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Why Reference Checks are Beneficial to the Employer and the Employee

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Why Reference Checks are Beneficial to the Employer and the Employee

I have been in the recruitment industry for more than 15 years, working across major and developing markets like Japan, Australia, Singapore, Myanmar and Cambodia. I have worked on almost every level of role, from Staff level all the way up to CEO. I have worked with local, international and multinational companies. And it still amazes me every day why only a small number of companies request reference checks from their recruiter, or never actually do reference checks when they are handling the processes themselves.

We all have made bad hires and know first hand the costs to the business (both tangible and intangible) that this causes. A reference check is one way of reducing the chance of making a bad hire. So it would seem crazy not to do them.

So what makes companies decide not to do reference checks?

This is a question I often ask myself.

While I understand that many people believe that the referee who is nominated by the prospective candidate is not going to say anything bad about them. This certainly has an element of truth to it, however, in my experience, I have had many referees give honest feedback that has led to me advising the client not to proceed with a particular candidate. If a referee is in a senior position, they know the damage that can be caused by hiring the wrong employee and are usually upfront about the negative sides of a specific employee

Another potential reason is that the company doesn’t have a standard reference check template that a hiring manager or HR can use. Because they do not have a template, there is no standard process set up in the company and many people think it is too much hassle and just ignore the benefits.

Btw any recruitment company they are using, should be offering this as part of their standard service. If they are not, then you are working with the wrong recruitment partner.

So what are the benefits of performing a reference check?

The obvious one is when a referee shares information with you that clearly indicates that the employee is not right for the position or for the organization. This doesn’t mean that they are sharing negative information about the candidate, but that the information they are sharing helps you better understand the candidate and make a well-informed decision.

There is rarely a perfect candidate, through most interview processes certain questions will come up that the interviewers want to clarify with a 3rd party. A reference check is a perfect opportunity to do this. If one of the interviewers is performing the reference check then it is easy, however, if HR or a recruiter is the one responsible just share with them the questions you have and they can add them to the standard questions they ask. What better way to clarify points in an interview than asking a third party who has direct experience with the candidate.

Even with an extremely positive reference check, the benefits are not just that you are going to hire the person. What about the opportunity to ask the person's previous manager “how the candidate reacts to different management styles” or “what is the best way to encourage the candidate to develop themselves and be motivated to grow”?? Every employee will respond differently to different management styles and it often takes months for a manager to fully grasp how to get the best out of an employee, so you can fast track the learning curve by asking more from someone with actual experience.

The final one that most people ignore is the possibility of building up a new network. Maybe the referee is in the same position as you, or they are working at a potential customer or supplier, or maybe they could be perfect for another role in your company. Spending 15 to 30 minutes talking to a referee about someone they like is a great way to build a relationship that could build into something else in the future that is beneficial to you or your company.

There are so many positives to performing a reference check, and the risks of not doing them can be very big. Take the time and make sure you conduct reference checks when you are hiring someone.