In the wake of the Black Lives Matter protests last summer, many companies pledged to hire more diverse employees. Yet many are still struggling to find diverse candidates.
One reason is a large percentage of companies rely heavily on employee referrals to fill open positions. Hiring often goes like this: A position opens up and a manager sends an email to their team, asking, “Do you know anyone who would be a good fit for the role?” Employees are eager to refer people they know, especially if their company offers a referral bonus.
At companies with 100 or fewer employees, 51% of jobs are filled by referrals, according to this 2020 survey. Although that percentage drops slightly for larger companies—21% of jobs are filled by referrals at companies with 501 to 1,000 employees—overall, referrals are four times more likely to be hired than candidates who apply online. By the time a position is posted online, the manager is likely to have already identified a potential candidate from the pool of referrals, says Melanie Feldman, co-founder of Going Places, a career development firm that works with young professionals.
Companies that rely on referrals are also more likely to see a homogenous candidate pool because employees tend to refer other people who “think like them, act like them and live like them,” says Priya Jindal, founder of Nextpat Ltd., a coaching and consulting firm for cultural transition in Washington, D.C. “It can be tempting to quickly hire referrals but then you overlook other talent and miss the opportunity to build a pipeline that attracts and nurtures diverse talent,” says Claudine Hoverson, senior vice president of talent & acquisition at Synchrony, a consumer financial services company in Stamford, Conn., with about 16,000 employees.
Here are four ways to encourage employees to refer more diverse job candidates.
1. Offer an extra bonus
One reason employee referral programs are so popular is it’s a great way for staff to earn extra money. In 2019, the average referral bonus was $2,500. Companies that want to encourage more diverse referrals could provide additional bonus money for candidates who have attended historically black colleges and universities or have specific skills or experiences, Jindal says.
While it’s illegal to hire someone based on their race, color, religion, gender, sexual orientation or national origin, there are no laws preventing companies from paying higher bonuses to encourage referrals of diverse job candidates. In fact, the U.S. Department of Labor and the U.S. Equal Employment Opportunity Commission encourage employers to offer these types of bonuses to foster a more diverse candidate pool.
2. Activate your employee resource group
If your company has affinity or employee resource groups for women, veterans or Black, Asian or Latino employees, hiring managers should work with these groups to fill job openings. Encourage members to reach out to their professional networks—people they graduated with or know through professional organizations—when positions open, says Jennifer Brown, CEO of Jennifer Brown Consulting, a Manhattan-based firm focused on developing inclusive leadership, and author of How to Be an Inclusive Leader: Your Role in Creating Cultures of Belonging Where Everyone Can Thrive. “Your employees should be excited to make referrals and approach their networks,” she says. “If they aren’t excited to share an opportunity, then there may be a problem with diversity and inclusion at your company.”
3. Encourage your employees to look outside their network
When the National Association of Colleges and Employers asked new graduates last spring to rank the importance of a diverse workforce, more than 79% said it was “very important.”
Millennial and Gen Z employees are eager to work at companies with a diverse workforce but they need to recognize the role they play in making this a reality, Feldman says. For instance, if someone outside your network reaches out for an informational call, make time to speak with them. “Then when your boss does reach out to you for a referral, you will have a list of people you recently spoke with who are outside your regular network,” says Anna Schuliger, co-founder of Going Places. “Commit to referring someone who has a different background than you or does not look like you.”
4. Make diversity a company goal
Companies should track the demographics of the talent being referred by staff and determine if only white candidates or only male candidates are being referred, Brown says. Then tell employees that the company is looking for more diverse candidates. “Explain here’s our gap and here’s something you can do to help close that gap,” Brown says.
Make sure your employees understand why diverse perspectives are beneficial for the workforce, your organization and your customers, Hoverson says. For instance, diverse perspectives and insights can help drive innovation at a company. “For those companies that are on the diversity journey, have the mindset that diversity is a necessity, not a nice to have,” she says.
