[euphemize]

At the end:

  To employers – ask your staff to help find new hires.  Offer a bounty – enough to get their attention, say a fortnight’s     salary.  It’s a lot less than Shithead would cost.  And their incentives are all positive: no-one will hire an idiot if they have to   work alongside them and new staff with social ties to your team are far more likely to stay.  You’ll be amazed how effective   this can be.

There are limits to this, and having someone from your team refer someone they know does not guarantee they will be an excellent worker, but I would tend to agreed that the overall quality of your team will be much higher this way.

[SandB0x]

On top of this, make the work environment nice enough that your staff will recommend you.

My current job was very strongly recommended to me by a friend and former colleague (who also got a small referral bonus when I was hired), and I'm pleased to say he was not exaggerating.

I've been honest with friends about about the pros and cons of my workplaces. The cons have normally seemed quite easy to fix, but nobody responsible cared to fix it (unfortunately, this part is not easy to fix).

[vkjv]

Agreed. You need to be careful with exactly how much the bounty is. Too low and people won't bother. Too high and people will recommend anyone they know.

I find recommendations for peers are almost always high quality simply because people want to work with good people.

[acveilleux]

Bounty payout can also be phased. My current employer does half upfront and half once the hire has been with us for 6 months (i.e.: trial period). The bonus are small but not inconsequential (think a nice vacation or down payment on a Camry...) This has been pretty successful.