This is a relatively common job interview question, becoming more popular recently.
Employers have many reasons for asking this question, and most of those reasons are not threatening to job seekers.
But, don't assume that this question is unimportant to the employer.
And definitely don't assume that you can't fumble it badly and ruin an opportunity.
Many employers have employee referral programs (a.k.a. "ERP") which reward employees for referring good job candidates, if the candidates are hired and stay for a given period of time specific to that employer.
This question might be asked as part of that ERP qualification process, confirming and/or documenting the referral.
Often this question is asked so that the employer can understand which recruiting method or platform being used is the most effective. When the employer understands what is working vs. what isn't, they can adjust and change to use the most effective method for their recruiting.
They primarily ask this question to gauge how interested you are in the job and in working for them.
Even if a question is not particularly challenging or complex on the surface, take care with your answer. In general, being honest is the best strategy, but be careful with how you respond to this question. With your answer, do your best to express your enthusiasm for the employer and the job.
As much as possible, avoid fibbing, and once you have answered the question, stop talking. Then, ask a question of your own, if you have one that is related, or wait for a follow on from the interviewer.
Employee referrals are the quickest method to get hired. Employers prefer job candidates who have been referred by an employee because, typically, referred candidates become "good hires" They do their job well, stay in the job longer than average, and refer other good job candidates.
According to Dr. John Sullivan, who has researched the process extensively, your chances of being hired increase 300% if you are referred by an employee. So, be sure to tell them you were referred in accordance with the rules of the employer's program.
However, in some situations, it may not be appropriate for the employee to have referred someone, for example if the employee is the hiring manager or, perhaps, in the HR or talent acquisition parts of the organization.
The employee who plans to give you the referral should know the rules to the employer's referral program or be able to find them.
If an employee gave you the lead, be sure to ask the employee if it's OK to give their name as the answer to this question. If it is OK with them, give their name and, in a large organization, their department and location, perhaps even an employee identification number if one is used.
The employee may qualify for a bonus from the employer for referring you, but most employee referral programs have rules about when an employee does or does not qualify. If someone has referred you appropriately, you want them to receive the award. The referral will usually help your candidacy, too. Definitely a win/win situation!
"When I decided to consider changing employers, I reached out to my network looking for recommendations of good local employers. [Employee name, job title, and organization] who I know through [previous employer, school, local professional organization, neighbor, etc.] reached out. He knew of this job being open and though it could be a good fit for me. He speaks very highly of this organization. When I checked out the job and looked at more information about you, I agreed. So I applied enthusiastically through your employee referral program."
For more information about successfully navigating the employee referral process, which is not as simple as it once was, read How to Make Employee Referral Programs Work for You for how to successfuly navigate them.
You can make points here for your interest in the employer. Reference your pre-application (or, at least, pre-interview) research that created or increased your interest in this employer. This demonstrates your interest in this specific employer, and addresses their concern that you just clicked on the "Apply" button on a job board because you found a job posting.
If you found the job on the employer's job board, be sure to share that information -- that you check their website to find appropriate jobs.
Perhaps, this employer is one you have always wanted to work for. Be prepared to explain what, why, and/or how you became interested in the employer. However, if your sole interest is that they have a reputation for paying very well, find another reason you can share with the employer.
If appropriate, mention colleagues, friends, and/or family members who are employees or who have worked happily for the organization. They may qualify for compensation (see # 1 above).
If you follow the company page on LinkedIn and found the job in association with the company's LinkedIn Profile, share that information with them. Be sure to check their company page on LinkedIn before you head out for your interview to demonstrate your interest..
Or, describe the research you've done on top employers, the industry, an article you read, or perhaps you or your family have been customers/clients/fans of the employer.
"I have been interested in [this industry] for quite a while, and [company name] is a leader. Since [company name] products and services are highly regarded both inside and outside of the industry, I decided that working here would represent a great opportunity to learn and to grow."
For more on researching employers, read The Winning Difference: Pre-Interview Preparation and Smart Google Research for Successful Job Interviews. Also see how to answer the related job interview question, "What do you know about us?"
If this is how you found the job, be very careful in your response.
Don't leave the impression that you have applied for every job you found. You don't want to sound desperate or careless.
If possible, share the name of job board, date, and whether or not the job was "featured" or in a sponsored ad made more visible than the other jobs listed.
If you found the job posted in social media, like Facebook, LinkedIn, or Twitter, provide as many details as possible -- date and source.
Make it clear how and why the posting stood out to you, and why you applied for the job. Then, add how you did research to discover that you would be interested in working for this employer based on the positive information you found. If possible, refer to that information in your response.
"This job stood out to me on LinkedIn. Your company page is very interesting, particularly [mention a product or service]. When I checked, I discovered that I am connected with several employees on LinkedIn. Since I'm not closely connected to them, I didn't feel comfortable asking for a referral, but I did check out their Profiles. I noticed that they have all been here for several years, which I view is a very good sign."
With most recruiters, they will make the introduction, so it's unlikely that you will be asked this if a recruiter referred you.
If you are asked this question, provide the recruiter's name, hopefully confirming what the employer already knows.
Prepare your answer to this question for every job interview. Not every interviewer will ask the question, but many will, and you will, most likely, answer it best when you are prepared.
Online job search expert Susan P. Joyce has been observing the online job search world and teaching online job search skills since 1995. A veteran of the United States Marine Corps and a recent Visiting Scholar at the MIT Sloan School of Management, Susan is a two-time layoff “graduate” who has worked in human resources at Harvard University and in a compensation consulting firm. Since 1998, Susan has been editor and publisher of Job-Hunt.org. Follow Susan on Twitter at @jobhuntorg and on Facebook, LinkedIn, and Google+.