How to Create an Employee Referral Program to Build Diversity

The power of employee referrals is no secret to recruiters and there are several reasons why. First and foremost, as hiring times have increased to an average of almost 23 days, getting referrals from current employees can save an organization a significant amount of time and money—sometimes upwards of $18,000 per hire—as recruiters have a shorter path to shortlisting candidates. In addition, employee referrals can help to attract some of the best talent because great employees are likely to have associations with people who are on their same level. As a result, organizations can use employee referrals to build a quality workforce that is more engaged because new hires go into the company knowing at least one other person—thus making it easier for them to get integrated into the culture and more likely for them to be retained.

Despite these clear advantages, employee referrals can also create pitfalls when organizations are trying to reach their diversity and inclusion goals. Although companies can benefit when employees refer people who are like themselves, this tendency is not restricted to job experience or work ethic. If an organization does not have underrepresented employees to begin with, there’s a good chance that staff members may not have people from underserved communities in their circle—which will make it even more difficult to get candidates from diverse communities into the hiring funnel.

How to Run an Employee Referral Program That Attracts Untapped Talent

If an employee referral program is created with D&I in mind, it will be more effective in attracting underserved talent. The following are some strategies for running a program that helps companies meet their D&I goals.

Create a strategy

Just as organizations create strategies for their diversity recruiting, they should also have a strategy for their employee referral program. Whether they want to increase retention of diverse talent, get better at targeting members of a particular underserved group, or attract more untapped candidates into the hiring pipeline, companies should have specific, measurable goals in mind when they begin their employee referral program—and be sure to monitor their progress as they go along.

Offer rewards for quality referrals of underrepresented talent

Many organizations already offer a reward for employees who refer a candidate that eventually gets tired. In order to find more untapped workers, companies can consider increasing the bonuses for referrals of candidates from underrepresented groups. Intel was able to do this successfully by doubling the bonuses—from $2,000 to $4,000—they gave employees for referrals of candidates from underrepresented groups. Consequently, the company was able to increase the amount of new hires from underserved communities to 41 percent in 2015—up from 32 percent the previous year. 

Open up the program

Getting referrals from current employees can go a long way toward increasing diversity in an organization, but the referral program does not have to be limited to people who actually work at the company. Opening up the program to other stakeholders—such as vendors, investors, and even customers—can also lead to quality hires because these are groups of people who are already familiar with the company and will have an idea of the caliber of talent working there.

Consider all candidates fairly

The point of having an employee referral program is to attract quality hires. But organizations can't automatically assume that just because a referral came from in-house that it will lead to a quality hire. Referral candidates should still be held to the same standard as any other candidate in order to get the best results.

By using these strategies, organizations can reap the benefits of employee referrals while not sacrificing their diversity recruitment goals. In fact, when done strategically, employee referral programs and D&I can go hand in hand.