Many employee referral programs, in their current state, require amending in order to maximize organizational performance because they create suboptimal team results stifling diversity and inclusion.
PayScale.com's 53,000 person survey, discovered that employee referrals give white men more than three times the benefit compared to women of color (40 percent v. 13 percent).
Employee referrals benefits to white men more than two times more than men of color (40 percent v. 17 percent).
White women closed the gap with their white male counterparts but only slightly (40 percent v. 30 percent).
Overall, employee referrals benefit whites two and a half times more than they benefit minorities (70 percent v. 30 percent).
Determining why employee referrals disproportionately affect some groups while boosting other group members is difficult to pinpoint.
However, the racial composition of social networks appear to give whites preferential treatment in employee referrals and, as a result, make whites more likely to receive a job offer because employers often place a premium on employee referrals in their hiring process.
HOW WE HANG OUT
In general, no one racial minority group represents more than 1 percent of most whites’ social networks, according to the latest research by The Public Religion Research Institute (PRRI), a nonprofit, nonpartisan research and education organization conducting public opinion polls.
White Americans’ social networks are 91 percent white so the liklihood that current employee referrals result in a white candidate is far greater than employee referrals resulting in a person of color getting hired.
Prioritizing employee referrals by compensating internal employees and conferring benefits to external candidates can be at loggerheads with an organization's diversity initiatives.
The referral v. diversity conflict represents a classical folly reward system because the organization rewards for "A" while incentivizing "B." If not handled with care, organizations incentivizing employee referrals may engage in a de facto state of affairs that contradicts written policy initiatives claiming to not discriminate against various protected classes.
Nevertheless, hiring managers and human resources departments traditionally consider employee referral programs an excellent source to find high potential employees amid an ocean of otherwise highly qualified applicants.
On the surface, the practice seems efficient, effective and like a sensible way to boost workplace morale, according to some human resources practitioners.
However, PayScale.com's survey reveals that employee engagement is not materially altered across the various ways external hires connect with their current jobs.
Take for example, the fact that employees listed in PayScale's "No Referral" category reported only 6 percent lower levels of job satisfaction compared to employees listed in the "Extended Personal Network" category-- 51 percent compared to 57 percent.
Hires making their way into a company without a referral report nearly identical numbers in reporting their intended attrition-- 46 percent v. 49 percent.
Deemphasize Cultural Fit
Imagine for a minute that Beyonce and Jay-Z were required to fit 1950s culture. Chances are the billionaire couple wouldn't have bestowed valuable contributions to business and society--the millions of dollars they've donated benefit both students who can pursue higher education and organizations that receive quality hires.
Organizations pay steep opportunity costs associated with incentivizing homogeneous environments where thoughts and ideas miss the careful information processing found in diverse groups. When diversity goes up, creativity goes up, innovation goes up and as a consequence, organizational performance goes up, according to research from Northwestern University.
Ironically, non-diverse groups report higher confidence levels with their results despite performing significantly lower than their diverse counterparts.
Many of us have heard the cliche that "Great minds think alike." But that' not necessarily true-- and the notion must be categorically challenged because organizational performance suffers if we as leaders do not reevaluate hiring, training, opportunity and promoting practices.
For a comparison of diverse group performance v. non-diverse group performance, see the results from Northwestern's Kellogg School of Management chart below:
Diversity & Inclusion represents growth for many organizations despite widespread perceptions of ineffectiveness or feckless social good.
Diversity & Inclusion is inextricably intertwined with business performance. As a result, organizations should introduce the topic under learning & training--just as they would with any other change management initiative requiring new behaviors and policies. In addition, growth opportunities and incentives need to be provided for both the existing employees and new employees so that new expectations are clearly defined.
New employees require situations where they're set up for success in the role in which they were hired. Room for growth should also be afforded to the organization's dominant culture because new change initiatives may bring about feelings of uncertainty with regard to how to interact with people who they are not likely to interact with on a personal level. Consequently, the organization should maintain consistent de facto and de jure patterns, practices and policies.
Carrot & Sticks:
Outline desired goals and set rewards for achieving and/or exceeding diversity & inclusion goals and hold accountable those who do not meet or exceed those goals. Accountability is no stranger to ROI, EBIT, EBITDA, Stock price, R&D, gross profit, net profit, margins and other measures business leaders look for when determining how well an organization performs in any given area. The same type of measurement--while avoiding quotas-- should be given careful thought and consideration.
To be clear, if your organization lacks proportionate minority representation--either through selection or attrition-- then the problem is likely due to ineffective inclusion policies.
"We can't find them" is an excuse.
"We can't keep them" is an excuse.
"They always leave" is an excuse.
"We don't know what we're doing wrong" is an excuse.
"They go to more prestigious employers" is an excuse.
Stop making excuses; start measuring results.
Diversity & Inclusion Matters.