With focus keenly attuned to value-added efforts, employers are taking opportunities to edit out unnecessary process steps, and a question often asked by HR professionals and Operations folks alike: “Do we really need to check references?”
Indicators of Success
As with some other business processes, whether or not your organization should check references will depend upon a holistic analysis of the hiring process. In making this determination, first, an employer should consider if their hiring process already contains enough success indicators and, in turn, results in quality hires. If so, and if reference checks seem to work well for the organization based upon positive outcomes, then the checks may be worth continuing. If unsure, look to data outside the organization for a better view of reference check efficacy.
Predictive validity of pre-employment assessments is a hot topic in Human Resources. Skills testing, reference checking, and other predictive assessments, such as integrity testing, can be valuable indicators of future success, although there is debate as to the level of that validity. It is likely valuable if a reference can provide information to the prospective employer that will help predict candidate success. However, it can be an extremely time-consuming process with seemingly little benefit. All or almost all reference results may be positive since candidates almost always provide sources of reference they know will be positive.
Experts vary significantly in their judgment over the predictive validity of reference checks. Some studies place them at the lowest predictive validity levels, below skills tests, and some, especially more recently, place them with higher value. Generally, the reference is likely more accurate when reference checks are done digitally (via questionnaire) and with three or more data points. Reference providers have more time to consider the questions and compile productive feedback.
Pitfalls to Avoid
Pre-employment information obtained by a third-party vendor may fall under the Fair Credit Reporting Act (FCRA). If your organization is outsourcing reference checking, keep in mind that you will need to follow all requirements of this federal law, as well as any other state and local requirements.
There are also confidentiality concerns, risks of defamation, and even possible discrimination claims. Be sure that the reference questions are solely related to the knowledge, skills, and abilities needed for the job—not other personal characteristics, hobbies, education, or anything else unrelated to the job. Considering this extraneous information when making an employment decision could lead to bias and violate your organization’s equal employment opportunity policy.
Employers must do all they can to hire responsible individuals who will develop and look after their teams with care and integrity, particularly with management candidates. Checking references is one way organizations can look after this fundamental ethical responsibility. When checking references for managers, pay attention to what you do not receive. A manager with prior experience without at least a few positive reference sources could indicate an ineffective leader or a leader who did not demonstrate a constructive, positive influence with their former employer.
With the topic of checking references, naturally, questions regarding providing references come up. To limit liability, employers typically insist that all requests for employment information come to a central point of contact, such as Human Resources. A policy to only confirm or deny the information a third party provides may help avoid defamation claims and protect confidential information. Keep in mind that for some professions, industry regulations require prospective employers to conduct reference checks on all applicants. So to allow an employee other than Human Resources to provide a reference, it is recommended to obtain a waiver from the employee, releasing the organization from liability.
Eligible Archbright members can access a sample waiver in the mozzo Resource Library. Members with questions about their unique situation are encouraged to contact an HR Advisor in mozzo Chat.