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Leadership

The Surprising Impact Of A Referral On Promotions For African-American Workers

The subject of a new study reveals that a well-placed referral can boost the upward career mobility of African-Americans.

The Surprising Impact Of A Referral On Promotions For African-American Workers
[Photo: Flickr user WOCinTech Chat]

Job searches can be fraught with false starts or dead ends. That’s why there’s some truth to the old chestnut, "It’s not what you know, it’s who you know." And recent research from Tufts and Stony Brook University reveals that Facebook friends—especially those who you don’t know very well—could provide the all-important referral that lands the job. The study found that 90% of these so-called "weak ties" helped get friends jobs.

Adina Sterling, an assistant professor at Stanford’s Graduate School of Business, has also seen how powerful referrals can be. "Knowing somebody in a company prior to joining—someone coming through, for instance, a referral—helps people develop more robust networks inside firms," she told Strategy+Business. Those hired through a referral were more likely to stick with the employer longer, she found. Likewise, those with friends in a company tended to do less shopping around for a better offer because it could reflect badly on the friend already working there.

Intrigued by these results, Sterling wanted to explore the longer-term impact of referrals, particularly on a worker’s upward mobility. With Jennifer Merluzzi of Tulane, Sterling analyzed hiring and employment data for 15,382 employees of a large, private company over the course of 11 years. Their soon-to-be published findings reveal that referrals were responsible for more promotions among African-American employees.

The reason they chose to analyze this particular company (which was not named in the study) was because referrals are one of the most common way people are hired to work there—accounting for 36% of total hires over the study period. Everyone starts at entry-level, regardless of how they came to get the job (at around age 25), and all receive the same training and incentive structure. The company leans on promoting from within as a way to move people into different jobs at higher levels of responsibility. The sample pool of employees was 38.6% women, 55.5% white, 18.2% black, 16.2% Hispanic, and 7.5% Asian-American.

Sterling and Merluzzi contend that because there is plenty of evidence to indicate that women and racial minorities are not treated equally in the workplace, and traditional, formal hiring methods don’t always have equitable outcomes, they could benefit from having an "informal affiliation with a company insider." That person (or people) would give them valuable access to resources (mentorship, training, etc.) within the firm that could smooth their entry into the job and eventually help boost their careers.

Their analysis proved that among minorities, African-Americans benefited most from referrals. But they also came away with some other observations. One was that if a worker was older than the average age of 25 at hiring, they were less likely to be promoted.

Another was that although both women and African-Americans had an overall lower number of promotions, they found that women in this company were not as disadvantaged. "One reason for this might be due to the nature of the jobs under study," they write in their report. "The firm is in an industry where customer service is important, and therefore women may be viewed as of similar quality as men because the job role is gender consistent."

The researchers did a series of checks to make sure the results were true, especially about the advantages of referrals for African-American workers. They further analyzed education levels, performance reviews, and regional geography, but came to the same conclusion.

"We’re still exploring the potential mechanisms behind this finding," Sterling said in the Strategy+Business interview. She cited the initial theory that facilitating entrance to a network and resources could have an impact on upward mobility.

"It could also be that when someone comes into a company and has been vouched for through the referral process, it alleviates concerns about how that person is going to perform," she said. "To the degree research has shown that African-Americans might not receive the same promotion opportunities as majority members in organizations, having that referral may provide a sort of stamp of quality."

Sterling did say that there could be some unobservable effect at work, too. Indeed, we’ve seen how a "champion" can help both women and minorities at crucial points mid-career in a previous report. Says Sterling: "We cannot assume or rule out any of these possibilities with our current data, but it’s a fascinating subject for future research."

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