HR Urged To Put More Emphasis on Reference Checking

By Eric Reed Jul 30, 2008
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Nearly all employers include reference checks as a standard part of the hiring process. Depending on the information garnered from references, however, the process can be regarded as time wasted while trying to acquire insight into how well a candidate will perform on the job.

It doesn’t have to be that way, according to Yves Lermusi, CEO and founder of the Mill Valley, Calif., performance management and assessment tools firm Checkster. Lermusi described how to get the most out of the reference checking process in a recent Society for Human Resource Management webcast.

“A reference check can be one of the best ways to gain insight on a candidate’s true performance,” Lermusi said during the webcast, titled How to Turn Reference Checking into an Effective Assessment Tool.” Depending on when and how the reference check is handled, he said, “It can be used to help determine why an individual should be hired”—unlike background checks, which are “usually conducted to determine the reasons not to hire an individual.”

In fact, “when” and “how” to conduct reference checks are the two critical questions that employers must focus on to increase the importance and effectiveness of the process. Lermusi said that most companies typically conduct reference checks by phone, letter or e-mail near the end of the hiring process and focus on verifying work experience, which is one of the least accurate screening factors, according to recent research findings. These methods of obtaining the references also are the most time-consuming and costly of the options available to employers.

“Many companies confuse performance with experience,” he said. Human resource departments can supply relevant employment verification information, but HR often hasn’t worked directly with the candidate so it can’t supply relevant job performance information even if asked.

A Long Wait Is Too Late

Reference checking is supposed to increase the quality of the hire, he said. But to achieve this, the process should begin earlier in the hiring process and automated to maximize time and cost savings.

“Best practice reference checks are more peer-review evaluations,” said Lermusi, noting that they incorporate diverse opinions from multiple sources that focus on the job performance of the candidate, as well as aspects such as teamwork or cooperation.

“It is way better to obtain collective feedback from more people who’ve worked with or know the candidate than it is to rely on one expert, like an immediate supervisor, to make a well-informed hiring decision about a job candidate,” Lermusi said.

But not all references are created equal, he added. The four most important criteria for selecting references are:

  • Freshness of relationship.
  • Length of relationship.
  • Closeness of relationship.
  • Nature of relationship.

    Not all reference checking questions are of equal importance either, he said. “One critical question is, ‘Would you rehire (or advise to rehire) the individual?’ And follow up by asking, ‘If not, why?’”

    Also, pose open-ended questions that can help candidates’ references address specific accomplishments, strengths and areas for potential improvement.

    Checking references earlier in the hiring process can help recruiters develop more probing questions during their face-to-face interviews with candidates, too, he said.

    And for those who are still squeamish about probing too deeply or even revealing too much information during a reference check, Lermusi reminded listeners that companies can be held just as liable for withholding important information about job applicants as they can be for negligent hiring.

    Automation can help ensure companies’ hiring practices stay in compliance with relevant laws and that all candidates are treated fairly and consistently. For example, he said, “Use an online questionnaire and invite candidates to supply information and reference lists for companies to contact.”

    Eric Reed is a student intern for HR Magazine.

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