Peer Monitoring versus Screening Separation
RCTReview
Employers frequently conflate two distinct benefits of employee referral networks: pre-hire screening (reducing asymmetric information about applicant skill) and post-hire peer monitoring (mitigating moral hazard during task execution). Failing to isolate pre-hire screening capability prevents firms from designing targeted recruitment incentive structures.
Picture this
Think of a school project where a classmate helps select a talented partner before the team is formed, compared to sitting next to that partner during work to make sure they do not slack off. The first action is screening talent; the second action is monitoring effort.
What to do
Separate pre-hire referral incentive schemes from post-hire performance management protocols to independently evaluate employee screening accuracy versus peer supervision.
From the source
> "The advantage of the experimental design is that we can disentangle employees' ability to identify inherently good workers from other on-the-job dynamics, such as monitoring or competition, and we can think of the financial incentives as serving as a proxy for the incentives generated by the long-term relationship between the firm and the employee."
Who Gets the Job Referral? Evidence from a Social Networks Experiment