Why companies should get rid of referral hiring to build a diverse workforce

Yahoo Finance’s Alexis Christoforous and Brian Sozzi are joined by Janice Gassam Asare of BWG Business Solutions to discuss diversity in the workplace.

Video Transcript

BRIAN SOZZI: Why do you-- as you work with these companies, you get in there and you understand what their operations are and their culture in these companies, why aren't they doing better?

JANICE GASSAM ASARE: Hi, Brian. Thank you so much. So I think that there are a lot of different factors, one of which being an unrealistic expectation of how long change actually takes. Companies bring me in typically to do workshops and trainings for employees, and there is this expectation that after the training or workshop is complete that employees will be completely transformed.

Most of the problem is that I am the first-- this is the first time I'm being brought into the organization. So if you're only doing a one-time a year one-off training or a workshop, it's not going to produce long-term effects or long-term results. So I think that there needs to be a lot more realisticness with what the training and workshops can actually do, and there needs to be more consistency on these companies' part.

ALEXIS CHRISTOFOROUS: You know, Janice, you actually came up with some real actionable things that companies can do to-- to make their workforce, especially their C-suite, more diverse. And one of the things you are proposing is getting rid of that popular referral program, right? Oh, yeah, look, my friend is really qualified. They'd be great for this job, and then the company typically gives them a perk for bringing that person. And you say we should get rid of that policy. Why is that?

JANICE GASSAM ASARE: Yeah, and thank you, Alexis. So the reason is because referral hiring typically leads to a homogeneous group within the workplace. So if I am asked to refer-- refer other engineers that I know, I-- if I'm a white male, there's the high likelihood that I know other white males that I can refer.

So if the goal is to get a diverse group of people, referral hiring does the opposite and often causes a echo chamber of the same types of employees being hired and referred into the organization. So I think that there-- and another problem, Alexis, is that a lot of organizations don't actually use their diverse referral hiring program that they have. So if you're having your diverse employees refer other diverse employees but you're not hiring from that pool, it can leave employees kind of feeling like your-- your words are not authentic.

BRIAN SOZZI: Janice, how much measurable change do you think corporate America can make within the next year? The fact is a lot of these, the board members are very much entrenched. It takes time to get them booted off for whatever reason. It takes time for management teams to change. When does that change start to happen?

JANICE GASSAM ASARE: What I'm-- what we're seeing right now, Brian, is really exciting for me because I've been getting requests-- you know, and I've been inundated with requests for racial equity workshops. So I think that talking about the issue is the first problem. When I'm brought in to do workshops, racial equity is typically what organizations don't want me to focus on. Usually, it's emotional intelligence or something like microaggressions.

But I see a lot of promise right now. And I think that understanding that it takes more than one workshop-- and I'm not a huge fan of unconscious bias trainings. So it takes learning that you have to be doing multiple things. And I think that because this is the focus of the national conversation that change will actually start to happen. And I think it was promising that earlier this year Goldman Sachs said that they're not going to take a company public unless they have a diverse member on their board. So I think that once Goldman Sachs said that that a lot of companies will start to follow suit.

ALEXIS CHRISTOFOROUS: Yeah, we actually had Katie Koch from Goldman Sachs on our show this week talking about just that, and saying that they don't have a problem divesting themselves of companies that they don't believe are doing the job when it comes to diversity. But I want to get your take on what we're seeing happen right now. Lots of companies very publicly saying they are giving millions of dollars to social justice programs as we see civil unrest in our country once again. Is that the right message? Should they be using those resources perhaps just to have change happen from within their own companies?

JANICE GASSAM ASARE: Yeah, and that's a great question, Alexis. I think that for a lot of employees, it seems like their companies are being a little bit inauthentic, because while on-- in one breath they're preaching that black lives matter, in another breath their organization is not diverse, and there's no diverse representation in leadership positions. So I think that a lot-- a large part of it is that-- I'm really happy that this national conversation is-- is happening.

But what is really going to take changes is putting that money into things like mentorship and sponsorship programs. Because there's research that indicates that for diverse employees mentorship and sponsorship, in particular, helps with their career progression. So in addition to workshops and trainings and things like that, also investing in your employee resource group.

A lot of times when I'm brought in to speak to a company it's through an employee resource group, however, they tell me that they don't have a lot of funding and that they have a very small budget. So if you have an employee resource group, making sure that you're also giving them adequate funding so that they can bring people into the organization to have keynote talks and to do events and things like that. So I think that half of that money should be invested in these nonprofits for racial justice, and the other half should be-- it's important to make sure your house is in order before going out and trying to fix other people's houses.

BRIAN SOZZI: Janice, we were just talking about lots of companies refusing to put out their diversity metrics. What's your advice to those companies that are still not doing so? Isn't it better to finally rip the Band-Aid-- Brand-Aid off here, get it talked about on social media, it may hurt, and it should hurt, but isn't it time now to drive change, get those numbers released, and do a better job?

JANICE GASSAM ASARE: Yeah, definitely, Brian. So that was my main qualm with a lot of these tech companies. Every year since 2015, the Googles and all of these large tech companies have put out a diversity report. But what you don't see is-- they show you the turnover numbers, and they show you the-- how many people are currently in their organization in diverse groups, but they don't show you whether those people actually stayed the following year. So people want to see that.

And like you said, Brian, it's important to just rip the Band-Aid off because the public likes transparency. If you-- you know, if you make a public statement and say, you know what, we haven't been getting diversity and inclusion right in the last few years, but we're committed to making changes here in an effort to be transparent, here are our numbers and our percentages, the public would appreciate that. And while they would receive some criticism, it shows that they're authentic and that they're trying to make a change. I think that the secrecy is what bothers people, especially the employees who know what the company culture is actually like.