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Tech firms seeking diversity criticize job referrals

State of Washington tech firms have signed a 'pact' to align workforce diversity with the state's regional diversity. The effort may prompt firms to rely less on job referrals.

About 50 technology firms and colleges in the state of Washington signed a pact to increase their workforce diversity. To meet their goal, they promise a reexamination of their HR operations from the inside out. One recruiting practice already getting critical attention from this group is the use of job referrals.

The diversity and inclusion effort began soon after George Floyd's death. "It was a galvanizing event" for members of the Washington Technology Industry Association (WTIA), said Michael Schutzler, the industry group's CEO.

"Everyone's mad, but now what? What do we do about it?" Schutzler said. 

After months of work, the WTIA and participating firms and universities developed the "Anti-racism in Tech Pact." It includes specific diversity goals, namely creating a workforce representative of local populations.

In the Seattle region, for example, an organization's workforce would be approximately 6% Black and 9% "Latinx," a gender-neutral term the WTIA prefers to use for the Latino community. The agreement is a tacit acknowledgment by signers that they need to improve their workforce diversity efforts, Schutzler said.

"They have also acknowledged that they don't know how to solve the problem, so they want to work together," Schutzler said. The firms will continue to collaborate and also seek expert advice.

The five-year plan includes extensive roadmap requirements, such as semiannual reports of their progress, and commitments to reform their HR policies and HRIS system capabilities as well as apply analytics. Advancing diversity, equity and inclusion (DEI) training is also part of the roadmap.

Everyone's mad, but now what? What do we do about it?
Michael SchutzlerCEO, Washington Technology Industry Association

Swift HR Solutions Inc. in Bellevue signed the pact. It provides HR, talent and leadership development for new and developing firms. 

It employs 30 and has one Black employee or 3% of its workforce; it has no Latino employees, said Shannon Swift, the company's CEO and founder.

Referrals seen as diversity obstacle

One recruiting practice that will get a second look is referrals in hiring, Swift said.

Swift plans to move from an "opportunistic hiring model" -- referrals, for example -- to an "intentional process," or a broader recruiting effort. The ability to offer a remote work option may help with recruiting, she said. 

Referrals usually result in people already in a company's network and friends who "typically look like you," Swift said.

Employee referrals are popular because of the low cost of acquisition, "and you typically don't refer somebody that you think is going to make you look bad," Swift said. The downside is "we're not getting outside our close circles," she added.

Schutzler said referrals are the No. 1 source of candidates for jobs in the tech industry -- "by far," he said. He believes they can limit diversity among the candidate population. "If you are a white guy, how many Black friends do you have?" he asked.

The University of Washington's Paul G. Allen School of Computer Science & Engineering also signed the pact.

The college has done well on gender diversity, but "like the vast majority of our peers, however, we have paid far less attention to racial and socioeconomic diversity," said Ed Lazowska, chairman emeritus of the university's school of computer science and engineering.

"Designing computer systems is a creative activity," Lazowska said by email. "Each of us brings our own background -- our own baggage -- to any creative activity."

If there are perspectives that are not represented or underrepresented, "you are guaranteed to reach an inferior outcome -- there will be problems your team fails to consider," Lazowska said.

"The WTIA pact holds our feet to the fire," he said.

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