When it comes to getting job referrals, not every recommendation adds to your bottom line.
PayScale’s latest report, The Impact of Job Referrals, shows that referrals from friends and family can have a negative impact on pay. That means that getting a referral from your uncle or your best friend could wind up netting you a lower offer than if you’d applied online.
How much lower? When we control for variables including industry, location and occupation, referrals from friends and family decrease salary offers by $1,600 for men.
Women see neither a decrease nor an increase from family/friend referrals — but they are also less likely to get referrals in the first place. White women are 12 percent less likely to receive any type of referral than white men; women of color are 35 percent less likely.
Want to Make More Money? These Are the Best Referrals to Get
If you want to increase your starting salary, look for referrals from business contacts such as former coworkers or clients. These types of referrals boost pay by $8,200 for men, on average, and $3,700 for women. (Yes, that’s right — even for the most lucrative referral type, there’s a 55 percent difference in the benefit for men and women.)
Next-best, for men: referrals from their extended network, which lead to a $3,200 increase in pay. However, this type of referral has no statistically significant impact on women’s pay.
The bottom line is that both men and women are better off looking for referrals from someone who can speak directly to the quality of their work.
Beyond that, it’s important to realize that while referrals may help job seekers get hired, the wrong type of referral can have a negative impact on pay — and even the “right” type benefits men more than women and white candidates more than people of color. For employers seeking diversity, and job seekers looking for a fair shake, referrals are not an easy solution.
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Have you taken a referral from friends or family — and paid the price? We want to hear from you. Tell us your story in the comments or join the conversation on Twitter.