Why Intel’s Double Referral Bonus for Diverse Hires Will Fail

On Tuesday, Intel announced that it double the normal employee referral bonus for women inteland ethnic minority hires. While this double bonus is driven by good intentions and seeks to improve the make-up of the company’s workforce, it is a bad idea. It is not going to achieve their goal. Here’s why:

1. Numerous studies (and anecdotes from my clients and my practitioner experience) have shown that increasing employee referral bonuses only results in more unqualified candidates entering the system. By increasing the bonus, you are incenting employees to refer more candidates to increase the likelihood of one or more of the candidates getting hired. Typically, these candidates are of no greater quality or fit than the average employee referral candidate. Thus, your recruiters just end up with more non-qualified candidates to review in order to find a qualified one. This takes precious time. Plus, most companies want to make sure they treat referrals with extra care, so someone (a referral program manager, recruiter, etc) is likely spending time reaching out to the unqualified referrals to tell them they aren’t a fit. You have now just added significant time into your recruiting process.
2. It honestly just doesn’t feel right. If offer more money, people are suddenly going to remember a female or minority candidate that they haven’t thought of before? No, employees refer candidates because they like where they work and they want other quality people to work with them. By putting a higher “bounty” on a minority candidate, you are essentially saying that only money will drive employees to refer these people. I think that is simply not true.
3. A finite number of females and minorities with the requisite skills Intel is looking for exist in the workforce. To get them, they need to take them from other employers. This does nothing to increase the available talent; it simply moves it around. At the Consumer Electronics Show, Intel CEO Brian Krzanich stated that he wanted to increase the diversity within the industry. The double referral bonus approach doesn’t accomplish this.

My advice to Intel (even though they didn’t ask for it):
1. Take the money you plan to spend on these increased bonuses and invest it in community education programs to help women and minorities gain the skills you are looking for. Give them internship and short-term assignment opportunities inside your organization while they are in training and then hire them full-time when then complete the program.
2. Stop making the lack of diversity in technical companies a recruiting problem. It is not. Double check your retention numbers for these groups of people. While I don’t know Intel’s data specifically, I’ve seen enough turnover data in the technology sector to know that women and minorities leave companies as fast as the talent acquisition team is able to bring them in. Invest money in leadership development programs for these groups, so that you new hires can see themselves in long-term careers at your company.
3. Finally, if you must show a greater effort in the recruiting area, have your talent acquisition team partner with you various employee resource groups. Educate them on who makes a good referral and walk through their LinkedIn and other networks with them and suggest people to refer. Make sure your process is simple and both the employee and candidate get regular updates on the process. Leave the standard referral bonus where it is. See my previous post on Building a Culture of Referrals for some additional ideas.

By the way, check my profile. You will see that my very first job out of college was with Intel in Folsom, CA. I loved my 4 years there and still compare every other company to the experience I had there. I just think they are wrong with this approach.

P.S. It didn’t work at Google either.

About Kara Yarnot

Kara founded Meritage Talent Solutions to provide tailored talent acquisition solutions to employers and employment services companies. Kara has over 17 years of leadership experience in talent acquisition and recruiting for several FORTUNE® 500 organizations, including Boeing, Intel, and SAIC.

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