Companies like Intel, Accenture, and Pinterest value referral bonuses for diversity. But should you pay higher bonuses to recruit candidates from underrepresented groups (e.g., BIPOC and women)? I think it’s a good idea.
In this blog, you’ll find examples from industry pros who think you should. Plus, we touch on the legality of it.
Should you pay higher employee referral bonuses for diverse hires?
Here’s what the pros say:
Jenny Zhang, a researcher from Glassdoor, Answer: Yes, but be cautious.
She says that if diversity referral bonuses for employees are “designed carefully” it urges employees to be more conscious of DEI goals when referring candidates.
The Kapor Center’s Tech Leavers Study on what drives turnover in tech recommends “offering employee referral bonuses for underrepresented talent” among other DEI strategies for hiring.
So, another “Yes” (but do it right!) for diversity referral bonuses for employees.
D&I strategies done right (e.g., a well-run diversity referral bonus program for employees) helps improve culture. This means creating a space for employees to feel comfortable recommending their diverse contacts and backing that up with hiring practices that don’t weed them out or make them feel based on who they are (e.g., unfair interviewing practices).
Vinayak Ranade, Founder/CEO of Drafted and Product @Instawork, is also a “Yes.” In a post about the Tech Leavers Study, he says:
“If you want more diverse referrals, just ask.”source: The Predictive Index
Ranade highlights that Pinterest’s diversity referral bonus program from employees is a success because they ask for “loose referrals” or “leads” instead of “referrals” (a word that carries a lot of weight).
Our good friend Tim Sackett, Chief Storyteller at Fistful of Talent HR Blog, has some energy around the topic too.
In his post on larger referral bonuses for Black Engineers, he points out that companies are already assigning large amounts of cash (and time) to recruit diverse candidates…so there shouldn’t be a concern about rewarding employees for doing the same. His “real-life” scenario makes a good case for why he approves of higher diversity employee referral bonuses:
“So, you will easily spend more resources for your organization to become more diversified, but you won’t reward your employees for helping you to reach your goals? I find this somewhat ironic. You will pay Joe, one of your best engineers, $2,000 for any referral, but you are unwilling to pay him $4,000 for referring his black engineer friends from his former company.
Yet, you’ll go out and spend $50,000 attending diversity recruiting job fairs and events all over the country trying to get the same person. When you know the best investment of your resources would be to put up a poster in your hallways saying “Wanted Black Engineers $4,000 Reward!”.source: The SHRM Blog
Is it legal to pay a higher diversity referral bonus for employees?
The short answer is yes. It is legal to recruit for more diversity (and it is the right thing to do). But it’s not legal to hire in a way that excludes any group based on “race, color, religion, sex, sexual orientation, gender, national origin or other protected category.”
The U.S. Equal Employment Opportunity Commission even recommends using referral programs as a diversity recruitment strategy.
“while welcoming and considering all applicants for hire, regardless of race, color, gender or other such status.”source: ChiefExecutive.net
And, to date:
“no published case law authority has held that paying higher bonuses to encourage referrals of diverse candidates is illegal or discriminatory.”source: ChiefExecutive.net
Why I Wrote This?
Our mission is to help you create effective and inclusive job descriptions to recruit top talent. Ongig’s Text Analyzer removes bias from job ads that might deter diverse candidates from applying.
- Can My Company Pay Higher Bonuses To Employees Who Refer Diverse Candidates? (by Margaret H. Allen and Dr. Mustafa Abdul-Jabbar)
- How to increase workplace diversity with employee referrals (by Vinayak Ranade)
- Do You Pay a Larger Employee Referral Bonus for Black Engineers? (By Tim Sackett)
- A Diversity Blind Spot: The Limits of Employee Referrals (by Jenny Zhang)
- Teach Leavers Study (by Allison Scott, Ph.D. , Freada Kapor Klein, Ph.D. , Uriridiakoghene Onovakpuri, MBA)
- Moving the needle on strategic diversity (by Affirmity)