What Is a Reference Check?

Nobody likes to get a hiring wrong, and while it’s impossible to guarantee a successful new hire, you can do a few things to improve your chances. One of the tools in your arsenal is the reference check, which can provide invaluable insights into a candidate’s past performance and help predict future success in the role. 

Reference checks have become the norm, but often, they are either not done accurately or not accounted for correctly when making that final decision.

What Is a Reference Check?

Employers use a reference check to verify the information a job candidate provides. This verification typically involves contacting individuals who can vouch for the candidate’s qualifications, skills, and employment history. These individuals, often called references, can include previous employers, supervisors, colleagues, and sometimes personal acquaintances. 

The reference check aims to confirm candidates’ suitability for the position by hearing what others say about them. Of course, logically, we know that a candidate will only include references they are sure will be positive, so it’s essential to consider that.

What Does Reference Checking Usually Involve?

The reference-checking process usually starts after the initial interview phases and often just before extending a job offer. It’s one of the final ticks needed in the application process. Here’s what it generally involves:

1. Identifying References: Employers request a list of references from the candidate, usually consisting of former supervisors, co-workers, and sometimes personal references.
2. Contacting References: The employer then contacts these references, typically via phone or email, to ask specific questions about the candidate’s work history, skills, and overall performance.
3. Asking Questions: During these conversations, employers ask structured questions to elicit detailed and relevant information about the candidate.
4. Documenting Responses: The information gathered is documented carefully for review and consideration in the hiring process.
5. Verification: Sometimes, employers may also verify employment dates, job titles, and other key details to ensure accuracy.

Advantages and Disadvantages of Reference Checks

Reference Check Advantages

Reference checks have become the norm in hiring, and it’s exceedingly rare that an applicant will be offered a position without contacting at least one reference. That’s because reference checks provide several benefits to employers that help rubberstamp an application. 

• Verification of Information – One of the main benefits of a reference check is that it ensures the accuracy of the candidate’s resume and application details. Sadly, it’s not uncommon for a bit of truth-stretching on a resume or application form, and a comprehensive reference check should be enough to confirm employment history. If false information comes up during the process, that’s obviously an enormous red flag and something that a company needs to take very seriously.
• Insight into Work Ethics and Behaviour – Another critical point is to provide a clear picture of the candidate’s work ethic and attitude. Third-party insight into a potential employee can be invaluable, as it can give information that the candidate either can’t or won’t pass on to you. A reference check can also reveal information about the candidate’s interpersonal skills and ability to work in a team.
• Performance History & Risk Mitigation- Speaking with somebody from the candidate’s past also offers a track record of past performance, which can help to predict future behavior. While we need to be careful not to judge a candidate purely on their past, potential red flags or issues not disclosed during interviews arising from the background check should be taken seriously. In the end, employers need to balance the risk and reward from what is found during the checks.

Reference Check Disadvantages

Despite their benefits, reference checks aren’t perfect and have some drawbacks to consider during the hiring process. 

• Bias and Subjectivity – Humans are subjective creatures, and references may provide biased or overly subjective information, especially if they have personal connections to the candidate. A reference that glows a little too brightly sometimes must be taken with a pinch of salt. 
• Inconsistent Responses & Time-Consuming – In a perfect world, each reference positively evaluates the would-be employee. In this case, your job is easy. However, it’s not uncommon for different references to give conflicting information, making it hard to form a clear picture. One might talk about an outstanding employee, while another reveals a pattern of negative behavior – which one do you put your faith – and your choice – behind? Performing reference checks can also be lengthy, sometimes significantly delaying hiring. 
• Limited Value & Legal Risks – Some references may provide only limited information due to company policies on disclosing employee details. This sometimes happens if you can only speak with somebody in HR. Rather than giving you an accurate impression of the candidate, they often can only confirm that they worked for their company and would or wouldn’t be eligible for rehire—there’s sometimes not much to go on. Improperly conducted reference checks can also lead to legal issues, especially if they violate privacy laws or other regulations.

Best Practices for Conducting Effective Reference Checks

To maximize the benefits and minimize the drawbacks, employers should follow best practices for conducting reference checks:

Prepare Thoroughly

Before reaching out to references, prepare a list of job-related questions. It ensures that the conversation stays focused and relevant. Nobody wants their time wasted, so don’t mess around when somebody has been kind enough to share some of their time with you. 

Be Consistent

Ask each reference the same questions to ensure consistency and fairness in the evaluation process. Human bias can easily lead an interaction down a different path, affecting the eventual outcome. 

Verify Employment Details

Always verify the candidate’s employment history, including dates of employment, job titles, and responsibilities, to ensure accuracy.

Maintain Confidentiality

Ensure all information gathered during reference checks is confidential and used solely for hiring decisions.

Respect Legal Boundaries

Familiarize yourself with relevant laws and regulations to avoid legal issues. Always inform the candidate before contacting their references.

Types of Reference Check Questions

Reference check questions can be categorized to cover various aspects of the candidate’s professional life:

Performance

• Can you describe the candidate’s job performance?
• How did the candidate meet or exceed job expectations?

Work Ethic

• How would you describe the candidate’s work ethic?
• Can you provide examples of the candidate’s commitment and reliability?

Skills and Competencies

• What are the candidate’s strongest skills?
• Are there any areas where the candidate needs improvement?

Interpersonal Skills

• How does the candidate interact with colleagues and supervisors?
• Can you explain how the candidate handled a conflict or challenge?

Cultural Fit

• How well did the candidate fit into your organization’s culture?
• Would you rehire this candidate if given the chance?

Reference Check Laws

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a federal law regulating how reference and background checks are conducted. Employers must obtain written consent from candidates before conducting these checks and inform candidates if the results will affect the hiring decision.

State Laws

In addition to federal laws, each state has its own regulations regarding reference checks. These laws can dictate what information can be shared, how it should be documented, and any limitations on disclosing certain types of information. Employers should familiarize themselves with the specific laws in their state to ensure compliance.

Frequently Asked Questions

Why Are Reference Checks Important?

Reference checks are a vital step in the application process. They provide an additional layer of verification, insight, and background history that interviews and resumes alone cannot offer. These checks paint a more comprehensive picture of a would-be employee to help make the right hiring choice.

How Long Does a Reference Check Take?

The length of a reference check depends on who you need to contact, but it typically takes a few days to a week. The more thoroughly the check is, the longer it will take, but the availability of references and the number of references to be contacted also play significant factors.

Final Thoughts

Making the wrong choice during the hiring phase can quickly become a nightmare. A bad new hire can negatively affect your business, your team, and yourself, which is why getting it right in the first place is so important. Reference checks are essential to the hiring process and should be one of the final rubber stamps that approve candidates or pass them over. 

For those looking to streamline this process, ScoutLogic offers comprehensive background screening and reference check services that can help make informed hiring decisions. Finding the right candidate takes long enough; let us take the baton, dot the i’s, cross the t’s, and confirm you’ve made the best possible choice.

David Garcia

David Garcia, co-founder and CEO of Scout Logic, is an industry leader in the bulk background check world. With his strategic acumen and expertise in the HR sphere, specifically in hiring, recruiting, legal compliance, background checks, and resume screening, he’s an invaluable asset and consultant.

David's counsel extends across the boards of ScoutLogic, YipitData, and Supplier.io, drawing from his impactful stints on the boards of Infutor and Avetta. With an extensive 25-year journey, he champions unparalleled B2B commercial leadership within data & analytics, significantly shaping the HR landscape.