How Your Flawed Reference Checking Process Is Causing Numerous Bad Hires Part 1

Cheating on reference checks is at an all-time high.

To slow this trend, this article provides a scannable list of the problems that cause flawed reference-checking processes to produce a significant number of bad or failed hires. The reference-checking process in most businesses and corporations needs immediate attention. After years of neglect, it’s time to treat reference checking as a vitally important component of hiring with significant impacts. In fact, our disdain for the reference-checking process becomes even clearer when you realize that most companies routinely assign their lowest-level employees (and sometimes even interns) to execute both the reference-checking and the reference-giving components of the hiring process.

Normally, the reference check is the last hurdle (and dealbreaker) that finalist candidates must pass. References are actually the final decision factor in the hiring process. So when your reference checking is inaccurate, your corporation will unnecessarily spend millions of dollars on bad hires. They are labeled as mis-hires when the reference process mistakenly allows candidates to be hired who wouldn’t have been hired if the reference-checking information were 100% accurate. Conversely, bad-hire costs go up when your company passes on a great candidate who actually had great reference support. But this support wasn’t fully disclosed during a faulty reference-check process.

“Reference Cheating” Is Currently at an All-Time High

Today, circumstances are forcing us to redesign reference-checking processes. I estimate that the amount of “reference cheating” is now at an all-time high. Because now, unscrupulous candidates can purchase phony reference websites that make it look like your candidate has worked for a real company. That, coupled with the fact that an increasing percentage of managers now rely exclusively on AI to write their reference responses. And it doesn’t take much research to identify the different types of reference cheating happening. Because it literally becomes easier each month to make a candidate’s reference information appear to be much stronger than it actually is. So even though most talent leaders don’t connect misleading reference information to the number of bad hires, they should start making that connection.

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A Long List Of The Problems That Most Corporate Reference-Checking Processes Have

Because you can’t fix a broken reference-checking system until you know the problems that are causing its dysfunction. The rest of this article covers the ever-growing list of things that actually go wrong in corporate reference-checking processes. This article presents the problems in an easy-to-scan bullet-point format. The problems that occur throughout your reference-checking process are separated into four distinct categories. Those categories are the most damaging problems, how changes in the business environment are impacting reference checking, and how the people involved in reference checking often actually make it worse. And finally, the administrative problems that face many reference-checking processes.

Category I – Today’s Most Damaging Reference-Checking Problems

Note that the highest-impact problems appear early in each of the following four lists of reference-checking problems.

1. Few companies measure the prediction accuracy of their own process – the most important of all metrics related to reference-checking is the percentage of new hires with outstanding references that, six months after being hired, actually become outstanding employees. Unfortunately, few seem to even realize that follow-up on a reference check is supposed to be conducted after six months to see if their reference level actually predicted the future of that employee. Unfortunately, most in HR don’t even request this critical follow-up correlation check. They just don’t seem to know (or care about) the validity (i.e., the predictive accuracy) of this last step in the hiring process. And even if they wanted to, the fact that you assign a numerical score to each completed reference check. Without a quantified score, that alone makes it impossible to calculate any correlation between reference scores and job success. The reality of reference checking is that almost no output from a reference check is ever quantified. Instead, all hiring managers typically receive from a reference check, of course, is usually a mixture of a few checked boxes and even fewer handwritten notes. And without quantification and data, AI cannot be used to improve the reference-checking process.
2. Scientific studies also show that reference checks have a low predictive value – most simply assume that because everyone uses them, reference checks accurately report past behavior and accurately predict what the candidate will do in the future. Unfortunately, academic studies have shown that reference checks don’t accurately predict! And if you take the time to look at the research data. You’ll find that employment reference checking and background screening are frequently identified as being among the weakest of all corporate assessment steps. For example, the classic 1998 study by Frank Schmidt and John Hunter found that traditional references have very low predictive validity (r = 0.26). However, this dismal predictive value hasn’t changed the fact that 96% of US organizations still use reference checking (SHRM survey). 
3. Unfortunately, the reliability of reference checks is also horrible – we already know that the corporate reference-checking process doesn’t predict very well. But few also know that this process is also highly unreliable. Which means that the actual execution of your process varies so much each time it is applied. That it’s almost impossible to get the same repeated answer from your reference check system. Because your process is continuously applied in a different way, and to make matters worse, those doing the reference check also act differently each time. This is because most reference-checking is completely decentralized. It’s quite difficult to make the process consistent across the company to get consistent results between your different candidates for this open job. Incidentally, requiring a thorough checklist to be used each time is the best way to improve process reliability.
4. Social media reference checking is common but fraught with issues – currently up to 73% of managers and recruiters check their candidates’ social media accounts during their screening process. And that is a huge problem because there is, of course, no evidence that social media reference checking provides any predictive value. And because there is no documentation of what was searched, you really have no way of knowing what social media information the manager used to decide for or against each candidate. And much of the information that managers and recruiters view on social media shouldn’t even be looked at, let alone used to support a hiring decision. 
5. You must decide which of the six types of references that you must have checked – there are generally six types of job-related information that can be checked with a reference search. Depending on the job, you may need to know the candidate’s work history, educational accomplishments, credit history, criminal background, right to work in the US, and whether the candidate has the proper licenses. A related problem occurs when reference information from different checked areas ends up contradicting each other. Often, reference-checking elements like right to work in the US, no criminal background, and having the right license should be optional. Instead, they should be absolute gates, which means that you can’t be hired without any one of them.
6. Even though you really want your rehire question answered, many HR departments prevent managers from answering it – questions aimed at identifying whether a former employee would be rehired at their former company. They often go unanswered because HR rules forbid managers from answering that question. So your hiring manager is often forced to compare candidates with no rehire answers, with mixed rehire answers, and with completely positive rehire answers. It’s also important to note that if your candidate last worked at a major competitor. Your competitor likely won’t provide your company with any reference information on one of their current employees.
7. Few reference providers will give you the detailed performance and skills information that you really need – because employers often face legal action relating to defamation. Many companies have a strong policy restricting reference conversations to factual information such as job title, dates of employment, and possibly salary history. What many potential employers really want is performance appraisal information, a list of their skills, and any indications of either outstanding or bad behavior. 
8. The personnel records of a former employee are not reviewed at any point during the reference check – unfortunately, most references (especially telephone references) are provided by employees who rely heavily on their memory to provide reference information. And I estimate that less than 10% of reference givers ever look at the employee’s personnel file or their yearly performance appraisals.
9. It’s now almost impossible to talk to the candidate’s former manager directly – the days of talking to the candidate’s manager directly are long gone. And now, the best you are likely to get from their former manager will be generated by an AI robot.
10. The reference provider’s knowledge of your candidate will often be limited – for a variety of reasons (like when the employee’s manager has moved on). And because many reference requests are handed off to a subordinate of their past manager. The individual who will provide you with your reference information may actually have limited or no actual knowledge of the former employee whose references are being checked. 
11. Personal references are an ugly problem – personal references should not be allowed because they often only provide non-job-related information. The personal references that the candidate provides are highly likely to be biased in favor of your candidate. And of course, there is no proof that personal references accurately predict the future success of your candidate.
12. Remember these checks only provide historical information, when what you really need to know is how they will act in the future – the reference information that you receive probably won’t reflect how the candidate will act today because all reference information is historical. So candidate references can, at best, reveal how the candidate acted in the past. And in a world changing so fast with AI, robotics, and other technologies. To make an accurate hiring decision, your hiring team will need to find another way to determine how your candidate will act today and in the future. 

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Category II – Problems Related to Our Changing Business and Job Search Environment

In the second category of problems, the reference-checking process is being impacted by changes in both the business and the job search environments that we work in. The changing environment means the type of reference checks we are accustomed to receiving (i.e., small-town, brutally honest reference checks) is no longer possible. So, in order to continually give and receive accurate references, those who manage the reference-checking process need to know how our environment is changing.

• Few realize that your own reference checkers will have a tendency to “find nothing” – few realize that when corporate employees conduct reference checks on their own top candidates. There is a noticeable tendency to be “lenient” and to avoid or downplay any negative information that they might find. This “leniency” is caused in part because finding too much negative information will mean that the reference checker will be asked to delve deeper into the candidate (more work). And that if too much negative information is found. Their whole team will have to reopen the job and go through your painful recruiting process once again. 
• Don’t let your candidate provide you with the contact numbers for their references – it’s a fact that “reference cheating” has gotten so bad. Now you can’t even trust the contact information of the references that your candidate has provided. Yes, this form of fraud is becoming a huge problem because many companies allow the candidate to provide the names, e-mail addresses, and phone numbers of each of their references. Unfortunately, many candidates are now actually providing completely false manager names, contact numbers, and email addresses. That, unknown to you, when called, they will be answered by the candidate’s best friends hiding behind the name of a phony company. So even though looking up the actual contact numbers will take a lot more time, it will protect you from a great deal of this type of “false contact information fraud”. I should also note that this practice is especially common among immigrants and North Korean ghost workers. For a variety of reasons, they don’t want a potential future employer to talk to anyone they work with.
• Credit checks are now problematic because a large percentage of candidates now have bad credit – for obvious reasons, employers have been unwilling to hire candidates with poor credit ratings. However, in today’s inflationary economy, affordability issues are rising. A significantly higher percentage of candidates now have real credit problems. So companies that used to supplement employment reference checks with outside credit checks may need to restrict credit checks as they face the possibility of having no remaining “good credit candidates” to hire. 
• An increasing number of businesses no longer exist, making reference checking difficult – it’s a fact that due to an increasing number of bankruptcies, mergers, and layoffs. It is now much harder to find individuals who can give an accurate reference check. Many employers no longer exist, so they can’t be contacted. This is also because of management delayering at many companies. There are far fewer managers available to provide accurate references for former employees. This is also because of layoffs and lean staffing within HR. Many HR departments are now extremely slow in responding to reference requests. 
• The rise in identity theft makes accurate reference checking even more difficult – it’s a fact that identity theft has moved beyond credit card fraud. It’s now prominent in reference checking. So unless you take and verify your candidate’s fingerprints (or DNA). You may often find that “the good person” that you are doing a reference check on is actually some “bad character” who has simply stolen the name and reputation of a real, quality candidate. That has never applied at your company, and if they are hired. Their performance certainly wouldn’t match that of the actual “good person” they are impersonating. And be aware that a fraudulent new hire may, on their first day, rob you and your data systems blind.
• Because global hiring is now more common, you will have to deal with the difficulties of global reference checking – because of the globalization of hiring. US companies are often forced into checking candidate references worldwide. This is especially difficult because different cultures and regions around the world have unique ways of handling candidate references. As a result, many globally obtained reference results are simply not comparable to USA references. This makes side-by-side comparisons of US and internationally obtained references extremely problematic. 
• The increase in resume lying has drifted over to the reference-checking process – in a weakened economy where individuals are desperate to land a job. The percentage of candidates who lie on their resumes has increased dramatically. And most recently, the tendency for a candidate to lie has spread over into reference checking. Many candidates will lie about who they are, when they worked, what their duties were, and who their supervisors were. And with so many lies to sort out. Your reference checking will take much longer. And unless you are diligent, they will be much less accurate. Because you will now have to decide between a mix of reference checks from your different candidates. Some candidates’ references will be 100% complete, others will be closer to 50% complete, and some will be mostly blank. Comparing candidates with strikingly different levels of reference check completeness and accuracy will be extremely difficult.
• Ghost North Korean candidates are becoming more common and more difficult to spot – perhaps you read about it. Still, today’s technical job market is flooded with remote working ghost candidates that live in North Korea. And when you suspect that you have one of them as a candidate. You can guarantee that the North Korean government will have provided them with what appears to be a credible but almost impossible-to-check list of references. So recruiters, reference checkers, and hiring managers must be especially diligent because hiring a North Korean is quite illegal.

Note: Next week, on September 29, Part 2 of this article will be published on my website.

Thanks for reading and reposting this article.

Notes for the reader

This is the latest article from Dr. Sullivan, who was called “the Michael Jordan of Hiring” by Fast Company.
Please help spread his ideas by sharing this with your team/network and posting it on your favorite social media.
Dr John Sullivan is its author – it first appeared in the 9/22/26 issue of Aggressive Talent Management.

How Your Flawed Reference Checking Is Causing Numerous Bad Hires (Part 2 – The remaining process flaws)

Pick one: reference checks suck, or they are the perfect scam.

Even though everyone uses them, there is no corporate evidence that reference checks identify great hires or that they screen out weak candidates. So it’s important to pay attention to the few public critics of this reference-checking process.

More Flaws That Make Reference Checking Ineffective

It’s a fact that the average new-hire failure rate is 46%. I estimate that at least 1/3 of those hiring failures result from inaccurate reference checks. Companies hire bad candidates because of misleadingly positive references.

Unfortunately, I conclude that no one in the corporate world will stop doing references the current, flawed way (with the exception of Tim Sackett). Until they fully understand why most expensive and time-consuming corporate reference checking processes do more harm than good.

And in this light, I present part 2 of my long list of what’s wrong with reference checking. Last week I published Part 1 of this article. It covered the highest-impact reference-checking problems and those caused by our changing business environment.

In this Part 2, I cover problems created by the people involved in reference checking, as well as the many administrative problems that negatively impact this process.

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Category III – Problems With the People Involved in the Reference-Checking Process

Often, both the person providing reference information and the person asking the questions inadvertently contribute to inaccurate references. And there is no way of knowing whether the person providing the references is lying or exaggerating. Because there is no reference provider “honesty validation process.” Also, because the content of most reference checks is not recorded, there is no way to know whether the reference provider had a bias toward providing positive or negative information.

• Because of mergers, layoffs, and bankruptcies, there are few to provide references – a significant problem in today’s fast-changing business world. Companies disappear, records get lost, and there simply isn’t enough staff to answer reference requests. So many reference requests go unanswered. Unfortunately, in today’s hiring world, reference-check “cheaters” have learned to list one or more companies that no longer exist as former employers. It is, of course, quite difficult to easily compare top candidates that have only one reference to those that have two or three.
• Many reference checkers ask “leading questions” – a significant percentage of the reference questions asked by reference seekers are leading and clearly suggest an expected answer (i.e., have you found this person to be a leader?). In most cases, you should use open-ended or forced-rank questions (i.e., force-rank this person’s skills) that allow a range of responses. 
• Most of those conducting reference checks are not trained – almost no one involved in checking references has been recently trained in the proper way to do them. In addition, hiring managers are not evaluated on how well they conducted reference checks or how accurate those checks turned out to be after six months on the job. Instead, most hiring managers I have encountered prefer to wing it, ignore any prescribed process, and assume their reference checks predict new-hire performance/success.
• Those who provide reference information are not trained, and they have colleague bias – I’ve met only a handful of recruiting staff members or recruiters who had recently been formally trained in how to provide accurate reference information. As a result, reference givers will make many mistakes. The most common ones include sharing restricted, private, or confidential information (like, “Would you rehire them?”), and because most reference information providers realize that negative information will hurt a former coworker’s chances. All too often, their empathy and loyalty to a former employee drive them to give overly positive reference information and literally no negative information. Unfortunately, this “help a former colleague out” bias will impact the accuracy of the reference information that they give. And of course, there is no punishment for providing only positive information.
• Reference provider bias often produces slanted references – often the person providing the reference information was a direct supervisor or coworker who happened to have a vendetta or grudge against the former employee. And that bias or negative feeling will slant their reference information so that it comes out overly negative. It’s also possible that current supervisors may provide a negative reference on a worker who hasn’t quit yet to improve their chances of keeping them. On the other hand, the reference giver may be a close friend or colleague who wants to help their colleague out. The natural tendency to provide only positive information for a former colleague becomes even stronger.
• Even though you are looking for catastrophes, reference givers aren’t likely to mention them – most hiring managers are looking for catastrophes in their candidate’s background (i.e., they were fired). However, most HR departments discourage these types of disclosures by anyone. First, because very few employees are actually fired these days (most are allowed to resign). Also, because HR discourages revealing any “major incidents” or problems related to the former employee (i.e., theft, sexual harassment, and discrimination), in most cases, there was no complete investigation or final conclusion. So providing this information externally could lead to a lawsuit. 
• Because reference providers have memory lapses, they may provide information that actually covers another employee – in larger organizations with high turnover, it is not uncommon for supervisors and coworkers to confuse high-performing past employees with other past employees that had similar names (it happened to me). So in these cases, you are unknowingly receiving reference information that doesn’t fit the actual person that you are calling about.
• Interns are providing or asking for reference information – the most common problem at today’s delayered corporations is that they have been forced to stoop even lower than using untrained HR professionals to conduct references. Instead, they use naïve HR interns for both answering reference requests and calling other companies for reference information about their own top candidates. Which, of course, is a huge gamble if you want accurate reference checks.

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Category IV – The Administrative Problems With Reference-Checking Are Overwhelming

This Part IV covers the administrative problems that are common in reference checking.

• Priority jobs should receive a more sophisticated reference-checking process – one of the first steps to making reference checking more accurate and cost-effective is to prioritize your jobs. So that your key jobs that benefit the most from having thorough and accurate reference checks are designated as top priority. While the jobs that benefit less from your highest level of reference checking use a different, simpler process. Those jobs that demand a more thorough reference checking include those that handle money, those involved with children, national security, company secrets, etc. Unfortunately, most corporations still use the exact same reference checking process for all of their jobs. 
• All references for a candidate should not receive the same weight – the more references you check on an individual candidate and the further back you go. You increase the likelihood that you will be faced with a mix of both positive and negative references. This makes a go-or-no-go reference decision more difficult. This is because things that happened further back in a candidate’s work history are less likely to be valid predictors of a candidate’s performance today. So to help minimize the “dated experience problem,” assign a candidate’s older references (beyond two years) a lower weight or stop checking after their second job or five years of experience.
• Some candidates legitimately have few job references – I mentioned earlier that some candidates falsely use no longer existing companies to prevent complete reference checking. However, there are some groups of candidates that will legitimately have no recent work references. They often include women and retirees returning to the workforce, as well as recent graduates. So if you expect to draw from these groups, you will have to find some way to ensure they have a reasonable chance. 
• Permission to check references is not automatic – many accept resumes as an application and then automatically assume that they have your permission to check their references. However, it’s best to ask for permission specifically. This is critical, especially when you are checking on a candidate who is currently employed, as checking with their current employer without permission could cause your candidate to lose their job.
• Slow reference checking may cause you to lose top candidates – in our highly competitive AI and data security recruiting marketplace. It is often the fastest “early bird” offer that lands the top candidate. So if you fail to allocate sufficient resources to your reference checking on your highest-priority jobs, you will likely lose many of your top candidates. At some companies, this has meant hiring top candidates right away, contingent on passing the subsequent reference check. 
• Telephone interviews are easier, but they provide the least documentation – litigation around reference checking is not uncommon. So complete documentation needs to be an essential part of the reference-checking process. And even though most find telephone references the easiest to get, unless you get permission to record the call, you will find the telephone calls provide little or no documentation. So in court, don’t be surprised when the reference-providing company denies everything. The best reference-checking documentation occurs when the company providing the reference fills out and signs one of your reference-checking forms.
• Negligent hiring is rare but real – in cases in which you hired someone who later did something bad as an employee. This troubling employee action might have been prevented with a more thorough reference-checking process. And this is one reason why, despite their ineffectiveness, many managers conduct cursory reference checks “just to cover their butt”.
• Outside reference-checking vendors are often inaccurate – be careful with online reference-checking vendors. Even though they may promise fast, fully automated services, few provide data proving their accuracy in predicting the on-the-job success of your candidate. And remember, your company is still responsible in the end. If you want to check a vendor’s accuracy, give them the names of your best and worst employees to assess the accuracy of what they come up with.
• Most corporations don’t check on the legality of your reference process – because these reference-providing processes are loosely monitored. There is no way to tell if someone did something illegal during your information-providing process. So it’s always a good idea to have your lawyers periodically assess the legality of both your reference-checking and reference-giving processes.
• For some jobs, reference checking should be a continuous process – most references are done exclusively during the hiring process. However, an employee might be doing many bad things after they are hired. For some jobs, license, criminal, motor vehicle, and credit issues should be continuously checked.
• Inclusion requires flexibility – if your recruiting or diversity goals include attracting women and individuals from lower-income, disability, or national origin groups. It is important to realize that it’s not a stereotype that some individuals of different colors, races, genders, and income levels are statistically more likely to have criminal, driving, credit, or job-jumping issues that can result in weaker overall reference scores. So if you have these goals, it’s important to check periodically whether your reference-checking process is preventing you from reaching those inclusion goals.
• When using criminal background checks, be aware that criminals are especially good at fraud – I might be stating the obvious here. Whether you are using a vendor or you’re doing criminal background checks on your own. It’s important to be especially precise with this group that excels at fraud.
• Contingent workers should not be treated differently – some organizations fail to require any reference checks on their contractors and temps. However, if you really care about protecting your company’s image and your employees’ safety, every employee needs to go through some level of a background check. 

Final Thoughts

Once you step back and realize that the reference-checking process is a “ final go or no go” assessment decision that has a huge impact on your hiring successes and failures. You will quickly realize that this process deserves much more attention, resources, and success measures than it actually gets.

One option is, of course, to stop doing reference checking altogether; however, after studying the flaws of this process over two decades, I have found a better way.

Next week, on October 6, I will outline my more effective approach that handles most of this process’s existing flaws.

Thanks for reading and reposting this article.

Notes for the reader

This is the latest article from Dr. Sullivan, who was called “the Michael Jordan of Hiring” by Fast Company.
Please help spread his ideas by sharing this with your team/network and posting it on your favorite social media.
Dr. John Sullivan is its author – It first appeared in the 9/29/26 issue of Aggressive Talent Management.