Ability-Dependent Peer Screening
RCTClinical Trial
Employers cannot easily observe applicant quality and struggle to know whether existing employees possess the screening capability required to identify and select top talent from within their social networks.
Picture this
Imagine trying to pick the best chess player out of a crowd. Only a master chess player has the expertise to accurately assess who among their acquaintances truly plays at an elite level, whereas a beginner cannot distinguish between a decent amateur and a grandmaster.
What the evidence says
High-ability original participants offered performance pay selected referrals who scored 0.371 standard deviations higher on cognitive tasks (p < 0.05), whereas low-ability participants showed no statistically significant improvement in referral performance (0.084 standard deviations) because low-ability participants could not accurately predict referral performance.
- Who was studied
- N = 561 original participants and N = 407 returned referrals, adult males in Kolkata, India.
- How
- Lab-in-the-field RCT measuring original participant performance, randomized financial incentive structures, and referral cognitive task scores using Heckman selection models and self-reported performance predictions.
What to do
Restrict high-stakes screening responsibilities or offer performance-indexed referral bonuses specifically to top-performing current employees who demonstrate high baseline job competency.
From the source
"High-performing original participants (OPs) are capable of selecting individuals who are themselves highly skilled, but that these individuals only select highly skilled network members when given a contract in which their own pay is indexed to the referral's performance."
468 Job Referrals in India AER Dec12.pdf