Enhancing Productivity and Job Satisfaction

The introduction of an employee referral programme (ERP) was evaluated in a field experiment involving a grocery retail chain with 10,000 employees and multiple treatment groups. The largest effect was driven by employees' increased sense of appreciation from senior management.

Higher referral bonuses increased the number of referrals but also reduced the quality of new hires. Overall, the employee referral programme generated substantial benefits, despite accounting for only a small share of total hires. Employee turnover declined by 15%, resulting in significant reductions in personnel costs. These gains were driven primarily by indirect effects. Employees in the “treatment” stores remained with the company longer than those in stores without the referral programme. The findings suggest that employees value being involved in recruitment decisions and appreciate the recognition and trust demonstrated by their employer.

Bonuses for successful team performance increase employee morale and firm revenues, with gains of up to 7%. This effect is particularly pronounced in low-wage sectors, where even the prospect of a modest increase in earnings can have a strong motivational impact. However, team size should remain limited in order to minimise free-riding behaviour. In collaboration with management, performance-based bonuses were introduced in 100 outlets of a bakery chain. Teams could earn up to 10% higher pay if they consistently exceeded predefined sales targets. The effects can be precisely identified because a control group of 100 outlets was used in which teams did not receive performance-related bonuses.

In a randomised field experiment, the CEO of a large retail chain instructed a randomly selected group of store managers to “do whatever it takes” to reduce employee turnover. In these stores, the resignation rate fell by approximately 20 to 25 per cent relative to a control group. The effect persisted for nine months, gradually faded, and reappeared following a reminder intervention. No impact on sales was observed. The data indicate that managers in the treatment group allocated more time to personnel management and less time to customer service. These findings highlight that middle managers can effectively reduce employee turnover, although they also face  trade-offs between tasks due to limited resources..