SIFTING AND SORTING - PERSONAL CONTACTS AND HIRING IN A RETAIL BANK

Using unique data from a large retail bank, we investigate the theoret ical mechanisms by which preexisting social ties affect the hiring pro cess. By focusing on a single, large employer; we are able To identify , the recruitment practices and hiring criteria used during screening for entry-level positions. This method allows us to assemble data for the pool of candidates at multiple phases of the hiring process and to conduct empirical tests of the various roles that personal contacts m ight play at each stage. Because we are able to treat hiring as a proc ess, rather than as an event, we can also consider the possible select ion biases introduced by the multistage screening process. More specif ically, we study how employee referral (i.e., being recommended by a c urrent bank employee) affects an applicant's success at multiple stage s of the recruitment process, and we examine the cumulative effects of referral status on the chance of being offered a job. Results of prob it models indicate that, controlling for other factors, referrals have advantages at both the interview and job-offer stages compared to ext ernal nonreferral applicants. Consistent with theoretical arguments th at referrals are prescreened by current employees, our results show th at referral applicants present more appropriate resume's than do nonre ferral applicants. Referral applicants also are more likely than nonre ferrals to apply when marker conditions are more favorable. Neverthele ss, resume quality and application timing cannot explain referrals' ad vantage at the interview and hire phases. We discuss the theoretical i mplications of these findings.