Rewarding employee referrals : effects on organizational attractiveness

Competing in the “war for talent”, companies have started to reward their employees for spreading job vacancies and recommending their organization to people they know. While offering such a referral bonus might increase employees’ extrinsic motivation to make positive referrals, it may undermine the credibility of employee word-of-mouth when potential applicants are aware of this motive, thus reducing its impact on organizational attraction. In a sample of 580 Belgian final-year students, hierarchical regression analyses showed that rewarding employee referrals led to lower organizational attractiveness, which was mediated by lower credibility perceptions. In addition, varying the specific characteristics of the referral bonus program (i.e., timing, size, type, recipient) did not seem to be effective in increasing potential applicants’ perceptions of credibility and attractiveness