Dr John Sullivan Talent Management Thought Leadership
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.
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.
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.
