What Do Employee Referral Programs Do?

Matthias Heinz, Guido Friebel (), Mitchell Hoffman and Nick Zubanov

No 13770, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: Referrals; Employee referral programs; Hiring; Respect; Turnover; altruism (search for similar items in EconPapers)
JEL-codes: D90 J24 J30 J63 M51 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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