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Strategic recruiting in ongoing hierarchies

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  • Goldlücke, Susanne

Abstract

This paper describes a hierarchy with peer hiring to explore the reasons behind the management rule “A’s hire A’s and B’s hire C’s”. Workers are promoted based on talent and therefore like to hire less talented co-workers. This is why B’s hire C’s. The same logic should cause A’s to hire B’s, but there is a trade-off in the model: A’s are more likely to be promoted, and a manager profits from more talented subordinates. If this effect is strong enough, then indeed A’s hire A’s.

Suggested Citation

  • Goldlücke, Susanne, 2017. "Strategic recruiting in ongoing hierarchies," Economics Letters, Elsevier, vol. 156(C), pages 176-178.
    • Handle: RePEc:eee:ecolet:v:156:y:2017:i:c:p:176-178
    DOI: 10.1016/j.econlet.2017.05.011
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    References listed on IDEAS

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    1. Guido Friebel & Michael Raith, 2004. "Abuse of Authority and Hierarchical Communication," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 224-244, Summer.
    2. Michael Waldman, 1984. "Worker Allocation, Hierarchies and the Wage Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 95-109.
    3. Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 453-472, June.
    4. Demougin, Dominique & Siow, Aloysius, 1994. "Careers in Ongoing Hierarchies," American Economic Review, American Economic Association, vol. 84(5), pages 1261-1277, December.
    5. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
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    Cited by:

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    2. Emre Ekinci, 2022. "Monetary rewards in employee referral programs," Manchester School, University of Manchester, vol. 90(1), pages 35-58, January.

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    More about this item

    Keywords

    Peer hiring; Hierarchies; Promotions;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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