lists, how do you distinguish the stronger developers (or do you trust that your interview process will sort them out)?
In a small company, I'm not going to refer anyone I don't already believe to be someone I want to work with. I've also seen referral processes that ask employees to rank the strength of their referral from "just a random resume, I have no idea if this would make a good candidate" to "I would stake my entire reputation at this company on this hire."
- Incentives
There are inherent risks that people will be recommending a lot of candidates. This is not a bad thing, especially if they are candidates that aren't easily reachable (inboxes overflowing from recruiters / passive candidates / little social media presence), but attend events and are much more open to speaking with fellow engineers (better technical understanding and what day to day life is).
Candidates still have to pass the interview process so there is still Quality Control. The person who referred the candidate is not allowed to be an interviewer for that candidate. This is to remove personal bias and mis-aligned incentives.
>By offering bonuses in this way, companies essentially turn their employees into part-time contingency recruiters who now face the same bad incentives of their full-time counterparts.
Don't understand why this is inherently bad. The worse ideas often come to mind about recruiters, not without merit, but think about what it takes to be a great recruiter. Consistently presenting highly qualified candidates and building a relationship of trust with the hiring team. It's like any business, it can be poor customer service and retain no one, or great customer service and have loyal repeat customers.
- Contacts In The Hands Of HR
This is well deserved criticism. People fall through the cracks for a lot of reasons. The biggest one is probably handling too many :reqs(can be 40+ at one time)/hiring managers/candidates. A lesser heard reason, but probably happens a lot, the recruiter leaves the company and a lot of information gets lost. Recruiting is a highly contigent based department. Most companies do strictly contract or contract to hire. Recruitment in itself is a high turnover profession.
- Paying For Contact List
If the recruiting department is doing their job, most of that list will already be in the system. So companies will have to figure out an efficient pay out structure, also with so many people in the same circles, de-duplicating lists. An introduction is worth so much more than a list.
EDIT:
Important Point: It is up to a companie's current employee if they feel comfortable recommending someone or allowing their recruiting team to go over their contacts. DO NOT ALIENATE YOUR EMPLOYEES!! They can either be your biggest advocates or biggest detractors. In my opinion, retention is even more important than active hiring.
If you pay for your employees' contact lists, how do you distinguish the stronger developers (or do you trust that your interview process will sort them out)?