A new study examines the impact of referrals on promotions for minorities and women.
It’s like putting your resume into a bottle and then dropping it in the nearest body of water. You will unlikely be even considered due to the overwhelming number of applicants.
This helps explain why social contacts can lead to up to 50 percent of all American jobs. Referrals allow applicants to bypass the queue. Theoretically, they also create an efficient application process by providing employers with candidates vetted informally and employees with workplaces that are likely to be fit.
Adina Sterling is an assistant professor of organizational behavior at Stanford Graduate School of Business. She says the downside of network-based hiring is that “birds of feather flock together, and people who aren’t as well connected could be excluded.” Minorities and women, who historically have not been as well-connected, may be disadvantaged if they seek a job via social networks. She asks, “But is this the whole story?” If network-based hires are negative at the entry point for certain groups, does this effect continue throughout their tenure in the organization?
Sterling’s article in The ILR Review revealed a surprising finding: referrals can boost the promotion rate for Black employees and even raise the rates to equal the rate among white employees who weren’t referred during promotions. However, this effect doesn’t hold for women.
In partnership with Jennifer Merluzziopens, a new window from Tulane University, Sterling investigated 11 years of personnel records for nearly 16,000 U.S. employees. The researchers tracked the promotions of Blacks and women, who are usually promoted at a lower rate than males and whites. They also differentiated between employees who were hired through a referral versus those who weren’t. The study found that Black employees engaged via a referral were more than 1.2 times as likely to receive a promotion. This did not, however, bring them up to parity with the white employees. Occasionally, employees with exceptional abilities were promoted sooner than their peers. Sterling and Merluzzi discovered that Black employees who had referrals received the same promotion rate as their white colleagues without referrals.
Referrals had little impact on women’s promotion. Sterling says, “That surprised me.” According to Sterling, this finding adds to the academic debate on whether race and gender are studied together as a factor related to minorities. These results “clearly speak to the notion that gender and race are different.” They suggest that women face distinct biases when hired or promoted compared to minorities.
Sterling and Merluzzi conducted a small study to understand why referrals led to more promotions for Black employees. MBA and executive MBA students were divided into two groups and given a similar hiring report and resume, except that the employee’s race differed (one White, one Black). Some students were told the employee was hired through a referral, while others were told it was through a campus recruiter. The employees were shown his performance and informed that similar performers were fired half the time and promoted half the time. They then had to decide whether or not to encourage him.
Sterling and Merluzzi discovered that Black employees referred to them were more likely to receive promotions and were statistically likelier to do so than whites not referred. The MBA and executive MBA students were more likely to use complex data when evaluating Black employees than white employees but less likely to do this for employees hired through a formal method rather than a referral. It was more important for Black employees to have someone vouching for them than for white employees.
Sterling believes this could be a sign that Black candidates are subjected to a pervasive bias during the hiring process. They may have been screened more thoroughly based on quantifiable criteria than other candidates. Referrals can help to dismantle the tendency.
Sterling states that women may be discriminated against more specifically at certain times, such as when they start a family. Referrals, or people with similar influence who can vouch for an individual when the work-life balance is a concern, may be beneficial.
Sterling says that the nuance in these findings speaks to the fact that no “silver bullet” can be taken away. She says that hiring and retaining employees about diversity is a complex problem. But she gives employers a starting point: track data about new hires. The human resource department has access to a wealth of information. Look at how each pool of new hires looks when they are brought in using different methods. Track if some collections are more varied than others or if groups within these pools respond or perform differently after hiring.
Sterling says that HR managers need to track and look at these factors and be open to the surprising ways referrals could help underrepresented groups.