Hiring Practices Examined in New UMD Smith Research

Did you know that about half of job openings go to friends and acquaintances of high-powered individuals within an organization? We’ve always been told it’s about who you know, not what you know, after all.

Yes, referral-based hiring come across as a little sketchy, but many human resource departments actually encourage the strategy. But despite that, a research paper co-written by two Robert H. Smith School of Business scholars shows that hiring managers invite harsh moral judgments when they give jobs to friends and acquaintances referred to them.

Entitled “Compromised Ethics in Hiring Processes? How Referrers’ Power Affects Employees’ Reactions to Referral Practices,” the author’s note; “When the referrer is powerful, observers will believe the hiring manager is attempting to increase the referrer’s dependence on him/her, ultimately resulting in future benefits for the hiring manager.”

The research was authored by UMD Smith professor Rellie Derfler-Rozin, Ph.D. candidate Bradford Baker, and Harvard Business School professor Francesca Gino and published in the Academy of Management Journal. They found that hiring managers appear self-serving and unethical to others in the organization, which can disrupt workplace chemistry and even hurt support for the new hire.

“Referral practices can be seen as morally murky territory in which special interests and the exchange of favors dominate, above and beyond merit,” the authors wrote.

However, they also found that referral-based hiring practices have advantages: Not only do referrers usually have inside information about the applicants they recommend, but they also have incentives to train, mentor, and monitor them as well. Additionally, new hires want to perform well so they don’t embarrass the referrers who put trust in them.

Ultimately, the research does not suggest that companies should stop referral-based hiring, but that hiring managers and the people who give referrals should be mindful of the power dynamics involved.

“One suggestion could be creating a system in which referrers are anonymous, at least for an initial period of time pre and post-hire, while simultaneously providing enhanced transparency regarding the reasons for the referral,” the authors write.

You can read the entire research paper “Compromised Ethics in Hiring Processes? How Referrers’ Power Affects Employees’ Reactions to Referral Practices” here.

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