Usually when a small business decides that it is time to recruit, they are already significantly under-resourced. Hiring additional employees, and all the costs associated with the hire, are a major investment for a small business. The flip-side of this is that due to the internal pressure to get more ‘arms and legs’ ASAP, corners tend to get cut. One of the corners often cut is the non-completion of reference checks.
The majority of small businesses that I speak to are not completing reference checks and are therefore leaving themselves open to the risk of hiring candidates that are duds. That is:
- non-performers
- illegal, i.e. they lack ‘right to work visas’
- were terminated from their last role
- embellish details around their role, title, length of service or achievements
Reasons small businesses do not conduct reference checks
- Value of Reference Checks – They don’t see the value of reference checks. They suspect that it is not the manager but a friend that is being supplied as the ‘referee’. There is the expectation that candidates only supply referees when they are sure they will give a good reference. Remember my post about Hugh and the termination for Gross Misconduct? Well guess what! He contacted me to be a referee for him. I couldn’t believe it! I told him that I could be a referee but I would be very clear about the reason for termination. The disappointing aspect was that no prospective employer questioned him about why his last employer was not a listed as a referee.
- Time – They see it as a time consuming process that doesn’t add a lot of value. Let’s be very clear here, the recruitment process and costs combined with the time unil the new employee is fully functional will cost your business between 50 -150% of the individual’s base salary. Are you still sure that this investment does not warrant an extra hour of your time?
- Questions – They are not sure what they should ask. They are not sure what they can’t ask. Are there any questions that are illegal or not appropriate to ask?
The risk with this is that they are making a decision to potentially offer a job to a candidate based on a 45 minute interview. This being the only data point. So you better be sure that it is a really good interview and that you have all the information you need to make an informed choice. You are absolutely sure that you have the detail required.
So, why do reference checks?
It’s an important step to learn more about the candidate. For example, does the interview responses align with the resume content. Do the dates that they’ve worked for an employer match. What was their reason for leaving? Otherwise you are relying entirely on them telling the ‘whole truth and nothing but the truth’ in the interview. Hmmm, really – everyone is that honest?
Another reason is so you can probe areas of concern that may have been raised in your interview. For example, if you have a concern that they are a flight risk. Again, it gives you another data point in which to help you make your decision.
So, how can you protect yourself?
During the interview check who they reported to. Not only what the individual’s title was but what was their name? And then if that’s not the referee that they have given, ask them why. This will ensure that it’s not just their mate.
You also have data privacy obligations. You need to confirm that the referee is aware of what you are planning to do with the reference information. This includes what it is going to be used for and who might see it.
Reference checks take about thirty minutes to complete. You will find that incorrect stories will quickly fall apart upon investigation. Another benefit is that you may gather alternative ideas on how to effectively manage and motivate the individual.
Reference checks when done well will save you time and money and a lot of hassle. If you would like a free template please contact me at: natasha.hawker@employeematters.com.au.
