In Simple Words
Asking an existing employee to recommend a candidate without a performance reward is like asking someone to pick a restaurant for a group without caring about food quality; the referrer suggests a friend regardless of merit, whereas adding a performance bonus forces them to select the most capable candidate available.
Men referring applicants in a Malawi study
- Usual referral incentives
- Reference referral quality
- Performance-based referral reward
- Higher-quality candidates referred
Separate referral study summarized in this article. Qualitative comparison; this was not the five-day work-experience intervention.
See source →Research question
Informal social job networks are ubiquitous in low-income labor markets, but unrewarded recommenders often prioritize social favoritism over worker quality, generating hiring inefficiencies for employers.
Participants
N = 215 urban Malawian male job seekers paired with qualitative HR manager interviews across employer sectors in Lilongwe, Malawi.
Study Design
Literature synthesis of referral experiments (Beaman, Keleher, and Magruder 2018) integrated with experimental IV tracking of job referrals and referral-based hires.
Results
Under standard unincentivized conditions, male recommenders do not systematically refer the highest-quality candidates from their social networks; offering explicit financial performance incentives significantly increases the ability and test scores of referred job seekers.
Takeaway
Introduce performance-contingent referral bonuses in private-sector recruitment to incentivize employees to recommend high-ability job applicants.