This blog post is an excerpt from our newest study, “The Impact of Job Referrals on Employee Engagement and Workforce Diversity.”
Between April 24, 2017 and August 25, 2017, PayScale asked 53,000 workers if they had received a referral. Because respondents also provided demographic information and details on their current position, we were able to study the impact referrals have on pay, engagement, which groups benefit from referrals as well as which groups are detrimentally impacted by referrals. You can download the full study here.
Have you ever attended a meeting at work, looked around the room and wondered to yourself: “Um, are we potentially making a sub-par decision because everyone in the room is looking at the problem in the same way?”
Do you ever feel a bit uneasy because you notice that many of your coworkers look, talk and act in the same way you do?
If you are wondering why your workplace isn’t more diverse (in terms of gender, ethnicity, attitude, mindset and skill set), it might be because your employer is relying way too much on employee referrals in their hiring process.
PayScale recently decided to investigate the impact of referrals on workplace diversity and pay. We asked 53,000 workers if they had received a referral, and collected demographic info and details on their current position.
We found that when organizations rely on referrals to fill their talent pipeline, they may be (accidentally) creating more homogeneous workplaces.
Aren’t employee referrals a good thing?
As an employee, you have a good idea about what skill sets your company needs and what type of people would fit into the culture. Additionally, when you refer your buddies, you’ll be helping them out and may get to spend more quality time with them.
Yet, our data showed that if we (the collective “we”) only referred our buddies for jobs, we will actually be perpetuating the old boy network. In other words, the makeup of our workplace will become more white and more male over time.
Our research found that referrals disproportionately benefit white men.
Holding all else constant, female and minority applicants are much less likely to receive referrals than their white male counterparts. White women are 12 percent less likely to have received a referral for their current position. Men of color are 26 percent less likely to have received a referral and minority women are 35 percent less.
To put it another way, in an organization were there are 100 referred employees, 44 of them will be white males, 22 will be white females, 18 will be minority males and only 16 will be women of color, holding constant industry, location and other relevant variables.
Female and minority applicants are much less likely to receive referrals than white male applicants.
By comparison, according to the Bureau of Labor Statistics, white men are only 34 percent of the U.S. labor market. That means that white men are 129 percent more likely to be in a pool of 100 referred employees than what demographics suggests they should be.
Regardless of the reasons, the fact remains that when those of us in the mainstream (in terms of gender and race) only refer our friends for open positions at our companies, we are contributing to a less diverse talent pool.
If you want to help your company become a more diverse workplace, consider implementing the following practices:
- Help out with on-campus recruiting. If you went to a school with a diverse student body, help your company connect to current students by volunteering to staff on-campus recruiting events. Or be an active member of your alumni network and make yourself available to students for informational interviews.
- Talk to that stranger on LinkedIn who wants to learn more about your employer. Our research found that employees who receive a referral from targeting another employee are the most engaged workers. This finding seems intuitive; after all, if someone will take the extra effort to contact a complete stranger to learn about an employer, they’ll likely go the extra mile once they’ve gotten the job. Next time a stranger contacts you on LinkedIn wanting to learn about your workplace, say “yes” to them and you might help your employer uncover a gem they wouldn’t have recognized otherwise.
- Tap into community organizations you are affiliated with. If you are affiliated with a cultural institution, a church, or a volunteer organization that’s full of people from diverse backgrounds, remember to turn to these organizations when your organization is looking for fresh talent.
- Mentor those who don’t look like you. As you already know, mentors can provide mentees with a career playbook, offer tailored advice, and open doors of opportunities. Yet, not everyone has access to this kind of support, since many traditional mentorships were established by men and were hierarchical in nature. You can fill the gap by mentoring employees in your organization who don’t look like you (both peers and more junior staff). If you are in a position to do so, help your organization start a mentorship program to increase opportunities for more employees.
- Ensure diverse employees are being compensated fairly. Payscale has done significant research on the gender pay gap and racial wage gaps that women and minorities face in the workplace. By compensating candidates across the spectrum appropriately, this can positive impact your company as a place where people of all backgrounds and experiences can grow.
If you’d like to dive deeper into the findings of this study, you can download it here.
Tell Us What You Think
Have you ever been hired through referral? We want to hear from you. Tell us your story in the comments or join the conversation on Twitter.