Recruiters & EEOC changes on referral policy

Sometime in the future, the economy will spring back and businesses will start hiring again. How will they find the employees to replace the employees laid off during the economic hard times? Many businesses will ask their current employees to recommend people that they know. Often businesses believe that by have employee referral programs, the business’ corporate culture is improved because employees will enjoy working with “friends” and people that they know.

Often, businesses pay a fee to the employee who refers someone who is hired by the business. The prevailing thought is that paying an employee for a referral is much less expensive than paying 10% or 15% to a recruiter, or pay for a recruiting job board such as CareerBuilder.

However, prior to making that decision, employers must be mindful that the EEOC has looked upon employee referral programs as potentially creating homogeneous working environments reducing the diversity of the work place. The EEOC suggested that people tend to refer people like themselves and those businesses that are not careful could find their employee population reflects a racially unbalanced workforce.

So what? The EEOC has successfully sued a company that did not carefully monitor their recruiting programs, and relied on employee referrals and created a less than diverse workforce. Cost to the company? $2,200,000!

What is the lesson? Recruiting programs should be developed to seek employee candidates from as diverse a group of qualified candidates as possible. Relying on only one or two methods to identify candidates is dangerous. It is best to develop programs that recruit candidates from a wide variety of sources. It is also a good idea to use a reliable recruiting service in addition to other recruiting sources to establish that the company is not limiting candidates based on race.

In the end, it seems to me that businesses are better served by expanding their recruiting sources because the opportunity to uncover talented individuals who will be able to make significant contributions to the employer. During the period of recovery, this will be important to growing the business and getting back to normal.