Another downside is for some companies it can make diversity problems even worse.
My latest article for TIME is on the rise of internal recruiting. I predicted this trend in 2010 and it's influenced my next book. Due to economic restraints, more companies are choosing to hire from within instead of outside. The cost per hire is 1.7x as much for external candidates. By doing this, companies increase retention, boost employee morale and save money. This is really bad for job seekers who are at a disadvantage when competing against current employees.