Instantly Improve Diversity Recruiting Results With a Bonus for Diversity Referrals

Written by Dr. John Sullivan and Kimberly Do

As a result of providing corporate diversity and STEM recruiting solutions, we receive lots of questions in this area. By far, the most frequently asked question is “What single best practice has the most dramatic impact on diversity recruiting results?” Well without hesitation, our answer is …

“Focus your referral program on diversity and offer a significantly higher referral bonus for diversity hires.”

You may think that paying an extra bonus amount for diversity referral hires is a theoretical approach, but you would be wrong. Intel is the latest firm to jump on the “diversity bonus” bandwagon. It recently announced that it would double its regular referral bonus (up to $4,000) for targeted diversity hires (i.e. underrepresented minorities, women, and veterans). Glowforge is representative of firms that don’t normally pay a referral bonus, but do offer a bonus exclusively for diversity hires (i.e. $5,000 for women, underrepresented minorities, or people with disabilities).

Offering a significantly higher bonus for referring someone from a particular category of targets is quite common in other areas of corporate referrals. Uber, for example, offers a significantly higher referral bonus for hiring drivers from its competitor Lyft, and it offers a still higher bonus for those who train drivers at Lyft. Offering a “kick-up bonus” for referrals for critical or hard-to-fill jobs is also quite common in the corporate world.

Why Does Doubling the Referral Bonus Add Such a High Impact on Diversity Hires

Employee referrals across the board routinely produce the highest quality and the highest volume of hires (in many cases over 50 percent of all hires). However, when you statistically examine all the factors that contribute to referral program success, the size of the referral bonus makes little difference. And although it might initially seem to be contradictory, it is, in fact, true that offering significantly higher referral bonuses for diversity hires often has the greatest impact on recruiting results of any diversity initiative.

The diversity referral bonus has such a significant impact because it sends an unambiguous message about the importance of diversity recruiting. Corporations are constantly sending out messages to its employees about the value of diversity. Unfortunately, many employees and managers don’t take those messages seriously because they often view them as “just talk.” However, when you put your money where your mouth is by doubling the referral bonus, most will finally realize that corporate leadership is finally serious about diversity recruiting. So it’s not just the money, but it’s the public doubling of the amount that instantly lets your employees and managers unambiguously know how important diversity referrals have become.

Additional Steps for Increasing Your Diversity Referral Hires by at Least 20 Percent

Although adding the diversity referral bonus is important, if you really want to guarantee a dramatic increase in your diversity referral results, you should also implement supporting actions. Some additional action steps that you should consider include:

  • Diversity must be a referral program focus area — in addition to the increased bonus, you must make diversity referrals a key referral-program focus area. Remind your employees of its importance in all of your communications, websites, posters, brochures, and meetings. Also, make sure that the leaders of the referral program are measured and rewarded for increasing quality diversity hires.
  • Present the business case for diversity referrals — obviously any referral program needs the support of managers and employees in order to be successful. The best way to get their support is by developing a compelling business case. Work with the CFO in order to demonstrate to all that there is a positive correlation between higher diversity percentages on a team and improved business results. Once they see the impact on their own business results, individual managers will encourage their employees to increase their diversity referrals. Employees will be even more responsive once they see that improving diversity can have a positive impact on their job security, stock valuation, and their bonus amounts. And finally, also show hiring managers that you make all major referral referral-program decisions based on data because managers are impressed with data-driven programs.
  • Provide a referral toolkit to your employees — it turns out that most employees, whether they are diverse or not, simply don’t know where to look for diverse referral prospects or how to convince them to accept becoming a referral. That means that you must educate your employees by providing them with a simple toolkit that reveals and explains the most effective diversity approaches. You can increase your employees’ ability to sell prospects by providing employees with an electronic “story inventory” that includes stories that excite every category of diversity prospects (don’t lump diverse targets all together). Also consider developing for your employees and managers a “sell sheet” which lists your firm’s features that are most attractive to diverse prospects/candidates (ask your own diverse employees to identify these features).
  • Consider a bonus for referring top diversity candidates who aren’t hired — normally employees only get a referral bonus if their referral gets hired. Unfortunately, this “all-or-nothing” reward can inadvertently discourage referrals from risk-adverse employees. Therefore, reward employees for “getting close.” Do that by offering a small reward (up to $100) for all of their diversity referral candidates who are good enough to be invited for a final interview. And then help those employees refine their referral identification process by revealing to them why their diversity referral didn’t get the job.
  • Target diverse people who you already know — your referral program should specifically encourage employees to refer diverse people who the firm is already familiar with. Firms like DaVita have found that re-recruiting or “boomerang-ing” former top-performing diverse employees is an easy but effective way to generate top-quality hires. Firms like General Motors, GE, and Intuit have learned that diverse individuals who came in a close second place for a job should be reconsidered for future positions. These almost-hired individuals are called silver medalists and in many cases they end up being considered to be top candidates by a different hiring manager. Because the families of diverse employees are also likely to be diverse, there should only be minimal direct supervision restrictions on nepotism hiring.
  • Provide referral cards — when you’re looking for diverse customer service and hourly employees, provide your most visible employees with paper or electronic referral cards. This simple but powerful approach is effective because your employees likely encounter many diverse service personnel throughout their day. The card should praise the work of the person receiving the card and note that your employee has determined that they would be an exceptional fit at your firm.
  • Proactively approach employees who have made successful diversity referrals — most referral programs are passive, in that they post jobs and then they sit back and wait for referrals. However, a superior approach is a proactive one that reaches out to individual employees who have a track record of successful high-quality diversity referrals. Obviously you would first ask these successful referrers to identify the factors that make their approach so successful. But you should also ask them directly for names whenever a job comes open in their field. Don’t assume that only diverse people know and can refer other diverse people.
  • Expand referral eligibility — managers and executives are well-connected, so they themselves should be encouraged to make referrals. Also expand eligibility to non-employees who know your firm well because they are often willing and capable of providing high-quality diversity referrals. These non-employees may include former employees, retirees, vendors, spouses, references, strategic partners, and even customers. This expanded eligibility approach is even more impactful at smaller firms, where the employee population simply isn’t large enough to generate enough referrals.
  • Add a college referral component — because college students are among the most connected people in the world, ask students for diversity referrals as part of your university hiring program. Ask your interns, your current student candidates, last year’s hires, alumni, faculty, grad assistants, and your employees to make high-quality diversity referrals.
  • Revise job postings to make them more familiar to diverse individuals — few job postings or job descriptions are written by diverse individuals. And as a result, the language used in them won’t attract and it may actually drive away diverse referrals. Firms like Google have found that involving diverse employees in the writing of job-related materials can have a significant impact on the number of diversity applicants.
  • Measure and reward managers for diversity hiring — because the employee gets a referral bonus, most managers devote little time to getting their employees to make referrals. This is unfortunate because when managers are highly supportive of diversity referrals, their employees respond dramatically. One of the most effective ways to improve manager involvement is to widely report on a diversity scorecard the ranked results of each manager on diversity referrals, hiring, and retention. In addition, the performance appraisal form and the bonus criteria for employees, managers, and recruiters should include their diversity results.
  • Identify bias in the recruiting funnel — many firms successfully recruit diversity candidates only to lose them during the assessment process. As a result, use data to determine the steps in the referral or recruiting process where you are losing a large number qualified diverse candidates. Next determine why, and see if the cause of the loss can be minimized.

Final Thoughts

Unfortunately, it takes courage to offer diversity referral bonuses. Although they clearly work, offering a separate diversity referral bonus has its critics. Some of the timid leaders in HR worry that it creates unequal treatment. It does, but so does spending corporate money on every other diversity and affirmative action program. Some are concerned that referral programs will harm diversity, but the opposite is true. And paying an added referral bonus for diversity will actually improve your numbers.

So in closing, the important thing to remember about offering higher bonuses for diversity recruiting is that the amount of money offered is less important than the fact that you announce your willingness to pay more for diverse referrals. Paying a differential sends an unambiguous message to all employees that diversity hiring really is important. However, if you expect referrals to become the primary source for diversity hiring, it’s essential that you supplement that message with some of the supporting actions that are recommended in this article (add comments below with your own actions).

As seen on ERE Media 9/14/2015.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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