The Times (Shreveport)

Major disparity found in employee referrals

Study: Connection­s help white job-seekers most

- Jessica Guynn

Flashing a polished resume, a sharp cover letter and a LinkedIn profile doesn’t guarantee a foot in the door.

Making the shortlist – let alone the final cut – is not just a matter of sterling credential­s.

It’s still largely a matter of who you know. And nothing counts more than a company insider putting in a good word with a hiring manager.

But research shows these employee referrals don’t give everyone a fair shake.

White candidates are almost twice as likely to be hired as those from other racial and ethnic groups, even in organizati­ons committed to diversity, according to new findings from diversity strategy and consulting firm Paradigm.

‘Self-perpetuati­ng cycle’

Because white people – and white men in particular – historical­ly have been the majority group in most organizati­ons, especially in leadership roles, job candidates recommende­d through employee referral programs are disproport­ionately white and male, Paradigm co-founder and CEO Joelle Emerson said.

“In both our personal and profession­al lives, our networks tend to be composed of people who look like us,” she said. “You essentiall­y have a self-perpetuati­ng cycle.”

Job applicatio­ns were more diverse than referrals in most companies Paradigm studied.

Black candidates represente­d 3% of employee referrals but 5% of all job applicants; Latino and Hispanic candidates were 4% of employee referrals but 7% of all job applicants; and Asian candidates were 28% of employee referrals but 40% of all job applicants, Paradigm found.

“All of this compounds and becomes a disadvanta­ge for candidates of color,” Emerson said.

‘Wake-up call’ for employers

Emerson said the Paradigm study comes at a critical moment for organizati­ons as the workforce shrinks and the nation grows more diverse.

Most organizati­ons her firm works with already struggle to hire, advance and retain employees from underrepre­sented groups – people of color, women and nonbinary people, disabled people, veterans and the LGBTQ+ community, Emerson said.

“This should be a bit of a wake-up call,” she said. “You very likely have gaps in hiring, performanc­e management, promotions and employee experience that are disadvanta­ging groups of employees that are currently underrepre­sented but growing as a relative proportion of the overall workforce.”

Emerson said if employers can’t remove those obstacles now, they will struggle to attract the best employees in the future.

The Paradigm study also counters misleading narratives from anti-diversity activists who claim that DEI programs discrimina­te against white people and give underrepre­sented groups an unfair advantage in hiring and promotions, Emerson said.

“The data shows that simply isn’t the case,” she said.

A USA TODAY investigat­ion of the nation’s largest companies found that the top ranks are predominan­tly white and male, while women and people of color are concentrat­ed at the lowest levels with less pay, fewer perks and little opportunit­y for advancemen­t.

Referrals more likely to get hired

Popular in organizati­ons across industries, referral programs are often considered a winwin-win. Job applicants with a personal recommenda­tion have the inside track. Employers get vetted candidates who start sooner and stay longer. And an employee who drops a friend’s name collects a cash bonus.

“For many companies, they are the primary or a top source of hired employees,” Emerson said.

Paradigm looked at data from more than 2 million job candidates and found that referred candidates were over 4.5 times more likely to get hired.

Research studies have raised concerns about referral programs for years, as have anti-discrimina­tion regulators.

In 2018, Payscale research found that referral programs benefited white men more than any other demographi­c group. White women were 12% less likely, men of color 26% less likely and women of color 35% less likely to receive job referrals than their white male counterpar­ts, the compensati­on data provider found.

“It is recognized that employee referral programs can jeopardize diversity efforts, particular­ly if your current workforce demographi­cs are not diverse,” Payscale’s pay equity strategist Ruth Thomas said. “We also know from studying ethnicity pay gaps that lack of profession­al networks is a driver of pay gaps.”

The analysis by Payscale found that a woman hired through a referral program received, on average, a $3,700 increase in pay, but a man hired through a referral program got more than twice that.

“Unless the workforce is racially and ethnically diverse, exclusive reliance on word-of-mouth should be avoided because it is likely to create a barrier to equal employment opportunit­y for racial or ethnic groups that are not already represente­d in the employer’s workforce,” the Equal Employment Opportunit­y Commission says on its website.

In 2017, tech firm Palantir settled a lawsuit by the Labor Department that alleged it discrimina­ted against Asian job applicants in several types of technical jobs.

The problem, the government said, was that Palantir relied too heavily on employees to refer job candidates – more than half of hires came through an employee referral program – disproport­ionately excluding Asian applicants.

Palantir said the Labor Department’s analysis was flawed.

Employers can still take steps to improve the fairness of employee referral programs, she said:

Ask every job candidate the same questions and evaluate their answers using the same criteria.

Conduct candidate debriefs to explore why interviewe­rs prefer one candidate over others.

Do not disclose to interviewe­rs that a candidate was referred by someone inside the company.

Consider whether candidates gave stronger answers or have more relevant experience

USA TODAY

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 ?? JUSTIN SULLIVAN/GETTY IMAGES FILE ?? White candidates are almost twice as likely to be hired as those from other racial and ethnic groups, even in organizati­ons committed to diversity, according to new findings from the consulting firm Paradigm.
JUSTIN SULLIVAN/GETTY IMAGES FILE White candidates are almost twice as likely to be hired as those from other racial and ethnic groups, even in organizati­ons committed to diversity, according to new findings from the consulting firm Paradigm.

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