Employee referral programs are making the workplace a lot whiter

Every office looks alike.
Every office looks alike.
Image: Getty Images/Oli Scarff
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It’s a common workplace practice: Recommend a friend or former colleague for a job and collect a handsome bonus. 

But a Rutgers University management professor finds that such referral programs actually cut off opportunities for minority candidates. Nancy Di Tomaso says that corporate America could actually be undoing gains in workplace diversity.

The problem is access and information, and cronyism raising barriers to employment for US Latinos and African Americans, Di Tomaso says. Her new book—called  The American Non-Dilemma: Racial Inequality Without Racismrelies on almost 300 in-depth conversations with individuals about their careers. (DiTomaso did not research company referral programs, though she has looked at corporate policies and practices on promotions in the past.)

Some 99% of the 270 whites interviewed relied on information, influence or direct hiring by family, friends or acquaintances to help land a job—men more often than women. Interviews with blacks showed they tried their networks too, but were more likely to land jobs through public programs or equal employment opportunity initiatives, Di Tomaso says in an interview with Quartz.

“They didn’t have the kind of family and neighborhood connections” that could aid them, she said. ” Addressing the issues about access is critically important. …The favoritism of whites toward other whites may be more important than discrimination by whites to people of color.”

She spoke today at a briefing by the Russell Sage Foundation, which funds social science research.

Referral programs gained popularity in the last five years as a way to avoid posting jobs that would draw hundreds or thousands of responses, swamping small human resources staffs. Referrals may bring in 25-33% of new hires, depending on the job, the employer and other factors.

Di Tomaso’s work comes amid other findings showing the US workplace actually growing less integrated, even as the population grows more diverse. For example, nearly one-third of US firms with more than 50 workers showed signs of re-segregating their workforce, said Donald Tomaskovic-Devey, author of Documenting Desegregation and professor of sociology at the University of Massachusetts, Amherst.  Nineteen of 58 industries including transportation, leather products, mining and others, showed a trend of re-segregation. This means that areas that had slowly become more integrated and diverse are reversing course.

Since the 1990s, 43% of industries have had “significant increases in employment segregation,” his research shows. In the 25 years since Ronald Reagan became a US president, employment segregation between white men and black men declined by less than it did in two years in the 1960s, his research shows. White men have increased their domination of management jobs in construction, durable goods manufacturing and mining.

Lack of diversity also shows up at startup companies, about half of which are more likely to be more segregated—mainly white, he said.

Meanwhile, jobs where education is key such as professional positions, he said, are where “white men lose their advantage.”