How to leverage an employee referral scheme for inclusive hiring

What is an employee referral scheme?

Generally speaking, an employee referral scheme is a hiring tool employers can use to fill their job vacancies with known and trusted candidates from within the network of their existing employees. As the name suggests, employees refer a person they know outside of the company for the job. Some organizations even offer incentives or bonuses to the referee if their candidate is hired and retained for a predetermined time period.

And hey, we know that hiring processes are expensive and time-consuming. Employee referral schemes can be a great option to cut costs by adding a sort of pre-screening layer. If the system is working as intended, the recommended applicants are likely to be a good match since the ones referring them have already been selected as a great fit for your company and workplace culture.

However, as is with anything that involves human participation, human bias can complicate the process. Employee referral schemes can unintentionally end up homogenizing the workforce, among other challenges.

Potential biases in referral programs

People tend to refer people they like, and that’s both a pro and a con.

On one hand, it’s great because the reference can come from a place of merit, where you as an existing employee refer someone you feel is a good match for the job. But on the flip side, it can be not-so-great because you’re also likely to recommend someone similar to you. These similarities can be social, ethnic, financial, educational, gender-based, etc. Why we prefer some people over others can often also be rooted in circumstance, coincidence, or sometimes even subconscious bias.

This has the potential to alienate a large section of candidates and can result in marginalizing the marginalized groups further. So, when you open the “hiring” floor to your employees, are you unknowingly moving towards a less diverse workplace?

One way to find out is by doing a quick audit of the previous referrals. Notice any patterns? Biases? Maybe you tended to hire one demographic more often than others? Is there a specific ethnic group that’s forming a clear majority within your team? Do most of the referrals come from more privileged or financially advantaged strata of society?

This critical analysis could inform you if your employee referral scheme is unwittingly falling prey to human bias.

Read this next: 10 mistakes you're making with your diversity recruitment strategy (and how to fix them)

When done carefully, though, an employee referral scheme can be a great strategy to make the workplace more diverse and inclusive.

So how do you start an inclusive employee referral program?

Designing an employee referral scheme for inclusivity

Step 1: Set clear and measurable diversity objectives

You’ve identified the gaps, now it’s time to bridge them. Let’s say you observe that the X to Y ratio in your organization is 10:1. To make a more diverse and equitable space, you’ll probably want more X-employees on the team.

So, when a vacancy comes up, you get the opportunity to balance the team out a bit more. Set a clear goal that the business is looking to encourage more participation and candidature from X. You could even put a number on this goal. Say, in a year from now, you want to take the ratio from 10:1 to 10:4.

While skills and fit are still the ultimate criteria behind the selection, setting a clear goal means you’re taking the first measurable step in the direction of diversity and equality.

Read this next: A guide to inclusive hiring practices

Step 2: Broaden referral criteria

Hiring processes can sometimes focus too much on where a candidate has worked before or the kind of institutes they come from. However, using this criteria alone works against applicants from marginalized backgrounds or historically disenfranchised groups. So then to get access to employers, applicants need privilege to even cross the recruiter’s desk.

When we shift the focus primarily on the skill set required for a job or previous work, it opens the door to a broader group of applicants and referrals, and welcomes more people from diverse backgrounds to compete based on skills and merit.

Read this next: Skills-based hiring for a more inclusive workforce

Step 3: Educate employees about inclusive referrals

Needless to say, if you want an employee referral scheme that works well, you have to tell your employees! Don’t just communicate the goals, either, but make sure you explain the reasons behind those goals. Most people aren’t consciously contributing to the lack of diversity; employees tend not to consider that their referrals shape the workplace.

As leaders, we should proactively (and gently) inform our teams of the role subconscious bias plays in hiring. Don’t get us wrong, this is a delicate conversation because it may come across as accusatory. But do it right, and you’ll help your employees feel more connected to you, your team, and your workplace. You'll also be helping them make better and more conscious decisions.

The good news is that at PowerUp, you’ll find plenty of courses and workshops that are themed around creating more diverse and equitable workplaces, and that’s as good a place to start as any!

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Step 4: Expand access to broader networks

Some industries and locations already face the challenge of homogeneity, and it might just be the case that your employees come from homogenous circles and they may not be able to readily recommend more distinct and diverse candidates. In cases like these, an organization can step in to provide them with resources that expand their current circles. Sign them up for membership in organizations like Black Girls Code and Code2040.

An employee resource group can also serve as an internal body within your organization, fostering diversity and inclusivity. Use ERGs to promote job openings in communities you may not have easy access to.

Watch this next: The ABCs of ERGs: How to Create, Build and Grow Employee Resource Groups

Step 5: Incentivize referrals

In the case of referrals, quantity is quality. The more employees refer, the higher your chances of getting a wider pool of applicants, leading to a more diverse workplace. To encourage more participation from your employees, offer them incentives. You have many options to pick from—more PTO, a fully-paid trip, a new work desk or laptop—all good incentives! A bonus is common too, for example, if the selected candidate also finishes six months in the company successfully, both the new employee and the referrer can be offered a bonus.

Step 6: Make referrals transparent

Transparency is almost always a good idea in the workplace, but if you really want your employee referral program to sing, you need to tell everyone about it, including wins.

If you were able to successfully boost your ratio of X:Y like in our earlier example, let your team know! Their hard work helped build a more inclusive workplace and a more diverse company. These are important metrics, and keep employees motivated. If you set a public goal, hitting it and celebrating it makes everyone feel pretty great. Plus, you’ll be putting your money where your mouth is and affirming that your DEIB initiatives aren’t just lip service.

Read this next: Take your diversity recruiting to the next level

This time when you start a referral program, you’ll get recommendations that are less biased or homogenous. This is great news! But…that’s only half the work done. The other half involves setting up an inclusive hiring process for the referred candidates.

Following up on the plan with an inclusive hiring process

Step 1: Create inclusive job descriptions

True inclusivity means providing an equitable hiring process to everyone. For those who aren’t coming via referrals, your job postings need to communicate your commitment to inclusivity. Ensure that your job description clarifies that you are open to candidates from all genders, ethnicities, and backgrounds.

📝 Free download: How to Write Inclusive Job Descriptions

Looking for some more examples? Grab our free guide on writing inclusive job descriptions below — so all talent, no matter their background, feel welcome at your company.

Step 2: Standardize the interview process

Questions for all interviewees need to (generally) look the same for the same position, even if they’re a referral. That’s one of the ways we ensure the process is fair and unbiased.

Of course, conversations with each person will go differently, and this in no way stands against the natural flow of the interview. However, certain questions can alienate a whole group of people. For instance, a question like “are you planning to have kids within the next two years?” is only faced by women and not men, and more importantly, it has nothing to do with their capabilities at work. Most importantly, some of these questions have legal implications.

Step 3: Create diverse interview panels

Want to foolproof the hiring process even more against partiality and discrimination? Appoint an interview panel with representatives from every group you want to see more of. If you would like to see more women in the workforce, your panel needs to have women on it. This isn’t just for the show, either. You’re bringing in broad representation to evaluate candidates and hear directly from folks who are more likely to share experiences.

Step 4: Get help from recruitment technology

You don’t have to do this alone! PowerToFly is always happy to help with all your talent management needs. Get your hands on our innovative recruitment tool, PowerPro, to attract top talent.

Read this next: How inclusion can help you attract and retain top talent