A Referral Program That Actually Increases Diversity… Requires These Design Features

With a data-driven design, employee referrals can be your #1 source for diversity (Forget that old wife’s tale).

Realize That With Some Proactive Actions, An Old Wife’s Tale Fades Away

I’m not trying to be subtle here; that old wife’s tale (found on this SHRM page) about how an employee referral program (ERP) will negatively impact long-term diversity over time. This has not been true since modern data-driven corporate referral programs have been implemented. Because when you rely on your own organization’s data (rather than your barely relevant academic studies) to redesign your ERP program. Literally, every real or imagined reason why, historically, employee referral programs might have had a negative impact on diversity can now be identified and neutralized. Five foundation factors drive this modern ERP approach.

  1. You must learn to rely 100% on data – being data-driven is the most critical factor in avoiding negative diversity referral impacts. As a result, ERP program managers need to forget intuition, antiquated past practices, and no longer true assumptions. Instead, shift to a modern referral program model driven by your own organization’s data. Then ERP leaders need to use that data to identify and eventually fix the program features that do not improve diversity. 
  2. Make diversity referrals your primary focus and target – it’s not true that employees automatically make referrals of people like themselves. And it won’t ever be true at your company if you focus on and prioritize diversity referrals. Every manager, employee, and recruiter must know about this goal. Also, they must fully understand why the goal is so important. Because increasing the diversity on individual teams is a key driver of team performance (it also helps to minimize the chances of the all-too-common groupthink). You can make the importance of this goal even clearer by having your CEO publicly announce that they support the goal. And they will also be actively working to make their diversity referrals. 
  3. You must emphasize that “helping the team” will be the primary motivator – money can distort the referral actions of employees. So instead, emphasize that your employees should exclusively make referrals that will measurably improve your team’s skills and performance.
  4. Educating the employee is critical – use the data you gather to educate your employees and your managers so that they know precisely the proven ways to identify, assess and sell diverse referral prospects.
  5. Realize that today’s workforces are much more diverse and connected – realize up front that today’s workforces are much more diverse. And because of social media, more widely connected than those of even 10 years ago. Today’s workforces at numerous companies have proven to provide a measurable increase in diversity referrals. Examples of successful firms include Pinterest, Accenture, Agilent Technologies, and Intel.

Yes, in my view, it’s time to stop forever listening to those that bring up “the old wife’s tale” that referral programs reduce diversity. Instead, begin your process of identifying the program design features needed to guarantee a positive increase in diversity referrals.

A List Of The Referral Program Actions That Will Increase Diversity Referrals

This article’s primary goal is to reveal which referral program features have positively impacted the number and quality of diversity referrals. The remainder of this article will focus on highlighting the many referral program actions and features that various companies have found to have a positive diversity impact. The most impactful actions and features appear first on each list.

Part I – Foundation Program Design Actions

This section contains the 10+ foundation design actions that smart ERP leaders must take.

  • The first data-driven actions to take – shifting to data-driven decisions will be the most difficult strategic action by far. So many involved in recruiting and diversity have operated without relying on data for years. This new approach needs to start by assigning a data expert to work with the referral redesign team. The second data-driven action should be measuring the beginning benchmark performance levels. Starting with the total number and the percentage of diversity referrals and diversity hires. Next, and this is critical. You need to measure the on-the-job performance level of all new hires (including both diverse and nondiverse new hires). You need this baseline performance level to determine if the new ERP process produces better quality hires. A simple way to measure the quality of hire can be found here. The next critical step in becoming data-driven is using your data to determine which referral program features or approaches help, hurt, or have no impact on diversity.
  • Publicize the fact that diversity referrals are a top priority – after establishing the goal of increasing diversity referrals. Make sure that you start all of your ERP program and marketing materials by letting the reader know that the top priority goal is to increase diversity referrals and new hires. Also, build support by demonstrating how your executives support this goal and that their executive bonuses will be partially determined by whether this goal is met. Note that Walmart, Nike, and McDonald’s have each had success with tying executive bonuses to meeting corporate diversity goals.
  • Shift the primary motivator to helping your team – unfortunately, money can encourage employees to make weak referrals as part of their misguided effort to help a colleague or friend find a job. Although money can still impact, the primary motivator needs to immediately shift away from making money toward making referrals exclusively for “the good of the team.” The “do it for the team” approach repeatedly reminds the referring person that all referrals must meet four “good for the team” pre-assessment criteria. Which are: is their work superior, will their skills add to the team, are they a fit, and will they accept an interview. All ERP program materials must emphasize that this is the only reason to make referrals.
  • Develop and spread the business case for diversity referrals – obviously, any referral program needs the support of managers and employees to be fully successful. The best way to get their support is by developing a “compelling business case.” Do that by working with the CFO’s office to identify the business benefits. Then, effectively convince all managers and employees that there is a positive correlation between higher diversity percentages on a team and improved business results. Once they see the impact on their team results and job security, individual employees will increase their efforts because they are now convinced of the benefits they will receive. Research has also shown that diversity is important because your customers demand it. But it also helps recruiting because 76% of job seekers rank a diverse workforce as something they look for in a new position. Research has also shown that diversity referrals can also positively impact employee retention
  • Celebrate and reward successful diversity referralsseveral firms, including Accenture, Glowforge, and Intel, have found that offering an increased bonus or reward for each successful diverse referral is impactful and legal. Other firms have included a charity donation option as an indirect reward for those less concerned about any monetary benefit.
  • Proactively seek out high probability referrers – rather than sitting back and waiting for referrals to happen. Data has shown that proactively approaching those employees with the highest likelihood of success is extremely effective (i.e., previous successful referrers, top performers, diverse employees, and well-connected employees). Where possible, approach these employees during a one-on-one and in-person meeting. Explain to each targeted employee how they are uniquely capable of making an important contribution and then ask them specifically for their help. If you have them, the leaders of each of your employee affinity groups should also be targeted. 
  • Educate employees on where to find diverse referrals – it’s a mistake to assume that even most of your employees know the best way to find and sell referrals. So use data to identify the best sources. Which often include industry events and certification classes that have mostly experienced diverse employees in attendance. For hourly jobs, encourage them to recruit at clubs, religious groups, or social activities with many diverse members or attendees. Also, help your employees sell potential referral prospects by educating them about the many reasons your surveyed employees have mentioned and what makes your company a great place for diverse employees. This selling information should also include powerful stories and specific reasons why members of each of the different unique groups of diverse candidates (never lump diverse groups) would want to join your organization.
  • Greatly expand those that can make a referral – in most cases, but especially when your employee base isn’t large or diverse enough. It makes sense to expand referral eligibility to anyone that likes and knows your company well. These individuals normally include former employees, contract employees, strategic partners, vendors employees, and employees’ relatives/family members. It’s also important to realize that any nepotism rule restricting referrals from “relatives” can severely limit your diversity referral volume. Because diverse employees often have large families that may include multiple diverse prospects. 
  • Maintain a connection with those not hired – when a diverse referral is not hired. Either because they were ranked second or there wasn’t an open job for them at the time of their referral. It’s essential that you remain in contact with them. Develop a talent pipeline or talent community. Where you continually make contact with them to maintain their interest. And so that you can automatically “push” (via text or email) information to them about any current relevant job openings. You should also consider giving a shout-out to any employee that provided an extremely high-quality referral. That, for whatever reason, wasn’t immediately hired.
  • Encourage the targeting of the already employed candidate – there is a tendency for employees to focus their referral efforts on unemployed prospects. However, it’s important to let them know that the very best candidates are, instead, likely currently working at a major competitor down the road. So encourage your employees to focus on these employed prospects. Because hiring them will not only help your firm, but it will simultaneously hurt your competitor.
  • Identify diversity recruiting killers – use data to identify every action that hurts referral hiring or diversity referrals at your company. And then starting with the highest impact results killers, have the courage to redesign or drop them completely.
  • Set your diversity referral targets if you don’t know how many referrals you should be receiving. In most cases, the overall goal of a successful referral program should be to produce the highest-performing new hires and for referrals to result in more than 50% of all hires. And a diverse referral target should be having at least one diverse referral in 15% of all open jobs and a female referral in at least 40% of jobs.

Part II – Specific Sourcing Programs That May Yield Diversity Referrals

This list contains eight narrowly focused diversity sourcing programs proven extremely successful at other firms. The sourcing programs include:

  • Accept name-only referrals – top performers make the best referrals. However, these employees are often extremely busy, so they often don’t have time to assess a referral prospect fully. So allow employees to provide “name only referrals,” which is where they provide your recruiter with only the name and the link to the LinkedIn profile of their prospects. Data collected by Pinterest revealed that simply asking for “leads” (rather than complete referrals) reduced unconscious bias. That action alone had a dramatically positive impact on diversity referral results.
  • Focusing on boomerang referrals – boomerang rehires routinely rank among the best performing new hires. So this focused approach emphasizes maintaining a continuous relationship with diverse former employees (i.e., corporate alumni), hoping that someday you can rehire them through an employee referral. Start by assigning one of your current employees to the task of converting a targeted diverse former employee into a referral. 
  • Ask new hires for referrals during onboarding – make it a regular part of your onboarding effort. To highlight your employee referral program and provide new hires with a referral toolkit. It’s also good to develop a process that ensures that every diverse new hire is asked for additional diversity referrals during their onboarding. 
  • Solicit reference referrals – because the references that supported your recent diversity hire are likely to know other diversity prospects. Identify and then approach each of the references of last year’s top diversity hires. Call them and after thanking them for their helpful reference. Next, ask them if they “know any other diverse prospects” that are equally as qualified.” Also, if the reference person is themselves diverse, ask them to commit to helping you identify diverse talent as a permanent referral source.
  • Required diverse representation on every interview slate – if you want to improve diversity hiring overall, learn from the NFL. Set a rule requiring that at least one diverse candidate appears on the final interview slate of every high volume and professional job.
  • Consider targeting your customers – if you are in the retail or hospitality business where diverse customers are highly visible. It makes sense to encourage your employees to get to know and refer to your knowledgeable diverse customers that might want to become an employee someday.
  • Highlight the need for diversity referrals around calendar events – it makes sense to publicize the need for diversity referrals during black history month. But also around other women’s and ethnic holidays celebrated in your area.
  • Add a college referral component – because college students are among the most connected people in the world. It makes sense to ask your recent grads for diversity referrals as part of your university hiring program. Also, ask your current and past interns, your current student recruits, alumni, faculty, grad assistants, and your employees to make high-quality diversity referrals. 
If you can only do one thing© – because others have found it to be true. Start by assuming that more than 40% of your current diversity referral practices have serious flaws. And that it’s your job is to find the data that will identify those flawed practices.

Part III – Administrative Recruiting Actions For Improving Diversity Referrals

This final section contains 10 administrative recruiting actions that will help support your referral program.

  • Stop doing things that don’t produce proven diversity results – it shouldn’t surprise anyone that I find diversity recruiting is bound by tradition. And as a result, there is an extremely high level of resistance to change. Unfortunately, it’s not enough to simply add positive features to your diverse recruiting program. You must also have the courage at least once a year. To redesign or drop your established employee referral practices that don’t have data to show that they produce positive diversity referral impacts at your company. Likely candidates frequently include diversity scholarships and supporting diverse small businesses.
  • Measure, recognize, and reward diversity results – in your ERP redesign, include metrics that identify individual hiring managers and recruiters that excel in producing diversity referral results. Find a way to recognize and reward them. 
  • Warn everyone about an overemphasis on factors that limit diversity referrals – often the top reason why diverse candidates are dropped early. Diverse candidates often have difficulty meeting the excess credential requirements required for many jobs. So work with hiring managers to limit all unnecessary job requirements, including requiring excessive years of experience, requiring college degrees in no specified field, and the need to have previously held the appropriate formal job title.
  • Assign the best-performing recruiter – most are surprised to learn that diverse recruiters are less successful at making diverse hires. Instead, use data to determine which recruiters have the highest diversity hire success rate. And assign them to diverse critical referrals, even if they are not diverse.
  • Only accept referrals by invitation – if your employees have learned the bad habit of making “junk referrals.” That’s flooding your system with referrals that have no real chance of being hired. Consider only allowing referrals from employees “that are invited” to make them. Obviously, that list of invited referrers should include past successful referrers, top performers, and people currently working in that job. 
  • A global referral capability is now essential – with the rapid expansion of remote work, most companies must now seek talent worldwide. So your referral program design must now include a global capability. Fortunately, global recruiting also exponentially expands your pool of diverse candidates.
  • When you find an adverse impact, invest in alternative sources – if, despite all your efforts, you find that you are still lacking in diversity referrals. The first step to counter it is to simply invest more money and resources into those alternative sources producing the most diverse candidates.
  • Make referrals “blind” – if you find that your company is experiencing a strong internal bias against diverse candidates. You can help minimize biases by making all aspects of every referral anonymous. Start by obscuring the name of the referral candidate and/or the employee making the referral. Also, realize that there are proven approaches for making the resumes and interviews of all candidates “blind.”
  • Consider a follow-up meeting after a great diversity referral – after each great diversity referral (or failure). It’s smart to schedule a follow-up meeting with the person. Find out “what worked” and ask them if they know any other stars? And if an employee continuously makes a high volume of low-quality referrals. Make sure that you provide constructive feedback to these individual employees to know what they did wrong and how to improve. In severe cases, proactively ban them from making additional referrals until the next quarter.
  • Act to limit diversity turnover – the competition for diverse employees is intense. So to reduce the chances of a diverse employee leaving. It makes sense to continually increase the opportunities that they will have within your company. So institute a diversity retention program. And one component of it should be to allow internal referrals, where employees and managers can refer another current employee for an internal job or project that might fit them and keep them engaged. 

Final Thoughts

It’s important to realize upfront that poorly designed referral programs are no different from other poorly designed recruiting programs. I have found that faulty ERPs have no more a negative diversity impact than poorly written or placed job ads or hiring managers that screen resumes without adjusting for their unconscious biases. The key to success is to find and fix the flaws in every sourcing program. And for ERPs, that means using data to identify which practices to use and which ones to avoid. Incidentally, if you run into several failures along the way, don’t be discouraged because all great HR programs fail once or even twice before they succeed. 

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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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