Checking References Saves You Trouble

One of the lessons from Jim Collins’ Good to Great (2001) is that great companies strive to place employees in the right seat of the bus. Your own due diligence as a hiring manager or business owner is the best way to ensure that 1) you have the right employee for the job and 2) they are placed in the right seat of the bus. It’s been my experience, however, that many employers fail to perform adequate due diligence in the process of checking references. This is crazy! It would seem only appropriate that if you’re considering spending the money and time to hire and train a new employee then you’d want to thoroughly check as many references as possible.

The fear of being involved in a lawsuit after you check on or provide references can be a powerful motivator to avoid the situation entirely. At least, it is for many hiring managers. But checking references is critical and can be done in a way that hedges, if not eliminates, the risk of being involved in any legal repercussions.

AllBusiness has published the following 9 Tips on Checking References:

1. Tell all applicants that you will check their references before you make any hiring decisions. Business owners often hire applicants because of a sharp-looking resume or a “good feeling” from an interview. No matter how quickly you’d like to get a position filled, always perform due diligence before you take the hiring plunge.

2. Ask each applicant to sign a release form permitting you to ask detailed questions of former employers and other references (sample background check permission forms are listed on this page). Make sure the form prevents the applicant from suing you or any former employers based on the information you learn during the reference checks. Without this permission, you may only be able to confirm employment dates, pay rate, and position – information that tells you little about a prospective employee’s character. Also, check with your lawyer, because some kinds of liability cannot be waived.

3. Fax over a copy of the prospective employee’s background check waiver and your personal credentials before you call a prospective employee’s references. Many employers fear being sued for defamation if they say anything negative about a former employee. Your fax will ease their fears. Keep in mind that some states now consider employers’ comments to be “qualifiedly privileged.” That means the employer cannot be held liable for the information he or she reveals unless he or she knows it to be false or reckless. If that’s true in your state (check with your lawyer), make sure the references know it.

4. Verify basic information such as employment dates, job titles, salary, and types of jobs performed. If one of the basic checks doesn’t match the prospective employee’s resume or what you heard during an interview, you’ve got a clear sign that something may be amiss.

5. Avoid vague questions. Ask specific questions based on what you learned about the applicant in the interview. For example: how did the employee contribute to projects mentioned in the interview?

6. Pay attention to neutral or negative comments from references. Lukewarm comments or half-hearted praise speak volumes. Ask the former employer if they would hire the person back. If they hesitate, move on to the next applicant.

7. Put less weight on positive references. Most people can find someone to say something good about them. And some employers give positive references even to bad ex-employees, because they’re afraid of legal action or are tired of paying unemployment taxes on the applicant.

8. Use former supervisors or senior coworkers as references. An applicant might not want you to contact their current employer (who might not know about the job hunt), but there are always people who can provide a reference.

9. Don’t rely on prospective employees’ verbal word regarding salary figures. Ask for a current pay stub to verify employment and pay rate.

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