Are You Wasting Your Time Reference Checking?

One of the most established principles of the job application process is reference checking. As you know, candidates supply two or three people they believe will vouch for their skills and experience to highlight their suitability for a job post. This is an age-old tradition, but it is usually the talking point for employers and candidates.

At the same time, recruiters are beginning to question if asking for references is a waste of time. There are arguments for and against the practice, so what are these arguments and should you be taking references and checking them?

The Argument For Reference Checking

One of the main reasons why you should be checking references is that it provides you with an insight into how a potential employee could behave when they join your organization.

The former employer can also give indications of what culture the previous employee has been used to. This can help determine whether they have the values to fit in, or if the transition would be too challenging for them.

You can also receive third-party feedback on their skills and experience, by asking questions such as ‘did the candidate overinflate their ability to perform in your company?’ Other facts can also be checked such as employment dates, job titles, salary, qualifications, etc.

About 40% of candidates lie on their resume and the most common lies are:

• Providing an incorrect address.
• Exaggerating about the value of their work and contributions made to a team.
• Claiming technical abilities or skills they don’t have.
• Inflating job titles. .
• Stating a higher salary than they received.
• Altering employment dates
• Fabricating a degree or adjusting grades.

Reference checking can help protect your business from making a wrong hire. and a bad hire can be very costly to your business. In 2010, the CEO of Zappos stated that bad hires had cost his company more than $100 million.

On an individual level, the cost per employee could run into hundreds of thousands of dollars. Jörgen Sundberg estimates employee onboarding to cost approximately $240,000, and the US Department of Labor stated that a bad hire could be worth at least 30% of their first-year earnings. Though other studies dispute this.

The main reasons why bad hires cost so much is that they can have a significant impact on morale and productivity within existing teams. They might also encourage other key staff to quit, leaving you with significant recruitment challenges and a loss of experience.

The Argument Against Reference Checking

In recent years, there has been a change in attitude towards reference checking. Some HR leaders are stating that reference checking adds little value to the hiring process. Partly this is because candidates are going to put the best people forward for their references, a fact confirmed by the coefficient between a reference’s recommendation and their job performance, which is just 0.29. Statistically speaking, this means that neither are a good indicator of the other.

Only someone who has no choice, or who is unaware of the potential for bad feedback, is going to provide a reference that will speak negatively about them. Therefore, when you check references, you are most likely only going to get glowing reports. How can you check against these?

When taking a reference by speaking to HR departments of large organizations, it is unlikely that you’ll speak to a direct supervisor. An HR employee in the respective company might not have known the candidate very well, therefore cannot give an accurate picture of their performance.

A direct supervisor from a job ten years ago, may only have a vague recollection of the employee or confuse them with another employee of a similar name. Therefore, you could be given information that is only partially true.

Their previous supervisor might have moved on, or the company might no longer exist due to closure, bankruptcy, merger, or acquisition. You might invest significant time in trying to track down the reference only to end up disappointed.

You may find that the reference only provides very limited information to avoid legal action being taken by the candidate if they feel an act of defamation has occurred. Another legal issue that can seriously hamper your business’ success in reference checking is identity theft, where a candidate is using the name and background of another person to secure a position.

The culture of their previous organization might be very different to your own, and this could cause significant disparity. Employees perform better when their own values and priorities are aligned to their employer. Therefore, in previous jobs, they might have performed below expectations because the environment wasn’t right for them.

Your referencing style might also prevent checking from being accurate. Either you don’t collect the right information, don’t probe too much, or rely on pre-designed questionnaires that are inflexible and don’t provide the necessary data to make an informed decision.

How To Get The Most Out Of Your Reference Checking

Reference checking is a hotly debated topic within HR. It can be a useful tool for checking information which candidates regularly misinform potential recruiters about. However, there is little other evidence that they provide a reliable way to assess the potential value of the candidate to your company.

Therefore, you should attempt to assess the candidate’s skills, personalities and experience in an interview setting and fact-check employment history with references. During the interview stage, you should ask candidates to describe their relationships, both good and bad, with former supervisors and peers at previous positions.

While they might not always be forthcoming; you can gain significant insight into the employee’s mentality. If they paint a rosy picture of their career history with no problems, they could be dishonest. If they have a long history of adversarial relationships, they could be a challenge to work with.

However, a balance of good and bad experiences probably shows that the employee is honest and being realistic – a good measure for a new hire for your company. Then you can check their job titles, job dates, responsibilities, and salaries with past employers.

Do you use job referencing in your hiring process? Do you find them effective?

Let us know in the comments below.

ExactHire provides hiring software to help small- and medium-sized businesses find and hire the right people. Take the time and tedium out of the reference check process, while producing more accurate results. If you’d like to learn how you can optimize aspects of your hiring process, contact us today.