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Food for Thought: Referral Hiring Bad for Diversity

Successful job applicants often come with personal recommendations from current employees. According to Bloomberg, not only are these individuals are more likely to the get the job but they can reduce hiring costs as the referral hires take “less time, start the job quicker, and stay at the companies longer.” Referral hires may report higher levels of job satisfaction and the current employee has a new work friend.

The problem often is that people who get referrals tend to be the same race as the person referring. According to a professor at the University of Georgia, social circles are often made up of similar people. Tech company, Palantir had a lawsuit filed against it by the federal Department of Labor because of its referral problem. The government said that the company relied too much on its own employees to suggest new employees. This reliance caused a disproportionately exclusion of Asians.

Google, Facebook, and Twitter were recently put on a list of the top 30 companies that used referrals for hiring and they all have problems with hiring non-whites and non-Asian male workers. Yet, most companies have asserted their intention to increase their diversity in hiring. According to Bloomberg, Accenture and Intel have tried a new tact with their referral programs: bigger bonuses for diversity hires made through referral. Pinterest had a big increase in the diversity of its candidates when running a similar program.