Leveraging Your Employee Referral Program to Build Diversity

Jul 26, 2019

Leveraging Your Employee Referral Program to Build Diversity

Employee referral programs are known as one of the most popular and effective recruiting strategies to attract top candidates. But are they good for diversity? In this article, we will examine the ways an employee referral program can be leveraged to create a more diverse workforce.

The relationship between employee referrals and workplace diversity

Employee referral programs are known as one of the most popular and effective recruiting strategies to attract top candidates. Employee referral programs can significantly improve cost, time and quality of hire. Many HR professionals swear by employee referral programs because they are a quick, cost effective way of sourcing great candidates.

Most talent acquisition teams dream of building a more diverse workforce. And they worry that employee referrals will result in hires that reflect the demographics of their current workforce, not a more diverse one.

In this article, we examine the complicated relationship between employee referrals and diversity. We’ll take a look at the research and data to find answers. We’ll try to provide an unbiased, realistic view of employee referrals and its impact on diversity. So let’s get down to work! :)

Employee referrals - the best way to hire?

Let’s start with a quick recap of what we already know about employee referrals programs. There is a ton of research proving that employee referrals are the best way to hire. Studies have shown that employee referral programs provide significant benefits when it comes to increasing quality of new hires, morale and a company’s bottom line.

Compared with other recruiting methods (such as recruiting via job boards, career sites, etc.), employee referral programs have the highest return on investment (ROI). According to CareerBuilder’s report, employers rated employee referrals above all other sources for generating the best return on investment (ROI).

This is because employee referral programs:

  1. Reduce time to hire
    HR technologists has found that referred candidates are 55% faster to hire, compared with employees sourced through career sites.
  2. Reduce cost per hire
    According to Recruiter.com’s report, traditional recruiting can cost anywhere from $4,285 to well over $18,000 per hire, while recruiting with a referral program only costs about $1,000 per hire. In other words, referral programs can save organizations $3,000 or more per hire!
  3. Improve the quality of hire
    Dr. John Sullivan's research showed that 88% of employers said that referrals are the #1 best source for above-average applicants.

Employee referral benefits don’t stop at recruiting. They stretch long after as well! As reported by Business Insider, referred employees are happier, more productive and stay longer at the company. It seems that employee referrals can have a profoundly positive impact not only on recruiting, but also on retention and the company’s bottom line.

Consequently, it comes as no surprise that recruiting via employee referrals is one of the most popular recruiting methods. A recent research by Payscale carried out on more than 53,000 workers has found that more than a third of U.S. workers landed their current job via an employee referral!

Diverse sourcing… what are your options?

Creating a more diverse workforce is tough!

Most people recommend recruiting from diverse colleges and reaching out to community organizations that serve the underprivileged… but this is really only a good option for entry level positions. You can ask recruiters and agencies to send you more diverse candidates… but they’re expensive and only supply a tiny fraction of your total hires. Either way, the impact will be minimal. You can do diversity training at your office… but this only helps you retain diverse workers, not recruit new ones.

Employee referrals to the rescue

Unlike the other methods we discussed, referrals are a high volume source of candidates that’s appropriate for all levels of your organization. They have the potential to really move the needle on diversity in a way other sourcing methods don’t.

Making just a few simple tweaks to your employee referral process can significantly improve the diversity of referred candidates!

Here are 5 proven ways to ensure more diverse employee referrals:

  1. Ask your employees to make more diverse referrals Yes, it is as simple as that. Don’t believe me? Pinterest did it. They asked their employees to refer candidates from underrepresented backgrounds. The result? They saw a 24% increase in the percent of women referred and a 55x increase in the percentage of candidates from underrepresented ethnic backgrounds.
  2. Offer special bonuses for referrals from underrepresented groups For example, Intel’s employees can earn a bonus of up to $4,000 if they refer a woman, underrepresented minority or veteran who is ultimately hired. That's twice the standard bonus.
  3. Make your employee referral program more inclusive Open up your employee referral program to non-employees. Ask your business partners, vendors, investors, customers, even social media followers to recommend great candidates.
  4. Highlight the importance of diversity in your employee referral ads When creating employee referral ads, make sure you use strong, inclusion focused imagery and power words. Here are two great examples:

Conclusion: Employee referrals in the service of workplace diversity

Employee referral programs don’t necessarily hurt workplace diversity. If done right, employee referral programs can even improve it! Those companies who take the time to explain the value of a diverse workforce tend to see more diverse referral candidates. In such companies, employee referrals can actually become a powerful strategy in diversity and inclusion plan.

About the author

Anja Zojčeska is an HR Manager and Content Marketing Specialist at the recruitment software company TalentLyft. She is passionate about researching all the latest recruitment and retention trends and ideas and happy for the opportunity to test them out in a great company like TalentLyft. Kendall.