Recommendation within Companies for Recruitment

“Hong has been responsible for developing the e-mail security system for four years in B Company. He studied electronic engineering at C college with the recommender. He works hard and has no problem in interpersonal relationships. The level of recommendation is in the middle.”

This is the sample of the ‘recommendation within the company’ from an employee through the company network when Ahn Lab, an Internet security company, recently recruited experience workers. The company has introduced this system since 2001. It hired 23 workers or 28% of the employees in 2001 and 34 workers or 44% in 2002. It is now planning to hire 20-30% in this way. When the company decides to hire the recommended person, the recommender will be given a bonus of 1 million won.

From two or three years ago, some conglomerates, IT and foreign companies have been put the ‘recommendation within the company’ system in place for their recruitment.

“As the recruitment of experienced workers on demand are preferred, such a system is becoming widespread,” said Sung Baek-min, a human resources manager at Ahn Lab. “We can hire a person who fits the position and it costs only a quarter of headhunting companies,” explained Sung.

LG Chemical, which implemented the system at the end of 2000, is recruiting R&D experts with experience of five years or more. Once the employment decision is made, the recommender receives 1.5% of the annual salary of the newly hired person. If the new employee remains in the company for more than a year, another 1.5% will be given to the recommender.

“The employee who recommended will be like a mentor for the new employee. So he can adapt to the new work environment faster and is less likely to leave the company,” said Roh In-ho, a human resources manager at the company.

LG Electronics will also introduce the system for this year`s recruitment of those with master’s degree in R&D and overseas sales department. Through this system, the company will hire 150 out of 1,800 this year. CJ, who has been recruiting about ten in this manner every year since 2000, will increase the number by improving the system in the latter half of this year. In addition, more companies are expected to join the trend, including SK Telecom, SK C&C, Hansol Paper, Pantech & Curitel, Hewrett Packard Korea, Yahoo Korea, Dupon Korea, and Daewoong Pharmaceutical.

The recommendation within the company is widespread in western companies as a referral. This is not a completely new system considering that the nation`s companies have been taking advantage of it when they hire a small number of employees.

However, this system is different from the past in that it is operated in an open and systematic manner to recruit quality human resources and the recommenders will be given incentives and responsibilities as well.

However, there are concerns over the system due to the characteristics unique to the Korean society where all the connections including academic backgrounds are considered influential. “When introducing the system, companies should set a stricter standard for the recruitment,” said Choi Yang-gi, a human resources manager at CJ.

As the system is widely introduced, college graduates who lack experience and the so-called ‘human resources network’ will likely face a hardship. “If job seekers want to work at a company they like, they need to work at other companies where they can have a job relatively easily to have experience and later transfer to the ‘targeted’ company,” said President Lee Kwang-seok of Incruit, an online recruitment information company.

Joong-Hyun Park sanjuck@donga.com