The Ultimate Guide to Reference Checks [+Templates, Questions, Case Studies]

Share

The challenge in today’s globalized job market lies in verifying the authenticity and accuracy of candidate information. Companies offer remote opportunities to hire employees from different parts of the world or provide relocation options, but this can pose challenges for both parties. What if the hire isn’t successful?

This article will be helpful for recruiters, HR practitioners, hiring managers, and job seekers alike, offering insights into the importance of reference checks and providing guidance on how to conduct them effectively. As a result, you will learn how to raise awareness about the significance of reference checks and promote best practices in the global hiring landscape.

What Is a Reference Check?

A reference check is a due diligence process in which an employer contacts a job candidate’s previous employers, colleagues, or professional contacts to verify the candidate’s qualifications, work history, and suitability for a new role. This step is crucial for gathering insights into the candidate’s performance, teamwork, and overall professional behavior, helping employers make informed hiring decisions.

Imagine a company is on the brink of hiring someone new. To ensure the candidate aligns with the job requirements and company culture, the company embarks on a reference check. This involves inquiring about the candidate’s work performance, collaboration abilities, commitment levels, and more from people who have previously worked with them. The aim is to garner a comprehensive understanding of the candidate’s professional demeanor and capabilities.

Reference checks are a staple in the recruitment strategies of both burgeoning startups and established international firms. Notably, US technology giants, often referred to as FAANG (Facebook, Amazon, Apple, Netflix, Google), are known for conducting exhaustive global background checks. These are not limited to just gathering references but also include verifying criminal and credit histories, confirming educational credentials, and cross-checking the employment history detailed in the candidate’s resume.

Contrastingly, European companies typically adopt a more candidate-friendly approach by collecting references post-offer acceptance, facilitating smoother negotiations. This variance in practice underscores the differing objectives and regulatory environments between the US and Europe.

The US Department of Labor has highlighted the financial and cultural costs associated with a mis-hire, noting that a single hiring mistake can cost a company approximately 30% of the employee’s first-year earnings. Beyond financial losses, a poor hire can also detrimentally affect team productivity, motivation, and overall workplace morale.

Conversely, the European hiring process is heavily influenced by the General Data Protection Regulation (GDPR), which mandates strict adherence to personal data collection, storage, and usage guidelines. European employers must obtain explicit consent from candidates before proceeding with reference checks, ensuring compliance with these data protection regulations.

The essence of a successful hiring process is to ensure mutual compatibility — the candidate must fit the organizational needs in terms of both hard and soft skills, and the organization must meet the candidate’s expectations. This reciprocal alignment is paramount for fruitful cooperation and long-term success.

Pros and Cons of Reference Checks

While reference checks present numerous advantages, certain drawbacks also exist. Understanding the pros and cons of reference checks can help organizations navigate these waters effectively, ensuring a more informed and strategic approach to hiring.

Pros:

  • In-depth Personality Insights: Reaching out to a candidate’s former colleagues or managers provides a deeper understanding of their personality, uncovering non-obvious aspects that interviews might not reveal.
  • Team Interaction and Motivation: Enables discovery of how candidates interact with colleagues, their motivation, and preferred management style, along with potential recommendations from former peers and supervisors.
  • Verification of Claims: Allows clarification of specific past situations and verification of the candidate’s claims, understanding reasons behind job changes, and reducing hiring risks.
  • Networking Opportunities: Contacting former colleagues and supervisors can expand your professional network, strengthen your employer brand, and foster future cooperation opportunities.
  • Transparent Feedback: An expanded professional network increases the chances of receiving honest feedback about the candidate.

To mitigate bias and gain meaningful insights, focus on asking relevant, open-ended questions that encourage detailed responses.

Cons:

  • Potential for Bias: References may be biased, leading to inaccurately positive or overly cautious negative feedback.
  • Time-Consuming Process: Reference checks can delay the hiring process, risking the loss of active candidates to other offers.
  • Incomplete Information: Candidates may hesitate to provide references from current employers, leading to gaps in information.
  • Risk of Counteroffers: Involving current employers may trigger counteroffer situations, complicating the hiring process.

How to Conduct Reference Checks: 10 Best Practices

To maximize the effectiveness of reference checks and ensure a thorough understanding of the candidate, it’s crucial to follow best practices. Follow these ten steps to enhance the reference check process, ensuring that hiring teams can make informed decisions and ultimately select the best candidate for the role:

  1. Identify and analyze the necessity for this position. The first question hiring managers should ask is “Why?” Unless there’s a clear answer to how the role meets the business needs of the company, there is no point in opening a position, not to mention reaching the reference call stage.
  2. Determine a comprehensive candidate profile. It’s rather a cliché or faux pas to search for a 100% match candidate or company. That’s why it is very important to have intake and calibration calls with hiring managers (HMs). A candidate’s experience may look impressive on paper, but in real life, the person may not be a fit for the team, product, or technology at all. To avoid mistakes and optimize time-to-hire (TTH), all team members, including sourcers, recruiters, technical interviewers, and final decision-makers, need to be aligned on the general profile we are targeting and understand the kind of hard and soft skill set they are looking for.
  3. Effective communication from the outset with both candidates and hiring managers (HMs) is crucial when conducting reference checks. This ensures that all parties understand the process, expectations, and timelines involved in gathering and evaluating references. Additionally, it allows HMs to clarify which specific aspects they wish to assess, whether it’s technical skills, proficiency with tools or programs, or specific soft skills relevant to the position.
  4. Be transparent. Once the company is one step away from extending an offer and wants to learn more about a candidate from their ex-colleagues, describe in detail what is expected from the candidate and why this stage is so important to the company. Ask to provide relevant contacts and make them aware of your intention to reach out to them.
  5. Make a candidate feel comfortable and secure by letting them know that all conversations between them and the company are confidential. So, unless they give permission and their current employer is aware that the candidate is actively searching for a job, you will not initiate any discussions. The reference check is a highly secure procedure for us, and we always keep it private to avoid embarrassing situations or ruining relationships with their current manager.
  6. If there’s a specific professional aspect to be found out about the candidate, a recruiter may engage HMs by inviting them to the reference check call. Do not be afraid to ask—after all, they will be working directly with the candidate and can obtain information firsthand. This is a common practice among professionals in international companies.
  7. Prior notice to the contact provided by the candidate is important; don’t make unexpected calls. Email or text message the referrer to set up a conversation in advance. If the candidate is sharing any contacts, make sure it has been negotiated with the person beforehand.
  8. A personalized approach is essential when conducting reference checks. Approach these checks as if they were another interview, pay attention to the detail, study the candidate’s career path, and focus on critical issues to discuss. Be generous in listening to appraisals, but do not forget to inquire about areas of improvement.
  9. A former colleague giving the reference likely doesn’t have much insight into the company or the role the candidate has applied for. That’s why it’s crucial to come up with well-structured, pertinent open-ended questions. This approach can prompt detailed responses without the need to rack your brain trying to remember which specific situation you were discussing with the candidate earlier.
  10. Do not limit feedback solely to direct managers or supervisors; reaching out to colleagues and subordinates, where applicable, can provide a 360-degree image and influence the final decision.

3 Key Approaches for Checking a Reference

Recruiters and HR specialists have a few tried and true methods up their sleeves. Let’s take a look at some of the most common techniques:

#1: Manual Reference Checks

Reaching out directly to provided references through email, phone calls, or video chats engages in a more personalized and human approach.

Pros: The direct conversation allows for deep insights into the candidate’s competencies and background, leading to significant discussions. This method also offers flexibility in scheduling, making it easier to coordinate with busy schedules.

Cons: However, it does require coordination between all parties and relies on the availability and willingness of the references to respond promptly, making it a potentially time-consuming process.

#2: Employment Verification Companies

For certain businesses, entrusting the task of reference checking to expert employment verification companies is the ideal solution. These companies have access to extensive databases and resources, enabling them to conduct thorough background checks on potential candidates.

Here are a few employment verification companies:

  • HireRight
  • Sterling
  • Accurate Background (AB)
  • First Advantage
  • IntelliCorp and many others.

Pros: This approach offers a smooth and efficient process, utilizing the expertise and resources of the verification agency. It provides consistent and comprehensive reports on the candidate’s background and employment history.

Cons: On the other hand, this option can be costly, especially for smaller companies or startups with limited funds. Additionally, it may lack the personal touch and adaptability to handle the process directly.

#3: Automated Reference Checking Tools

With the continuous advancements in technology and the will to optimize any process, a large number of companies are now opting for automated reference-checking tools to streamline their processes. These tools use state-of-the-art algorithms and databases to verify candidate information and craft customized reports.

Pros: These platforms increase speed and efficiency, as they automate a significant part of the reference-checking process and minimize manual effort. Moreover, they provide standardized and timely reports, ensuring swift turnaround times.

Cons: One of the main limitations of automated tools is the potential lack of personalization and in-depth insights obtained from direct communication with references. Additionally, implementing these tools requires a significant investment in software and training for employees.

Determining the Optimal Approach

When figuring out which approach to take, there are a few things to consider: the size of the company, the budget, and the number of people targeted to be hired. For small-sized companies or startups with limited financial resources, doing things manually might make the most sense financially and practically. On the other hand, corporations that hire a lot of people might find it more efficient and scalable to use automated tools or hire a verification agency.

The key is to find a balance between getting things done proficiently, ensuring the information is accurate, and really understanding what specifically you want to learn from the reference checks. Picking the right method enables recruiters or HRs to make sure they’re making smart decisions that line up with what the company strives to achieve.

Reference Checks in Real Practice: Templates & Checklists

Are you looking for a helpful template to reach out to a current or former manager to request a reference check for a candidate? The template presented below has been designed specifically for that purpose.

It is sure to set the right tone, offering a perfect blend of friendliness and professionalism. Additionally, it includes all the pertinent information about the candidate and the reference check request.

Reference Check Request [Template]

Subject: Request for Reference – [Candidate’s Name]

Hello [Manager’s Name],

Hope you are having a lovely day! My name is [Your name], and I’m a Technical Recruiter at XXX company, which specializes in XXXXXXXXX. XXX (candidate) shared your contact, assuring me that you are aware of their involvement in the interview process at XXX. They are in the final stage, and the only step remaining is to collect references. XXX mentioned that both of you were responsible for the XX Project, and you were supervising them. If we could have just a 15-20 minute catch-up, it would really help us understand XXX’s background and skill set. I’m very flexible, so any available timeslot works for me via this link.

To give you more details on the topics of our potential conversation, I’d like to go through the following: XXX’s background, performance, work ethic, interaction with multiple teams, as well as the challenging case [personalization+data you found vital to discuss based on the candidate’s previous interviews]. I am open to any kind of feedback and appreciate your contribution & transparency. I believe that by managing [Name] at XX company, you may greatly contribute to our decision-making process, as well as bring insightful feedback on the best ways to motivate and approach XXX.

Please let me know what timeslot works for you this week. If not, please tell me if we can conduct this conversation via email, so I can send out a short list of questions to get comprehensive feedback on the candidate’s professional and interpersonal skills.

Which way would you prefer?

P.S. I would be happy to talk to you and THANK YOU for facilitating XXX’s career moving forward.

Best regards,

[Your name]

How to Kick Off the Reference Check [Checklist]

The following tips are best applied at the stage when you are setting up a conversation with a current or former manager for the purpose of conducting a reference check. 

  • Try to avoid super formal or super fun ways to set up a conversation – just stick to neutral language
  • Small talk is a nice thing but follow the purpose of this call – get prepared and keep questions focused
  • Go for open-ended feedback, this will lead you to scrape more data
  • Avoid numeric ratings; instead, rely on key competencies and offer choices. Asking to rate a candidate from 1-10, or focusing on any other numeric scale, may lead to inaccuracies. By providing options and avoiding influencing responses, you reduce the ‘rating inflation’ of answers, resulting in more insightful feedback.

Reference Check Questions [Template]

  • Introduce yourself and the company you are working for. Explain why you are having this call and the importance of collecting unbiased reviews.
  • How and when did you meet XXX? What kind of project you both were working on and for how long? What was your role and XXX’s role at that time
  • To what extent has XXX had experience with X ( key tools, products, etc.)? 
  • How easy was it to onboard XXX to the project and integrate them with a team? Why? 
  • What is the best approach to managing XXX? Are there any specific nuances we need to be aware of to provide smooth integration with the team?
  • Is XXX good at working independently or within the team? Why?
  • Everyone has their superpowers and areas for improvement. Leaning on your experience with XXX, what are they?
  • What type of working environment facilitates XXX’s motivation and helps achieve significant results?
  • We are considering XXX for XXX role with a focus on YYY. In your opinion what could make XXX a good fit for this role? What advice or recommendation you’d give to their next manager?
  • If you had a chance to cooperate with XXX in the future, which role or promotion you would offer to them? And why?
  • How did your co-op end up and what was the main reason for that?
  • Any remarks or comments you would like to add?

Reference Checks Case Studies

Case Study #1: Eastern Europe (Ukraine)

I had a really tough case while working at a Ukrainian product IT company. Back then, there was a trend in the Ukrainian market to hire people from Big-4 firms and integrate their experience into the IT industry. Candidates who aced the test assignment had the freedom to choose their career path based on their interests. Many took on roles in marketing, analytics, finances, and some even landed business roles. It all depended on their skill set and job preferences.

In my case, I was hiring for the position of Senior Business Analyst with the following expectations:

  • Taking charge of payment processing and chargeback management processes.
  • Analyzing the performance of the company’s major customer support business unit (with an annual revenue of USD XXX million).
  • Developing pricing strategies for the global expansion of a group of mobile apps, increasing conversion rates for organic traffic.
  • Creating a financial model for the highest-grossing Health & Fitness product worldwide.
  • Providing reports for investors.

So, during the reference check, I scheduled a call with the candidate’s ex-manager. This manager used to be the Chief Operating Officer at the time at a branch of one of the 4 biggest international consultancies. There was some tension even before our phone call. It took a while to get a response to my 3 emails and messages. Then there were a couple of reschedules. But finally, we managed to have this conversation.

From the very beginning, the manager tried to take control of the communication. She sounded a bit arrogant and manipulative at first, answering with simple “yes” or “no.” The manager mentioned that reference checks are a waste of time as Big-4 firms always hire top talent, no matter who the person is. However, things took a turn when I asked her how she managed to teach and educate such a skilled professional in just 2.5 years. It was immediately clear that she respected that person but also wanted to emphasize her contribution to the candidate’s career growth. Additionally, I got some practical insights on how to manage and motivate this candidate.

But here’s the thing: this manager was more of a conformist by nature and had doubts about the candidate’s decision to switch from a big consultancy firm to an IT company. So, all of my questions were answered rather skeptically.

The key takeaway I learned from this was to stick to the plan and focus on getting the data I was specifically interested in. I remained calm and rephrased questions if they seemed stupid or senseless to the referrer.

It’s crucial to craft relevant questions and find the right words in advance. It may sound obvious, but in fact, it is essential. The referrer should have a chance to express any opinion, be heard, and explain the specific role they played in the candidate’s career.

To sum up this story, we extended the offer, and the candidate signed it within an hour. He’s still working for this company and has had a couple of promotions since then.

Funny fact: a few months later, I had to reach out to this manager again for another reference check. Surprisingly, our communication was much easier and more comfortable.

P.S. Mind that this case was in Ukraine; the procedure & communication in Western Europe look differently, especially in Germany, the Netherlands, Norway, & the UK. Reference checks may be required before or even after the job offer – just to check general key points.

Case Study #2: The US Market

In the US, it’s standard practice to conduct reference checks for most non-technical roles during the hiring process. However, in my experience with technical positions, companies often perform background checks without directly contacting candidates’ current or former managers.

Instead, they rely on online services that cover various aspects, including SSN verification, address history, national criminal database checks, sexual offender registries, county, statewide, and federal criminal searches, motor vehicle records, watch list and compliance screening, employment and education verifications, and even drug testing.

It’s essential to note that if you apply for a position and the company is unable to conduct a thorough background check, it might result in your elimination from the hiring process.

For technical roles, a company can evaluate a candidate’s expertise through multiple interview rounds, focusing on the tech stack, pet projects, patents, publications, product niche, and industry specifics.

However, when hiring for non-tech roles such as business, executive, product, and operations, the evaluation process requires a deeper dive into a candidate’s career track. I can’t assess their behavior or coping skills in stressful situations or observe their team management abilities until they start working with the company. This is where reference checks become crucial, as they provide valuable insights into the candidate’s competencies from different perspectives, including peers, managers, and supervisors.

I recently handled a reference check for an Executive Assistant to the CFO role at a science tech company that leverages hardware, software, and AI for precision manufacturing problem-solving.

The challenge I faced was my location in the CET timezone, while the company operated in the EST timezone. Scheduling a Zoom call with the referrers was difficult since it often meant catching up late at night (1:00-2:00 AM).

To overcome this hurdle, I emailed the last referrer I needed to speak with, providing a list of questions I wanted to address. I suggested having a phone call via WhatsApp for a more informal approach. The result was remarkable, and I was able to connect within the next two days.

Every case is unique; therefore, find various approaches to work effectively in your specific case. At this company, the offer was extended by the end of the week, and accepted the next one.

Conclusion

Navigating the complexities of the global job market requires a nuanced understanding of reference checks, an essential tool for ensuring the right fit between candidates and companies. This guide has provided a comprehensive overview of the process, from understanding what a reference check entails to exploring the pros and cons, best practices, and real-world case studies.

Key Takeaways:

  • Understanding the Importance: Reference checks are crucial for verifying a candidate’s qualifications, work history, and compatibility with your company’s culture and values.
  • Balancing Pros and Cons: While reference checks offer invaluable insights, they also present challenges such as potential biases and time constraints. Balancing these factors is key to a successful hiring strategy.
  • Strategic Approaches: Whether through manual checks, employment verification companies, or automated tools, choosing the right approach depends on your company’s size, budget, and hiring needs.
  • Practical Templates and Checklists: Utilizing provided templates and checklists can streamline the process, making it more efficient and effective.
  • Learning from Real-World Applications: Case studies offer valuable lessons on conducting reference checks across different markets and industries, highlighting the adaptability required in today’s dynamic job landscape.

Reference checks are not just a formality but a critical component of the recruitment process. They provide a deeper dive into a candidate’s past performance and behaviors, offering a glimpse into how they might perform in the future. By implementing the best practices outlined in this guide, hiring managers, recruiters, and HR professionals can make more informed decisions, ultimately leading to successful hires that benefit both the candidate and the company.

Thank you for joining us on this journey through the intricacies of reference checks. Whether you’re a seasoned professional or new to the hiring process, we hope this guide serves as a valuable resource in your efforts to build strong, effective teams.

Article by:
Lead Talent Partner at Matchr
Lead Talent Partner at Matchr
mail icon
Subscribe to our monthly updates
We have more articles you'd love