Posted November 16, 2016 by

Diversity bonuses: do they work?

Employee happy with his bonusCompanies who understand the importance of hiring diverse employees are pouring millions into their Diversity and Inclusion efforts. One such effort is to offer a “diversity bonus” to recruiters or employees who make referrals. The results are mixed. In 2015, Intel started offering $4,000 to employees who refer women or minorities. It may have played a part in their increase in diverse hiring. Facebook tried to incentivize recruiters to recruit more diversity, and it doesn’t seem to be working. A third example isn’t actually a bonus but a mandate. The NFL’s Rooney Rule requires teams to interview minority candidates for coaching and senior football operation jobs. When they put the policy in place, there were six head coaches of color. Over 12 years, the NFL added 14. This does seem like progress, albeit a bit slow moving.

Some love the idea of paying out for minority and women candidates. Some say it just doesn’t feel right. If you decide to invest in this approach, make sure to think through the risks and how to do it right.

There reasons why some raise their eyebrows at the idea. In the case of the Rooney Rule, some point to “sham” interviews that bring in a diverse candidate just to comply with the rule. (Why recruiters would spend time on this instead of finding a quality diverse candidate is another conversation.) Clearly, a policy that mandates diversity recruitment must have buy-in from the recruiters.

Additionally, many companies may feel uncertain what the legal boundaries are. Their employees may cry “reverse discrimination”, and HR may feel that it’s a fragile and grey area right now. Another risk, that I believe is quite valid, is what your staff will assume when diverse candidates are hired. Will those new hires, who were presumably hired for their excellent qualifications, be presumed to be “add-ins” or inferior? If so, you have a bigger problem of building respect and inclusion.

If you follow Intel’s example and pay out for employee referrals (as opposed to Facebook’s model of paying bonuses to recruiters), think how to do it right. One thing is clear: paying a bonus sends a clear signal that the leadership truly cares about diversity. That they are putting their money where their mouth is. Any Diversity Director will say that diversity and inclusion is everyone’s job, and building a culture of referrals can build that sense of “all hands on deck” approach to diversity hiring.

Building in a diversity bonus into your referral policy could actually be smart from a legal standpoint. The EEOC prohibits employers from using “neutral employment policies that have a disproportionately negative effect on applicants or employees of a particular race” or other diversity dimensions. Referrals may be the winning recruitment strategy for quality hires, but people tend to associate with—and hence refer—those who are similar in race, religion, etc. If you rely too heavily on employee referrals without a diversity bonus, it may be hampering your diversity efforts.

When you ask employees to make referrals, help them do it. When you ask, “Can you think of someone who should work here?” your response rate will be low. Ask them specific questions.

Lazlo Bock describes how they did this at Google: “In the context of generating referrals, [people] rarely do an exhaustive review of all the people they know… We increased the volume of referrals by more than one-third by jogging people’s memories. For example, we asked Googlers whom they would recommend for specific roles: “Who is the best finance person you ever worked with?” “who is the best developer in the Ruby programming language?” And they had recruiters at their side, ready to take notes.

People may still come up short on who to refer. Ask staff to think of people who possess the not-so-obvious skills you need. “Who do you know with contagious positive energy?” Or, “Who never lets their guard down?” Or, “Who can bring different people together?”

If your bonus is tied only to referrals who get hired, employees may be shy to make referrals in case they don’t make it all the way. Why not offer a smaller bonus for referrals who almost get hired? Your employees’ confidence will go up, especially if you can provide feedback for why their referral didn’t make the final cut.

Look deep into your college relations program. First, because many college campuses are very diverse, but also because college students are very connected. They have hundreds of people they could potentially inspire with one smart post. Your interns and even entry-level candidates may feel honored to be asked for referrals. They have access to groups and other campus networks that you will never have, so don’t overlook the power of college referrals.

Never stop at the referral. If the goal is to diversify your staff, getting a diversity of candidates in the door is only the first step. Ultimately, none of these efforts matter if interviewers don’t evaluate candidates objectively, or if you don’t also adopt a culture of inclusion. Make sure you track the performance of all hires. If your diverse hires feel engaged and valued, you will be able to build a business case for investing more in diversity recruitment.

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