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Where to find that perfect new employee? Ask the ones you already have.

This story appears in the May 2007 issue of Entrepreneur. Subscribe »

Skilled management consultants who want to work part time are tough employees to find. Scott Glatstein needs them to keep growing Imperatives, his $2.5 million Minnetonka, Minnesota, consulting firm, but the usual recruiting tools work poorly. "It's hard to advertise for independent consultants," says Glatstein, 48. He has used a variety of recruitment tools, including online advertising, but he now relies almost exclusively on one: recommendations from his 40 existing employees. "In the past six months, we've hired eight people and haven't run a single ad," says Glatstein. "Those hires came [from] referrals."

Employee referrals are one of the more powerful staffing tools available, according to proponents, who say the ability to track down hard-to-find talent is just one benefit. Costs can be 75 percent lower than using advertising or agencies, says Jody Ordioni, president of New York City employee communications brand consulting firm Brandemix. Using referrals also reduces turnover among both new and existing employees because applicants come prescreened for culture fit, she says.

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