What Do Employee Referral Programs Do?
80 Pages Posted: 11 Jun 2019
There are 2 versions of this paper
What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice
Date Written: May 2019
Abstract
Employee referral programs (ERPs) are randomly introduced in a grocery chain. Larger bonuses increase referrals and decrease referral quality, though the increase in referrals is modest. Still, ERPs are highly profitable, partly, because referrals stay longer than non-referrals, but, mainly, because non-referrals stay longer in treated stores than in control stores. In a post-RCT firmwide ERP rollout, referral rates remain low for grocery jobs, but are high for non-grocery jobs, which are perceived as more attractive. Our results (1) are consistent with referral-making being driven by money and altruism toward friends; (2) show that ERPs can have substantial benefits beyond generating referrals. The most-supported mechanism for (2) is that workers value being involved in hiring.
Keywords: altruism, employee referral programs, Hiring, referrals, respect, Turnover
JEL Classification: D90, J24, J30, J63, M51
Suggested Citation: Suggested Citation
IZA Institute of Labor Economics
P.O. Box 7240
Bonn, D-53072
Germany
Mitchell Hoffman
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
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What Do Employee Referral Programs Do?
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