At the Expense of Quality

Brittany M. Bond, Tatiana Labuzova, Roberto M. Fernandez

Sociological Science, June 28, 2018
10.15195/v5.a17


Many organizations use employee referral programs to incentivize employees to refer potential applicants from their social networks. Employers frequently offer a monetary bonus to employees who refer an applicant, and this is often contingent on whether the person is then hired and retained for a given length of time. In deciding whether to refer someone, referrers face a potential role conflict, as they need to balance their motivations for helping connections find job opportunities with concerns regarding their reputations with their employers. To the extent that monetary incentives shift an employee’s considerations away from finding the best matches for the employer, referral bonuses may increase the chances that lower-quality candidates are referred. Using a survey vignette experiment, we find that even a small referral bonus increases the likelihood that referrers will refer lower-quality candidates, and they are more likely to refer people they do not know well. We further discuss theoretical and practical implications regarding the efficiency of incentivized referral programs in producing quality applicant pools for employers.
Creative Commons LicenseThis work is licensed under a Creative Commons Attribution 4.0 International License.

Brittany M. Bond: Sloan School of Management, Massachusetts Institute of Technology
E-mail: bbond@mit.edu

Tatiana Labuzova: Sloan School of Management, Massachusetts Institute of Technology
E-mail: labuzova@mit.edu

Roberto M. Fernandez: Sloan School of Management, Massachusetts Institute of Technology
E-mail: robertof@mit.edu

Acknowledgements: We thank our colleagues at the Massachusetts Institute of Technology Sloan School of Management and elsewhere for their feedback on earlier versions of this article. We have also benefitted from help, advice, and feedback from Matthew Amengual, Rhett Andrew Brymer, Santiago Campero, John Carroll, Emilio Castilla, Minjae Kim, Ezra Zuckerman Sivan, Heather Yang, and participants in the Economic Sociology Working Group at MIT Sloan and the Ninth Annual Meeting of the People and Organizations Conference at The Wharton School.

  • Citation: Bond, Brittany M., Tatiana Labuzova, and Roberto M. Fernandez. 2018. “At the Expense of Quality.” Sociological Science 5: 380-401.
  • Received: March 27, 2018
  • Accepted: April 17, 2018
  • Editors: Jesper Sørensen, Mario Small
  • DOI: 10.15195/v5.a17

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