Great comment, and from my perspective a view that is perfectly complementary to Joel's post. It could very well be that the same people who are firing off hundreds of resumes are also hitting up dozens of their connections to try to find work. As you mention, hiring even one of these people into a role for which they are not qualified, whether through resumes or private placement, could really damage a small company.
When people make a statement like "xx% of all hires are made through private placement," my first thought isn't "wow, networks are such an effective hiring mechanism!" Rather, it's that our other alternatives are frequently so lacking that we rely on "known-unknowns" in the absence of a better method.
Networks are both a strength and a limitation. When you rely on them for hiring you might be able to attract the best candidate from within your set of connections, but if there are 100 people outside your network who are objectively better then you will have missed out. Unfortunately, limitations in our current tools make it very difficult to determine whether those 100 other people are actually out there and, if they are, how to find them.
When people make a statement like "xx% of all hires are made through private placement," my first thought isn't "wow, networks are such an effective hiring mechanism!" Rather, it's that our other alternatives are frequently so lacking that we rely on "known-unknowns" in the absence of a better method.
Networks are both a strength and a limitation. When you rely on them for hiring you might be able to attract the best candidate from within your set of connections, but if there are 100 people outside your network who are objectively better then you will have missed out. Unfortunately, limitations in our current tools make it very difficult to determine whether those 100 other people are actually out there and, if they are, how to find them.