People often believe that hiring people that were referred to you works out the best.
I started thinking …
Could that be this is a result of the fact that most people who were NOT referred are low quality. I have found that the worst quality job applicants, on average, applied from a job advertisement they see somewhere (though I have seen plenty of exceptions).
Referrals often are not coming from an advertisement but instead are usually happily employed but open to a new position (passive job seekers).
Especially in today’s job market, passive job seekers are generally going to be better than active job seekers.
So if the only passive candidates you are seeing are referrals, than referrals are going to be much better than the alternative.
However, you can actively recruit passive candidates. You can contact people directly who are not looking for jobs and try to convince them to apply. A good recruiter should do this. And it is not clear that these passive candidates would be much worse than the passive candidate that was referred to the organization.
And actively recruiting passive candidates is the recruiting function that most companies fail on.