The Trouble With Reference Checks

When you add a step to a hiring process, it ought to earn its place in one of two ways. Either it tells you something you didn't know, or it costs so little that it doesn't matter much whether it does. The reference check is odd because it seems to do neither, and yet almost every company keeps it, usually as the last thing before the offer.

Start with what it's supposed to do. The idea is that people who worked with the candidate will tell you things the candidate won't. That's reasonable. But look at how the check is actually run.

For one thing, the candidate picks the references. Nobody lists the manager who put them on a performance improvement plan. So what you hear is testimony chosen by the person being evaluated, which is a strange thing to call verification.

Then there's legal caution. HR departments at mid-sized companies routinely tell managers to confirm dates and title and nothing more, because saying anything about performance, why someone left, or whether they'd rehire carries legal risk. The references who speak freely tend to be at small companies where the lawyers haven't arrived yet, or they're personal contacts giving you something close to an honest opinion. You don't know which kind you've got until you're on the call.

And by the time you reach references, the candidate has already been through a phone screen, at least a couple of interviews, maybe a skills test and a panel. You've formed a view. A conversation with someone the candidate chose isn't likely to change it. Mostly you're confirming a decision you've already made.

So it's not surprising that nearly everyone passes. One figure that gets quoted puts the pass rate for reference checks at 98%. I wouldn't treat that as precise, but even if the real number were a good deal lower, the step would be screening out very few people.

If that were the whole story, reference checks would just be a harmless ritual. The trouble is where they sit.

The week after the final interview

Think about a finalist the day after your last interview. They've probably been interviewing elsewhere too, and a good candidate in a competitive role may have other processes reaching the offer stage at about the same time. The days right after the final round are when they're most likely to get another offer, and that's exactly when your reference check runs.

Here's how it tends to go. You finish the final interview on Tuesday and tell the candidate you're moving to references. The requests go out Wednesday. References reply Thursday and Friday. On Monday the recruiter pulls the notes together and gets the hiring manager's sign-off, and the offer goes out that afternoon. Nobody was slow, exactly. It still took six days, and for a candidate with options, six days is a long time.

The candidates still available at the end of that wait aren't necessarily your best ones. More often they're the ones with fewer alternatives. It's the same pattern as the seven-day silence that costs you your best candidates. Nobody means to cause the delay, the process produces it anyway, and the result is that you put someone through a careful process and then gave a competitor most of a week to hire them.

Doing the diligence earlier

I don't think the answer is to stop checking people. What helps is getting the useful checking done earlier, so that the end of the process can move quickly.

That's the idea behind Asendia: do at the start of the funnel what the reference check claims to do at the end. A reference is someone the candidate chose, speaking after you've mostly made up your mind. Asendia phones the candidate directly soon after they apply and holds a screening conversation in which each follow-up depends on what the person just said, which is not something you can line up in advance the way you can line up a friendly reference. It gets things on the record while they can still change a decision: how the person reasoned when pushed, where their answers went vague, what they said about pay and availability. It works evenings and weekends too, and what it learns is written into the candidate's record in your ATS rather than kept in some separate system.

By the time that candidate reaches your final round, you have that record plus everything your interviewers learned. A call with a reference the candidate picked is unlikely to add much to it. The offer decision can then come soon after the final interview, because the diligence was done along the way instead of stacked up at the end.

People usually blame candidate drop-off at the offer stage on pay or on how long the whole process took. I suspect reference check delay is another cause that hardly anyone measures. It's easy to check. Take your last 20 declined offers, and for each one compare the date you picked the finalist, the date the offer went out, and the date the candidate accepted somewhere else. If the gap between the first two is regularly more than a couple of days, some of those candidates were lost in a window your own process opened.

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