Is Reference Checking A Waste Of Time?

Employers have varying practices when it comes to checking references as part of the recruitment process. For some, reference checking is an integral part of every hire. For others, there is effort and perceived risk in the reference checking process, and practice is less “religious”. Read on to learn more about the case for reference checking as a valuable recruiting tool.

The Case for Reference Checking

Even when references are checked, the processes engaged are often somewhat “ad hoc”, subject to bias, inconsistency and needless risk, even in larger companies.
There are certainly ways to do effective reference checks in a transparent, consistent and low-risk fashion, but is it worth the time, trouble and expense or is reference checking a waste of time?
The consensus among H.R. specialists appears to be that checking references is an important source of information about prospective employees, a source that typically has direct knowledge about how an applicant performs on the job. It is another critical input from an (ostensibly) reliable source about an applicant’s capabilities and track record that can bear out what an employer learns from a résumé or an interview.
Reference checks can save an employer the high cost of a bad hire, (which ranges between one and five times the annual salary of the position). A bad hire disrupts business processes, can damage the company’s image, and negatively affects both productivity and morale.
Ensuring that reference checks are effective, consistent, fair and defendable is a very important part of the practice, as is avoiding legal risks. The good news is that all of these areas of concern can be addressed and contained by “structuring” the reference checking process.

A Structured Guideline Process for Reference Checking:

•    Establish a company policy describing comprehensively how reference checks are to be carried out, who is to conduct them, and what procedures are to be followed.
•    Ensure that Job Descriptions and Job postings not only identify the required qualifications and competencies for the position, but indicate that references will be required. Identify that a (prior) immediate supervisor should be one of the references supplied.
•    Put together in advance a Reference Checking Form that contains the series of questions to be asked of each referee for the particular job. (Examples can be found in the references of this article)
•    Provide the applicant(s) for whom references will be checked, a copy of the Reference Checking Form and encourage them to send copies to those who have agreed to serve as their references
•    Equip the reference checker with the Reference Checking Form, the Job Description, the competencies required for the job and any supplementary information needed.
•    Try to arrange dates and times for the reference check telephone calls in advance. If a reference checker is contacting a referee by telephone to set up a date and time, they should be prepared to conduct the check immediately if it happens to be convenient for the referee.
•    Conduct the reference check call in six stages:

  1. Initiate the discussion with introductions and a description of the objective of the check, and what will happen during the call.
  2. Ask preliminary questions to verify information already provided by the candidate. Use open questions, not those simply requiring a “yes” or “no” answer.
  3. Move on to questions about competencies important for the job and ask for evidence of supporting behaviours. Take comprehensive but accurate notes on the Reference Check Form. Be careful if paraphrasing not to misinterpret or misrepresent.
  4. Describe the position being filled and ask the referee to comment on their assessment of the candidate’s suitability for the job.
  5. Ask the referee for any additional comments that pertain.
  6. Close the interview with thanks and provide your contact information in case the referee thinks of anything afterward.

•    After the call, assess the responses and “score” them using a consistent points earning system. Record the scores on the Reference Checking Form, and record a final summary of the comparative overall rating of the candidate. Keep the applicant’s Reference Checking Form in a secure file. (For unsuccessful candidates, destroy the Form and other records containing personal information after one year).
•    Be prepared to have an informal discussion with an applicant in case they request feedback about the results of the reference check(s). Be sensitive and cautious in comments made, and frame negative feedback as positive opportunities for development.

Legal Considerations

Two main areas of legislation affecting reference checking are Human Rights and Privacy. It is prohibited to discriminate on the grounds of race, national or ethnic origin, colour, religion, age, sex, (including pregnancy and childbirth), sexual orientation, marital status, family status, disability, or a criminal conviction for which a pardon has been granted. Discussion of these areas should be avoided.
Federal privacy legislation limits the collection, retention, duplication, distribution and use of “personal” information. Whatever personal information is collected should be with the applicant’s permission, and limited to only that information necessary to establish suitability and qualification for the job. Confidentiality of personal information must be safeguarded.
Since these restrictions govern all phases of recruiting and ongoing employment relationships, observing them in reference checking should not be a hardship, but does require diligence and care.

Conclusion

Establishing a structured reference checking process requires non-trivial effort up front, and imposes a discipline upon practioners. But in the author’s opinion, the benefits of getting over that “up front” hump and operating with discipline far outweigh the costs.  Yes, it IS worth the hassle!
Related articles:
Tips for Interviewing Job Candidates
Writing a Good Job Description
 
REFERENCES
1. Structured Reference Checking – A User’s Guide to Best Practices – Public Service Commission of Canada
2. Background Checks and References – The Do’s and Don’ts – Fasken Martineau
3. Queens University – Conducting Reference Checks
4. McCarthy-Tetrault – Considerations in Conducting Background Checks
5. EMPLOYER REFERENCES IN THE AGE OF PRIVACY – Legal Counsel – Spring 2013
By Glenn Tait and Vicki Giles, Partners, Labour & Employment McLennan Ross LLP
6. McCarthy-Tetrault – Conducting Reference Checks without Violating Privacy Laws
Rosalie A.Cress – June 2, 2008
7. Go2HR – Conducting Effective Reference Checks
8. Stikeman Elliott – Best Practices in Reference Checking – Posted on August 27, 2010
9) Monster.ca – Employment Law: Reference Checking in Canada
By Howard Levitt and Michael Mulroy, Lang Michener, Toronto Office, Monster Employment Legal Advisors