Hired Through Your Network? Don’t Come To Me For Help!: Employees’ Reactions to Informal Hiring

Organizations increasingly rely on informal ways of hiring, such as referral-based hiring, to fill up vacant job positions. Despite the prevalence of such hiring, there is little evidence depicting how informal hiring affects employees, who are not involved in the hiring process. We attempt to examine some of the consequences of informal hiring by investigating third-party employees’ reactions toward informal hires. Particularly, we assess third-party employees’ likelihood to engage in more negatively valanced behaviors (i.e., act antisocially or competitively), and less positively valanced behaviors (i.e., act prosocially and cooperatively), toward informal hires and propose two main mechanisms driving such behaviors - perceptions of merit and perceptions of threat. Further, we test whether third party’s perceptions of their own network size attenuate or buffer the effects. Findings from two empirical studies largely confirm our hypotheses and shed light on the unintended consequences of popular informal hiring methods.