Equal Pay Negotiations LLC

Achieving Equal Pay by Consulting for Employers, Employees, and Policy Makers

Your Referral Program is Killing Diversity Efforts

Employee Referral Programs have long been hyped as the number one means to recruit great employees. Among the many reasons include:

  • Referred employees onboard quicker than other new employees
  • Referred employees’ retention is high
  • Referral programs are cost-effective means to get good candidates
  • Referral programs turn every employee into a recruiter thus widening HR’s reach

Bigger Bonuses for Diversity Referrals
Last summer, Intel doubled its employee referral bonus for diversity hires. This sounds like referral programs can improve diversity efforts, yet it highlights that referral programs are not bringing in a diverse crowd.  As Kara Yarnot of Meritage Talent Solutions wrote, “By putting a higher ‘bounty’ on a minority candidate, you are essentially saying that only money will drive employees to refer these people.”

Referrals Equal More of the Same
That is just one problem with Intel’s new bonus and it highlights an overarching problem with Employee Referral Programs in general. You get more of the same with Employee Referral Programs. More of the same was great when it was cool to have a lot of white men running everything. Those days have passed. Research shows time and again that more diverse organization are more successful, with success being defined as profitable.

Candidates referred by director level and higher employers almost always get hired. It happens 91% of the time. So 9 out of 10 candidates referred by upper management are hired. I imagine the 1 out of 10 who is not hired is presented in a manner to ensure the referral is not hired.

“Hey, this is my sister-in-law’s brother. I need to refer him so I continue to be welcome at Thanksgiving dinners. He’s a mess. Can you do me a solid and phone screen him but then not move him forward? I’ll owe you one.”

Leadership in business is overwhelmingly white men. According to McKinsey & Company, 97 percent of US companies have leadership that DOES NOT reflect the demographics of the US workforce. As the EEOC wrote back in 2006,

“Unless the workforce is racially and ethnically diverse, exclusive reliance on word-of-mouth should be avoided because it is likely to create a barrier to equal employment opportunity for racial or ethnic groups that are not already represented in the employer’s workforce.”

I’d like to add gender diverse to the EEOC’s comment. Hiring nine of 10 referrals from leadership is not an exclusive means of hiring but it is highly preferential. It highlights that such referrals trump other candidates including the candidates found and charmed through diversity programs. Diversity programs that have costs, efforts, and time associated to them.

Referrals and Diversity Recruiting Working Together
At its core, this preference of leadership referrals highlights how impossible it is to say no to the boss.  Put a process in place that acknowledges leadership referrals while not completely railroading every other recruitment method and no one will have to say no to the boss. I recommend:

  • Anonymous reviews of candidates’ resumes or applications by interviewers will enable all involved to give honest feedback on credentials.
  • Grading systems that give points for referrals and more points for referrals from leadership keep the “juice” of such referrals with candidates but does not squash all competition.
  • Provide the feedback and grades to referring leadership on their candidate, the winning candidate, and other finalists so they can accept or overrule hiring decisions not in the favor of their referral.

Having such a process takes the onus off  recruiters and hiring managers. Having such a process shines a light on the lost opportunity of hiring the referred candidate instead of the winning candidate. Then again, the referred candidate and the winning candidate could be one and the same.  Just not 91% of the time.

 

One comment on “Your Referral Program is Killing Diversity Efforts

  1. Antony Gomes.
    May 19, 2016

    It is also turning away motivated/ talented people.Lot of major well established companies hire relatives / friends of employees even though they are not qualified/experienced for the position.Only startups / smaller companies hire good,talented people these days because they really need these people to grow their business.

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