Do You Pay Your Employees More for Referring Black People?

I know a ton of HR Pros right now who have been charged by their organizations to go out and “Diversify” their workforce.  By “Diversify”, I’m not talking about diversity of thought, but to recruit a more diverse workforce in terms of ethnic, gender and racial diversity.  Clearly by bringing in more individuals from underrepresented groups in your workforce, you’ll expand the “thought diversification”. But, for those HR Pros in the trenches and sitting in conference rooms with executives behind closed doors, diversification of thought isn’t the issue being discussed.

So, I have some assumptions I want to lay out before I go any further:

1. Referred employees make the best hires. (workforce studies frequently list employee referrals as the highest quality hires across all industries and positions)

2. ERPs (Employee Referral Programs) are the major tool used to get employee referrals by HR Pros.

3. A diverse workforce will perform better in many complex circumstances, then a homogeneous workforce will.

4. Diversity departments, is you’re lucky enough, or big enough, to have one in your organization, traditionally tend to do a weak job at “recruiting” diversity candidates (there more concerned about getting the Cinco De Mayo Taco Bar scheduled, MLK Celebrations, etc.)

Now, keeping in mind the above assumptions, what do you think is the best way to recruit diversity candidates to your organization?

I’ve yet to find a company willing to go as far as to “Pay More” for a black engineer referral vs. a white engineer referral.  Can you imagine how that would play out in your organization!?  But behind the scenes in HR Department across the world, this exact thing is happening in a number of ways.

First, what is your cost of hire for diverse candidates versus non-diverse candidates? Do you even measure that? Why not!?  I’ll tell you why, it’s very hard to justify why you are paying two, three and even four times more for a diversity candidate, with the same skill sets, versus a non-diverse candidate in most technical and medical recruiting environments.  Second, how many diversity recruitment events do you go to versus non-specific diversity recruitment events?  In organizations who are really pushing diversification of workforce, I find that this ratio is usually 2 to 1.

So, you will easily spend more resources of your organization to become more diversified, but you won’t reward your employees for helping you get reach your goals?  I find this somewhat ironic. You will pay Joe, one of your best engineers, $2000 for any referral, but you are unwilling to pay him $4000 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 $4000 Reward!”.

Here’s why you don’t do this.

Most organizations do a terrible job at communicating the importance of having a diverse workforce, and that to get to an ideal state, sometimes it means the organization might have to hire a female, or an Asian, or an African American, or an Hispanic, over a similarly qualified white male, to ensure the organization is reaching their highest potential.   Work group performance by diversity is easily measured and reported to employees, to demonstrate diversity successes, but we rarely do it, to help us explain why we do what we are doing in talent selection.

What do we need to do? Stop treating our employees like they won’t get it, start educating them beyond the politically correct version of Diversity, and start educating them on the performance increases we get with a diversified workforce.  Then it might not seem so unheard of to pay more to an employee for referring a diverse candidate!


10 thoughts on “Do You Pay Your Employees More for Referring Black People?

  1. Let’s not forget that if you are asking your White, male employees for referrals then they are probably going to refer other White men. White people tend to have racially homogenous social circles. Racial minorities are usually going to have a significant number of White people in their social circles so that isn’t necessarily the whole answer either. Additionally, women in tech tend to actively seek to connect with other women in their field. It’s a good move to retain minority staff in addition to, as you mentioned, being open with staff about who you’re looking to attract.

  2. This is such a murky topic. As an African-American myself its a hard pill to swallow to think that you’re vetting my LinkedIn or targeting me because of my color. Although your wanted poster suggestion is pretty funny. I also agree that the education around this is important. Again diversity is so murky & you never know where the conversation could end up.

  3. Pay for the job, not the person. In my 30+ years experience recruiting, the managers just want people who are technically competent, socially oriented to the work world, able to think their way out of a paper bag and demonstrate a legitimate work ethic. No slice of society corners that market – so you’re more likely to hire people who “get it” naturally and the diversity will take care of itself.

  4. Hmmm. what is the difference between a Java Developer/Accounting assist and black people/white people? I”ll just set that here for now.

    As an African American I wouldn’t appreciate that concept. Diversity is more than just race. Would you consider offering a different referral bonus for someone from the LGBT community? The issue to me is companies should make their recruiters do their job and if they have a diversity dept that is not performing than replace them. That can help with diversity better than telling your employees that you will give them a big fat bonus for the best strong black buck they bring in the organization.

    • Terryl,

      You know what, I take it all back. Instead I want to now pay more for women.

      I value diversity. I’m willing to do something about it. You go fire some recruiters.


      PS – another way to solve this would be to post each hiring managers diversity mix publicly within your company, along with your organizations goal. Then tie their department results to their annual bonus.

  5. We don’t do it because it makes us feel icky. The reasoning behind that is fuzzy though. Perhaps because workforce diversity “should just happen” in a perfect world. And it doesn’t, so we gave to force the issue, and that’s uncomfortable. So oaying more referral fees to get there is one ice step too far. Interesting conversation, Tim.

  6. TS, paying more for any person is wrong for many reasons (more philosophical but I’ll save my thoughts on this for another time) but paying more for a diversity employee should be wrong for a particularly noxious reason: The price paid for the biggest Negro slaves by slave owners.

    There are aspects of history that should never be forgotten.

    • Levy –

      We pay more for a referral of Java Developer than we do for a referral of an Accounting Assistant in most orgs. What’s the difference? One is a much higher value to the organization, than the other.

      In some organizations, recruiting diversity is a much higher value than recruiting a white guy. So, why wouldn’t we pay more?


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.