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Employee Referral Hiring in Organizations: An Integrative Review and Process Model
This present paper outlines the theoretical perspectives that explain employee recruitment and retention in start-ups. It offers an overview of the conceptualization of context, and its integration into existing research related to the implementation and effectiveness of employee recruitment and retention practices. Furthermore, the paper highlights relevant research gaps and identifies future research areas. The reviews of existing studies indicate that employee recruitment and retention practices are highly dependent on external and internal contextual factors. Insights on the role of contextualization in recruitment and retention in technology start-ups indicate that they are limited and often contributed to the peripheral level. The study reported a lack of understanding regarding the actual role and implementation of the external and internal context on employee recruitment and retention. This study facilitates a comprehensive understanding of the state of the relevant field and whether suggestions of it being neglected pose a critical analysis.
The purpose of this study is to examine the effects of potential applicants' awareness of employees being rewarded for referrals on organizational attractiveness, based on credibility theory and the multiple inference model. In a first study (N=450), final-year students were less attracted to the organization when they knew employee referrals were rewarded, which was partially explained by lower credibility perceptions. Moreover, varying the specific characteristics of the referral bonus program (i.e., timing, size, type, recipient) did not improve potential applicants' perceptions of credibility and attractiveness. A second study (N=127) replicated the negative effect of referral bonuses on organizational attractiveness and found that it could be explained by both potential applicants' inferences about the referrer's other-oriented motive and lower referrer credibility. Whether employees explicitly stated their referral reason was bonus-driven or not did not affect these results.
This study examines twelve recruiting methods to determine their relative popularity (frequency of use) and effectiveness (subsequent job performance. Data on 199 employee representing five occupational categories and from eight businesses in different industries are used to explain the relationship between recruitment methods and performance. The results reveal that employee referrals, newspaper/special advertisements, former employees or rehires, private employment agencies/search firms, and walk-ins are both popular and effective recruitment methods.
This article summarizes the practical and theoretical implications of 85 years of research in personnel selection. On the basis of meta-analytic findings, this article presents the validity of 19 selection procedures for predicting job performance and training performance and the validity of paired combinations of general mental ability (GMA) and the 18 other selection procedures. Overall, the 3 combinations with the highest multivariate validity and utility for job performance were GMA plus a work sample test (mean validity of .63), GMA plus an integrity test (mean validity of .65), and GMA plus a structured interview (mean validity of .63). A further advantage of the latter 2 combinations is that they can be used for both entry level selection and selection of experienced employees. The practical utility implications of these summary findings are substantial. The implications of these research findings for the development of theories of job performance are discussed.
Scholars and practitioners agree that referrals provide firms with better workers. Economists and sociologists debate whether the underlying mechanism behind such relations is a better match between workers and firms or an advantage conferred by social relations. Building on insights from network theory and cognitive psychology, we offer a new approach to the debate, arguing that network relations can also create evaluative bias. We reexamine the connection between social ties and workers' performance using unique data on the actual productivity of sales employees and their evaluations in a large global firm. Results suggest that the preexistence of ties between an incoming employee and insiders in the firm creates an evaluative advantage-an advantage that is unrelated to workers' concrete performance. We discuss the implications of these results for a relational approach to social stratification, organizations and work, as well as social networks.
Purpose
– The purpose of this paper is to identify the elements of a LinkedIn profile that hiring professionals focus on most, and then examine LinkedIn profiles in terms of these identified elements across different industries.
Design/methodology/approach
– The methodology was comprised of two phases. In the first phase, researchers interviewed hiring professionals to determine their usage of LinkedIn. In the second phase, LinkedIn group member profiles from three industries – HR, sales/marketing and industrial/organizational (I/O) psychology – were compared on the 21 variables identified in Phase 1 ( n =288).
Findings
– χ 2 and ANOVA tests showed significant differences with respect to ten of the LinkedIn variables in how people presented themselves across the three groups. There were also several gender differences found.
Research limitations/implications
– A general limitation was the use of a qualitative research approach. A limitation of Phase 1 was that only a small sample of New York City-based hiring professionals was interviewed. Perhaps a wider, more diverse sample would have yielded different variables. In terms of Phase 2, it is possible that just utilizing the second connections of the researchers limited the generalizability of findings.
Practical implications
– User unwillingness to fully complete the LinkedIn profile suggests that it may not have replaced the traditional resume yet. Sales/marketing professionals were more likely than HR and I/O psychology professionals to complete multiple aspects of a LinkedIn profile. Women were also less likely than men to provide personal information on their profiles.
Originality/value
– Most of the empirical research on social networking sites has focussed on Facebook, a non-professional site. This is, from the knowledge, the first study that systematically examined the manner in which people present themselves on LinkedIn – the most popular professional site used by applicants and recruiters worldwide.
This study focuses on the impact of sex, race, and social networks, to analyze the hiring process in a midsized high-technology organization, using information on all 35,229 applicants in a 10-year period (1985-94). For gender, the process is entirely meritocratic: age and education account for all sex differences. But even without taking into account the two meritocratic variables, there are small if no differences between men and women at all stages in the hiring process. For ethnic minorities, the process is partly meritocratic but partly reliant upon social networks. Once referral method is taken into account, all race effects disappear. In hiring, ethnic minorities are thus disadvantaged in the processes that take place before the organization is contacted. They lack access to or utilize less well the social networks that lead to high success in getting hired.
[Excerpt] "Technology in employee selection is more highly developed than in recruiting or placement; therefore, the major emphasis is on selection Recruiting or placement are not less important processes; to the contrary, they probably are more vital and more profitable to the organization. An organization's success in recruiting defines the applicant population with which it will work; selection is more pleasant, if not easier, when any restriction of range or skewness of distribution is attributable to an overabundance of well-qualified applicants... Unfortunately,the contributions and confusions of the literature, the central social pressures, and the facts of contemporary practice conspire to place the emphasis on selection" (pp. 777- 779)
Informal contacts are extensively used by both firms and workers to find jobs and fill vacancies. Thecommon wisdom in the economic literature is that jobs created through this channel are of better qualityand pay higher wages than jobs created through formal methods. This paper explores the empiricalevidence for European countries using the European Community Household Panel (ECHP) and discovers alarge cross-country as well as cross-industry variation in the wage differentials between jobs found throughinformal and formal methods. Across countries and industries wage premiums and wage penalties tofinding jobs through personal contacts are equally frequent. This paper argues that such variation can beexplained by looking at firms' recruitment strategies. In labour markets where employers invest largely informal recruitment activities, matches created through this channel are likely to be of average better qualitythan those created through informal networks. A simple theoretical model is used to show that employersinvest more in recruitment for high productivity jobs and for positions that require considerable training.The empirical predictions of the theory are successfully tested using industry-level data on recruitmentcosts.
When organizations have an opening for employment, one method of recruitment is through employee referrals, which utilize the social networks of incumbent organizational members (referrers) to locate job seekers. Employee referrals are unmatched compared to more traditional recruiting techniques in that they allow a potential applicant (a referred worker) to interact with a referrer who has more complete information about the job opening and understands the referred worker's knowledge, skills, and abilities. In addition, referrals allow the organization to tap into desirable applicant populations that may have been unsolicited through other recruitment methods and to attract applicants with a more thorough understanding of the job's nature. These theoretical arguments have gained traction in the literature as conceptual justification for the higher performance and reduced turnover that referred workers tend to show in comparison to other employees. While promising, the literature has taken a relatively segmented approach that has not treated referring as a complex interaction that develops over time. ^ Therefore, the purpose of this dissertation is twofold. First, I seek to offer a more comprehensive view of referring in organizations by reviewing the existing literature across a variety of disciplines and developing a model that reflects both established and theorized pathways, thus offering new directions for future research. Second, I seek to test some of the pathways formulated through this model in two studies. In the first study, I examine how referred workers may receive positive or negative treatment in the selection process as a function of the referrer's characteristics, finding support for the importance of referrer power and previous referring behavior. The second study investigates how referrer turnover intent and affective commitment are affected by a referred worker's rejection at the firm. Taken together, these studies bridge multiple portions of the proposed model and continue recent research that accounts for the dyadic nature of employee referrals.
Referred workers are more likely than nonreferred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers’ observable characteristics. We also find that referrals perform particularly wellwhen working directlywith their referrers.However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer’s position at the firm.
In this study, unlike most recruitment source research, we tested for and ruled out the contaminating effects of prescreening and self-selection bias by examining applicants and new hires for nursing positions (Rynes & Barber, 1990). Consistent with the predictions of Rees (1966) and Ullman (1966), recruitment sources reached differently qualified applicants in terms of nursing experience and education which, in turn, were valid predictors of subsequent nurse performance. In a similar manner, recruitment sources produced sharply different levels of prehire knowledge, which was inversely related to voluntary turnover after 1 year. However, contrary to both hypotheses, prehire knowledge, education, and experience did not mediate the relationship between recruitment sources and posthire outcomes. Recruitment sources with greater prehire knowledge did not always result in lower voluntary turnover. Likewise, despite recruitment source differences in nursing experience and education, recruitment sources were not related to nursing performance. Finally, the extent to which applicants use multiple recruitment sources was investigated, and the methodological problem that this creates for recruitment source research was discussed.
Recruiting influences employees’ motivation, performance, and retention. Because an organization’s talent influences its capabilities, strategic execution, and competitive advantage, recruiting is a foundation of organizational performance. Strategic recruitment refers to recruitment practices that are connected across levels of analysis and aligned with the goals, strategies, context, and characteristics of the organization. It differs from traditional recruitment perspectives by explicitly connecting firm strategy and context to recruitment practices and activities within that firm. Strategic recruitment lies at the nexus of four important topics: resource-based theory, strategic human resource management, human capital, and levels of analysis. In this review, we first define strategic recruitment and explain its importance. Next, we briefly review why strategic recruitment is a critical yet underexplored area of research despite decades of research on strategic human resource management in general and recruitment in particular. Finally, we introduce a model that advances our understanding of strategic recruitment. We introduce two new concepts, horizontal strategic recruitment and vertical strategic recruitment, which connect to the ideas of horizontal and vertical alignment in the strategic human resource management literature but focus explicitly on the notion of strategic recruitment. This model highlights a variety of opportunities for future recruitment research relevant to resource-based theory, strategic human resource management, human capital, and levels of analysis.
The effects of subunit power on organizational decision making and the bases of subunit power are examined in a large midwestern state university. It is hypothesized that subunits acquire power to the extent that they provide resources critical to the organization and that power affects resource allocations within organizations in so far as the resource is critical to the subunits and scarce within the organization. Departmental power is found to be most highly correlated with the department's ability to obtain outside grants and contracts, with national prestige and the relative size of the graduate program following closely in importance. Power is used most in the allocation of graduate university fellowships, the most critical and scarce resource, and is unrelated to the allocation of summer faculty fellowships, the least critical and scarce resource.
This paper presents a search model with heterogeneous workers, social networks and endogenous search intensity. There are three job search channels available to the unemployed: costly formal applications and two costless informal channels - through family and professional networks. The gain from being employed is increasing in the productivity, so the lowest motivation for preparing formal applications is proved to be among the least productive worker types. We assume that professional contacts exhibit a strong degree of homophily, thus it is profitable for firms to direct their network search towards the more productive incumbent employees. So the probability of a professional referral is increasing in the productivity of the worker, which mitigates the incentives to use the formal channel of search. Therefore, the model predicts that workers in the right (left) tail of the productivity distribution have the highest propensity of finding a job with a help of professional (family) contacts, whereas the formal channel of search is mostly utilized by workers in the middle range of the distribution. This explains the U-shaped referral hiring pattern in the model. The endogenous sorting of workers across channels also implies that professional (family) referrals are associated with wage premiums (penalties) compared to the formal channel of search. The average effect of referrals on wages is, however, ambiguous and depends on the relative proportions of high and low productivity types in the population. These findings help to explain the contradicting empirical evidence concerning the effect of referrals on wages.
Microlevel mobility research argues that job changes depend on the job seeker's social network and social ties. Job seekers find better jobs by contacting persons with superior knowledge and influence. These contact persons are usually others with whom the job seeker has only weak ties. Life history data from Germany demonstrate the necessity of considering the multidimensional nature of social ties and the interaction between social ties and status of prior job when predicting job mobility. Results suggest some modification of micromobility theory because individuals with high status prior jobs benefit from weak social ties, whereas individuals with low status prior jobs do not.
The literature on employee referral hiring gives little attention to referrers. Synthesizing two theories in the literature (the better match and social enrichment accounts), through the lens of social resources theory, I provide a conceptual and empirical breakdown of the effects of referrer quality (referrer performance at hire and referrer tenure at hire) and post-hire accessibility (referrer employment and referrer-referral hire job congruence) on referral hire performance and likelihood of voluntary turnover. I tested my hypotheses with longitudinal data from 386 referrer-referral hire pairs at the same job level in a U.S. call center over a 2-year period. Across analyses of two performance criteria (calls/hour and quality) and likelihood of leaving, I found a nuanced mix of benefits and liabilities that illuminate potential boundary conditions of the revised theories. Referral hires from high-performing referrers performed better but had higher turnover propensities than those from lower performing referrers. Longer-tenured employees also produced better performing referral hires, up to a point. Referral hires were less likely to leave, provided their referrer remained employed, but they performed less effectively under this condition. Similarly, referral hires performed worse when their job was congruent with their referrer's job. Theoretical and practical implications are discussed.This article is protected by copyright. All rights reserved.
From a social capital theoretical perspective, deficiencies in access to mainstream ties and institutions explain persistent joblessness among the black urban poor. Little problematized, however, is the extent to which access leads to mobilization and the social context within which social capital activation occurs. Employing in- depth interviews of 105 low-income African-Americans, this work advances the literature in two ways. First, it suggests that what we have come to view as deficiencies in access among the black urban poor may have more to do with functional deficiencies of their job referral networks. Second, the findings from this study lay the groundwork for a single, multilevel conceptual framework within which to understand social capital activation, a framework that takes into consideration properties of the individuals, dyads, and communities of residence.
Previous research suggests that one or more of three mediating variables account for the relationships between recruiting sources and applicant effectiveness. This paper offers a critical test of the three mediating variables: demographic characteristics, realistic expectations, and perceived person-job fit. Using a sample of 242 newly hired marketing representatives, the study found that employees recruited through college placement offices had better initial levels of performance than did employees recruited through newspaper advertisements. While all of the proposed mediating variables were associated with some recruitment sources, none of them mediated the effects of recruitment sources on performance or turnover. This paper suggests that there may be complex contingency relationships between recruitment sources and employee performance and turnover.
This study examines the process by which men in three ethnic neighborhoods of Boston move from secondary to primary employment in a segmented labor market. Workers who successfully make this transition belong to neighborhood-based social groups that have customary linkages to particular primary jobs. Members of such groups costlessly learn how to perceive and act in the labor market in ways that faciliate their entry into the primary sector. Workers' labor market perceptions reflect objective characteristics of the primary jobs to which their social groups are linked.
Job search has profound implications for both the extent and duration of unemployment and hence for the efficient allocation of human resources. Yet, little is known about the relative effectiveness of alternative methods of job search. This study uses the National Longitudinal Survey of Youth Labor Market Experience to examine whether different methods influence the duration of job search and job satisfaction. Methods of search do seem to differ significantly in influencing duration of job search but not so in respect of job satisfaction, contrary to a widely held view. Some have held that informal channels of job search convey a particular type of qualitative information which makes for better and more efficient job choice and that this largely explains their extensive usage, but the data do not support this position. Both findings have potentially important implications for job search theory and government intervention in the labor market.
A lthough the existing theory predicts that a referral's chances of being hired increase with the job performance of the referrer, no empirical evidence is available to support this claim. To address this discrepancy, we decompose the recruitment process into objective selection, subjective selection, and self-selection and theorize that the likelihood of passing a particular recruitment stage increases with the performance of the referrer under objective selection and self-selection, but remains undetermined at a stage of subjective selection. Our analysis of unique comprehensive data on online recruitment of sales agents in a virtual call center supports these arguments. The effectiveness of personnel as a recruitment channel varies with the type of the recruitment stage and performance of the referrer. When the firm evaluates candidates by an objective criterion, the advantage of a referral increases with the performance of his or her referrer; those referred by relatively high-performing workers are significantly better than the applicants who learned about the job from Internet ads. When job candidates self-select into the next stage of the online application process, the referral of any agent is more likely to continue than a nonreferral, and this likelihood increases with the performance of the referrer. On a subjective stage, the outcome is contingent on the intricacies of the recruitment process. In our case, an applicant's chances of being hired increase with the performance of his or her referrer because the firm rejects the referrals of low-performing workers at a higher rate than it does nonreferrals, while it treats equally the referrals of high-performing workers and nonreferrals. The study's contributions to the literature on social networks in labor markets are discussed.
The purpose of this study was to examine the psychological processes for the effects of recruitment source and organization information on newcomers' job survival. Formal sources of recruitment were compared to informal sources, and a model based on the realism and met expectations hypotheses for the effects of information accuracy received from one's recruitment source and the organization on job survival was tested. Employees recruited through informal sources of recruitment (employee referrals, rehires, and self-initiated walk-ins) were found to have greater job survival in comparison to employees recruited through formal sources of recruitment (newspaper and radio advertisement, and posters), and reported receiving more accurate job information from their recruitment source, greater met expectations, and ability to cope. The results of a path analysis indicated that the accuracy of information received from one's recruitment source and the organization was significantly related to several of the hypothesized process variables of the realism hypothesis that are related to subsequent job survival. Further, the results support the met expectations hypothesis as one of the key psychological processes underlying the relationship between information accuracy and job survival. The implications for future research and practice are discussed from an information acquisition perspective that integrates the literature on recruitment sources and socialization.
Research on employee referrals demonstrates positive outcomes for the recruited individual and the organization. However, little research addressed employees who make employment referrals, also known as employee recommenders. To address this gap in knowledge, we developed a conceptual model and present the theoretical basis for addressing the motivation of, and organizational outcomes associated with, employees who make employment recommendations. The model is based on the theories of word-of-mouth communication, cognitive dissonance, self-perception, and attitude change through self-persuasion. Partial support for the model was found in an experimental design simulating an employee referral situation. Results showed an increase in normative commitment of recommenders.
The effectiveness of different recruitment sources for new employees has been the topic of speculation and research for over 50 years. Effectiveness has primarily been assessed by examining turnover/job survival rates and job performance. As reported in most narrative reviews and all five quantitative reviews, referrals by current personnel, in-house job postings, and the re-hiring of former employees are the most effective sources. Walk-ins have been slightly less effective, and the least effective sources are newspaper ads, school placement services, and employment agencies (government/private). Over these 50 years, six explanations for this pattern have been offered. They are summarized and evaluated here. The practical usefulness of recruiting from effective sources is estimated, based on the effect sizes from our meta-analysis. Finally, suggestions for future research are made.
The use of social networking software by professionals is increasing dramatically. How it is used, whether it enhances or reduces productivity, and how enterprise-friendly design and use might evolve are open questions. We examine attitudes and behaviors in a large, technologically-savvy organization through a broad survey and thirty focused interviews. We find extensive social and work uses, with complex patterns that differ with software system and networker age. Tensions arise when use spans social groups and the organization's firewall. Although use is predominantly to support weak ties whose contribution to productivity can be difficult to prove, we anticipate rapid uptake of social networking technology by organizations.
Given falling birth rates, ageing baby boomers approaching retirement age as well as a pension crisis in most advanced economies, understanding the characteristics of the labour supply function of the elderly have taken on a new significance. Even in developing countries, with labour surplus economies, this is a major issue as these poor countries try to build a pension scheme with at least a minimum amount of state provision for the elderly. What motivates retired people to enter or continue in the labour force is the focus of our analysis. We use panel data from Korea which is an interesting country since it transited from developing to developed economy status within the last few decades and therefore exhibits characteristics of both underdevelopment and economic advancement. The econometric methods include probit models of: pooled data; panel data with random effects; and 2SCML, to allow for possible endogeneity bias induced by the self-declared health status of the elderly. We stress the crucial importance of pecuniary and non-pecuniary factors in determining labour supply of the elderly. Contrary to expectations, non-pecuniary factors such as health status are crucial in the decision-making process of whether to work or not to work for the elderly.
Firms often view job applicant referrals from current employees as more informative than direct applications or referrals through formal labor market intermediaries such as placement firms. The authors argue that old boy networks reduce employers' uncertainty about worker productivity. Using Jovanovic's job matching model, they show that workers hired through the old boy network should (1) earn higher initial salaries, (2) experience lower subsequent wage growth on the job, and (3) stay on the job longer than otherwise comparable workers hired from outside the network. They find considerable support for this theory using data from the 1972 Survey of Natural and Social Scientists and Engineers. Copyright 1992 by University of Chicago Press.
The aim of this research is to test the hypothesis that particular recruitment sources are associated with employee turnover within certain construction organizations. Hypothesis validity would enable management of similar organizations, through the use of more favourable recruitment sources, to reduce or eliminate the employment of individuals who may yield shortened periods of tenure. In the research, 15 recruitment sources used by construction organizations to obtain new employees are compared in terms of their influence on employee tenure and turnover. Personnel records of construction organizations were analysed and from this analysis sources identified which are associated with lower turnover rates and also of stable or longer employee tenure. For each of the organizations considered, specific sources are shown to be indicators of stable employee tenure. Conversely, each organization demonstrates sources which are shown to be associated with high levels of employee turnover.
This article outlines a social information processing approach to explain job attitudes. In comparison with need-satisfaction and expectancy models to job attitudes and motivation, the social information processing perspective emphasizes the effects of context and the consequences of past choices, rather than individual predispositions and rational decision-making processes. When an individual develops statements about attitude or needs, he or she uses social information--information about past behavior and about what others think. The process of attributing attitudes or needs from behavior is itself affected by commitment processes, by the saliency and relevance of information, and by the need to develop socially acceptable and legitimate rationalizations for actions. Both attitudes and need statements, as well as characterizations of jobs, are affected by informational social influence. The implications of the social information processing perspective for organization development efforts and programs of job redesign are discussed.
Employee referrals: A study of 'close ties' and career benefits in China
- W Wang
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Organizational recruiting and the decision to participate
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