What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice

Guido Friebel, Matthias Heinz, Mitchell Hoffman and Nick Zubanov
Additional contact information
Guido Friebel: Goethe University of Frankfurt, CEPR and IZA
Matthias Heinz: University of Cologne and CEPR

No 164, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Employee referral programs (ERPs) are randomly introduced in a grocery chain. On direct effects, larger referral bonuses increase referral quantity but decrease quality, though the increase in referrals from ERPs is modest. However, the overall effect of having an ERP is substantial, reducing attrition by 15% and significantly decreasing labor costs. This occurs, partly, because referrals stay longer than non-referrals, but, mainly, from indirect effects: non-referrals stay longer in treated than in control stores. The most-supported mechanism for these indirect effects is workers value being involved in hiring. Attrition impacts are larger in higher-performing stores and better local labor markets.

Keywords: Management practices; organizational economics; hiring; respect (search for similar items in EconPapers)
JEL-codes: D23 M51 M52 (search for similar items in EconPapers)
Pages: 90 pages
Date: 2022-05
New Economics Papers: this item is included in nep-hrm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_164_2022.pdf First version, 2022 (application/pdf)

Related works:
Journal Article: What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice (2023)
Working Paper: What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice (2019)
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