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

No 25920, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D23 M51 M52 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-lma
Note: DEV LS PR IO
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Citations: View citations in EconPapers (3)

Published as Guido Friebel & Matthias Heinz & Mitchell Hoffman & Nick Zubanov, 2023. "What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice," Journal of Political Economy, vol 131(3), pages 633-686.

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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 (2022)
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