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Chris Tan
Chris Tan

Principal Consultant

Published 5 December 2022

The value and pitfalls of reference checking

Reference checking can add a necessary layer of due diligence to the recruitment process for incoming executives. Do you know when and why it should be used, and how to work it to your advantage?

The value and pitfalls of reference checking

At a glance:

  • Reference checking is an important part of executive search and onboarding.
  • There are some common pitfalls that need to be considered when performing reference checks.
  • Timing, alignment, context and confidentiality are important aspects of best practice for reference checking.

Reference checking is a powerful tool for reducing risk when onboarding executive talent. For reference checks to be effective, employers must know when, why and how they should be used, and have the right experience to meaningfully interpret the findings.

We invited Principal Consultant, Chris Tan, to explore how reference checking can add value to executive search; the pitfalls that employers must navigate; and what defines best practice for this process.

Enhancing executive search and onboarding

In the search for executive talent, the interview process and resume screening stages can reveal a lot about a candidate. However, reference checking brings another critical layer of due diligence to this process.

“At its best reference checking is an artform,” says Chris. “It can help employers to tease out real insights into how a candidate thinks and operates. Reference checking can also reveal a candidate’s values and motivators, which is essential for achieving cultural alignment.”

Other benefits include:

  • Revealing factors for success and/or failure to help predict future behaviour and performance;
  • Uncovering inaccuracies in resumes, particularly in the case of embellishment or fabrication;
  • And understanding the behavioural factors and leadership traits that may contribute to a candidate’s team fit and leadership fit.

Reference checking can also be used as part of employee onboarding, to best leverage the skills and experience of incoming leaders.

When should you use reference checking?

Traditionally, reference checks are completed just before an offer is released, but only doing it at this stage can bring about an intrinsic risk for employers.

“Elements may arise from reference checking that may disqualify a candidate at the very end of the process, throwing the entire recruitment process off track and therefore risk losing other quality candidates who were being considered,” says Chris. “A staged approach can reduce this risk, by taking softer references midway through the process to probe certain areas, before deploying the more sensitive and/or senior references towards the end.”

Reference checking pitfalls

There are some common traps that employers can fall into when performing reference checking. To improve recruitment and onboarding outcomes, consider these pointers for your next appointment.

1. Know when cynicism is needed

“Candidates naturally provide the referees who are most likely to provide good feedback and share positive experiences, making it important for those conducting reference checks to dig into the context of any commentary,” says Chris. “In many situations feedback may be biased, and at the extreme it may not be true, so interpreting referee commentary should always come with a healthy degree of cynicism.”

2. Check referee credentials

There is tendency for employers to assume the integrity of referees, without questioning if they are as credible as they appear to be. “To uphold the quality of reference checking, the validity and trustworthiness of referees must be confirmed,” says Chris. “Given the digital footprint that most executives now leave, a quick online search can be quite revealing.

3. Apply adequate rigour

Reference checks have been used in the defence of negligent hiring claims, making it even more important to understand this process and undertake it thoroughly.

“Along with other due diligence processes, reference checks can be used to demonstrate that all necessary efforts were made to uncover, and to be informed of a candidate’s background,” Chris explains. “If reference checks are rushed or they lack rigour, the gathered intelligence may not lead to meaningful insight, or support the employer’s defence in the case of a claim.”

Best practice for reference checking

Despite the importance of reference checking, many employers (and even some recruitment firms) treat it as a box-ticking exercise, asking generic questions or relying on online surveys – approaches that Chris believes offer little value to employers or candidates. He shares these examples of best practice for harnessing the benefits of reference checking during executive search.

Timing

A career should not be thought of as static, but rather a connected series of events and turning points, making timing critical when reference checks are performed. “Employers often seek references who were present at certain points during a candidate’s career to provide perspective, and insight through context,” says Chris. “A lack of references from key career points may also serve as a red flag and require following up.”

“It is also worth noting that referees can only offer perspective based on their experience with a candidate at a certain point in time. But as careers progress people grow and develop, so commentary based on observations from 10 years ago may be meaningless if the candidate has since developed in that area,” Chris continues. “If referees do date back in time, employers can still use their insights to determine whether a candidate has the track record and ability to improve themselves through maturity, self-awareness and proactive self-development.”

Context

Reference checking, particularly at senior levels, should capture a holistic view of a candidate’s work experience. “Just as performance reviews try to capture context through a 360-degree view of employee performance, reference checking should encapsulate that same perspective around candidates too,” says Chris. “At a minimum, our reference checking always includes superiors, peers, subordinates and external stakeholders.”

Failure and success can also change with context, and employers must factor this in when performing reference checks. “If a referee indicates that a candidate was unsuccessful in generating revenue, perhaps there were other factors, like market forces or commodity pricing, that contributed to their poor performance,” says Chris. “The opposite can also be true. A candidate may have a stellar staff retention record, but in context they had no direct reports for much of this time, or they only ever led very small teams. In both instances context played a part in their performance.”

Negative references

The request from employers to seek negative references is a novel, but effective trend in executive search. “The intent is to help employers identify areas for improvement, allowing strategies to be devised on how to manage, and get the best out of new employees,” says Chris. “Negative references can also reveal how candidates are likely to handle stress, conflict or confrontation, and help to prevent situations that may lead to poor performance.”

In taking this approach, Chris urges employers to always be mindful of context, and to implement recruitment processes with care, never putting candidates at risk. “To protect candidates’ interests, reference checking must always be approached with sensitivity and confidentiality,” Chris cautions. “Reference checking is important, but it should never put a candidate’s current employment, professional relationships or reputation at risk.”

For assistance performing reference checking and all other aspects of Executive Search, connect with Chris or contact your local Gerard Daniels team

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