What Do Employee Referral Programs Do?
80 Pages Posted: 11 Jun 2019
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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
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