Employee referrals can aid hiring but carry hidden downsides. New research by Rellie Derfler-Rozin at the University of Maryland’s Robert H. Smith School of Business and Teodora Tomova Shakur of Texas Christian University finds that staff often see referred hires as less meritorious and offer less support, even when the referred employees demonstrate high performance. Their study, in the Journal of Applied Psychology, recommends clear communication about hiring rigor and employee involvement to counter these biased perceptions.

“Everyone uses referrals. It actually is positive because people who are referring someone for a role feel responsible,” says Derfler-Rozin, academic director of Smith’s in-person and online Master in Management Studies programs. Someone making a referral, she adds, knows the candidate they recommend will also be a reflection of them.

Derfler-Rozin says her previous work in this area inspired Shakur to inquire about collaborating on this subject. “She had this prediction that maybe current team members have this in their mind — the new employee has been referred, meaning they have leveraged social networks. So, they’re probably not as merited because of this.” Employees who’ve been on the team a while may see it as some kind of justice violation or think the new worker may not be as qualified, she adds. People tend to hold simplistic views of other people’s attitudes and behaviors, and this can be another manifestation of this bias.

The researchers sampled employees from industries where referrals are the norm and from a cultural context that views referrals positively, which confirmed their prediction. Derfler‑Rozin said that in a subsequent study, they aimed to enhance the generalizability of the findings and again found evidence that established team members offered less help to referral beneficiaries as a way to “correct” for the perceived merit violation. The researchers were careful to show that the candidates were not only referred but also went through a robust interview process and have, in fact, been good performers. Even in these situations, incumbent employees were still less likely to help and support these new hires, an effect mediated through decreased merit perceptions

One of the key recommendations from the research is ensuring that leadership clearly and transparently communicates the exact assessment procedures referral beneficiaries went through to alleviate concerns about merit deficiencies. Additionally, leadership can involve employees on a rotational basis in some hiring processes with the hope that such involvement could mitigate some of this bias.

Derfler-Rozin notes that established research has shown that referred employees actually are good performers, yet the assumption may remain that they are not. “We tend to keep having those simplistic assumptions about networking. It is either networking or merit. It is not both.”

There is value in making the referral process transparent and emphasizing the responsibility that comes with recommending a new hire. Derfler‑Rozin says she hopes organizations recognize this, because employees who refer candidates are demonstrating their commitment to the company—and the company, in turn, signals that it values them. “For me, and this is kind of a broader theme of my research agenda, it is this notion of trying to document and then maybe break those zero-sum mindsets and simplistic assumptions that people make about others. How do we actually break this [trend] at the workplace?”

The study, “The Referral Penalty: Decreased Perceptions of Merit Undermine Helping Behavior Towards Referred Employees,” is published by the Journal of Applied Psychology.

Source: University of Maryland’s Robert H. Smith School of Business