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Comment by slg | Hacker News Reader

This could spiral out of control in both good and bad ways. The good ways are mentioned in the article, everyone wants to keep everyone else happy so they all continue earning their bonuses. But what happens when someone does leave? The person who referred them will suddenly have their compensation drop. That could destroy morale and send that person looking for other employment. The problem could then possibly ripple throughout the entire organization.

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Conveniently, the first person leaving might go to work for another company that has a similar policy, and start referring their co-workers from their previous employer, who then move to the new employer, referring one another as they go.

It is not quite a Ponzi scheme or chain letter, since (presumably) only one referrer could collect the bonus, but it might produce patterns where many people in one department follow the lead of the first one to migrate.

OTOH, if the bonus is linked to the starting salary, HR may now have an incentive to low-ball the start, and then increase to retain.

Cui bono?

How many people calculate a bonus as part of their base compensation? I tend not to count my chickens before they're hatched and don't see how something like this would negatively affect the morale of anyone who understands the difference between base pay and bonuses.

Additionally, a 10% of annual compensation referral bonus is generous; even if it can only be collected once.

If you've recruited 2-3 new hires, and their salary is similar to yours, that's a 20-30% raise a year, a not-insubstantial amount.

I could easily see people coming to expect these bonuses, starting to rely upon them to pay for their holiday shopping, etc, to the point where politics and drama could result.

Of course on paper, even one 10% referral bonus would be better than most existing ones, but people don't behave rationally about money, and we quickly get used to our "bonuses"...

Not only that, but the company negotiates future salary increases knowing the bonus exists, so you can't be guaranteed that it will actually be on top of what you would otherwise get paid.

It is a great idea. I've heard of many companies that give small (~$500) bonuses for successful hires.

The unintended consequences listed here are interesting as like any system, people will learn how to game it.

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