Originally posted on the Predictive Index blog and updated June 3, 2020.
Employee referrals are known to result in more efficient hiring. As you can see in the below SlideShare, U.S. companies hire 29 percent of their workforce through referrals—and at least 88 percent of employers love employee referrals. At companies like Ernst & Young, referrals can account for up to 45 percent of non-entry level hires, according to The New York Times.
At the same time, every week we see something in the news reminding us that most businesses have a ways to go when it comes to diversity and inclusion in the workplace. Take a look at these survey results showing the percentage of women within various companies—on the low side we see 23 percent with a median of 39.5 percent.
If you’re in the recruiting and talent business (i.e. any business), it’s not unusual to hear something like:
“We want fewer referrals, because we’re focusing on diversity, since you know, birds of a feather…”
There is truth to this idea. Research says people tend to refer people like themselves, so naturally, some recruiters and employers believe that having a healthy referral program is unhealthy for their diversity and inclusion initiatives.
However, saying you don’t want more employee referrals for diversity reasons is throwing the baby out with the bathwater. More referrals doesn’t mean less diversity, necessarily. You can accomplish your workplace diversity goals by being more thoughtful about your referral program, instead of just abandoning it.
Here are four ways you can create a diverse employee referral program at your company:
New research from the Kapor Center suggested that you can turn referrals in favor of diversity by strongly encouraging not just any referrals, but diverse referrals. It seems so obvious once you think about it. If you want more diverse referrals, just ask.
Further, the Kapor Center’s studies also found that offering a referral bonus specifically for underrepresented minorities moves the needle more than several other popular methods. These include the appointment of a Chief Diversity Officer (a popular Silicon Valley band-aid) as well as unconscious bias training, which can potentially have the opposite effect. As Harvard sociologist Frank Dobbin said to Vox, “Training can bring bias to the surface … it can activate stereotypes.”
This HBR article talks about how Pinterest, a premier tech company in Silicon Valley, was able to move the needle on their workforce diversity efforts with a very simple trick. Instead of asking for “referrals” (a word that carries a lot of weight), they asked employees for “loose referrals” or “leads” and let the recruiting team decide whether the candidate made the cut.
As Candice Morgan, Head of Diversity at Pinterest, said in the article: “We found that people tend to refer job candidates who look like themselves, so we decided to ask people for loose connections and leads instead of referrals.”
This way they were able to combat unconscious bias that might play into referrals, and also get a broader, more diverse set of candidates at the top of the funnel.
If you’re not convinced yet and still don’t think there’s a cure for “birds of the same feather,” there’s an obvious solution: ask a better set of birds.
If you can find ways to more effectively encourage and incentivize under-represented groups within your company to make more referrals, that will increase the diversity at the top of your candidate pipeline.
Forty percent of all referrals originate from a non-employee source. This means that someone has to network his or her way through the community to one of your employees in order to get referred.
Now, if you want all the good parts of referrals (trusted source, higher response rates, better candidate engagement, faster time-to-hire, lower cost-per-hire, etc.) but don’t want people that look and smell exactly like your employees, a no-brainer would be to simply ask people that aren’t your employees.
Every company has a community—friends, family, investors, customers, social media followers, and so on. With the right personalized and targeted messaging, you can engage different parts of your community in helping you find the best talent from a variety of places.
At Drafted, we believe that your company network is your single biggest competitive advantage when it comes to hiring. Our mission is to make it easy for you to leverage your network in the hiring process to find the best candidates. Your network is already powerful, it’s just too much work to make it a priority over the day-to-day of recruiting. Companies that use Drafted see their employee referral numbers go up by 2x, their time to hire drop by 30% and their overall hiring efficiency increase significantly within just a few months.