Reference Check:
Definition, Types, Comparison & Benefits

A reference check is an objective evaluation of a job candidate's past work performance based on information collected from key individuals (such as supervisors, peers, or subordinates) who have known and worked with the applicant. It involves contacting the applicant's provided references to learn more about their employment history and gain better insight into their work ethics, style, and attitude.

Reference checks are typically conducted near the end of the selection process after the field of applicants has been narrowed to only a few competitors. Most reference checks are conducted by phone, though some employers use written questionnaires or online survey platforms. Phone interviews allow the checker to collect reference data immediately and to probe for more detailed information when clarification is needed.

Related terms: background check, employment verification, pre-employment screening, candidate references

Reference checks serve 3 primary purposes in recruitment. First, they verify the accuracy of information given by job applicants through other selection processes such as résumés, occupational questionnaires, and interviews. Second, they predict the success of job applicants by comparing their experience to the competencies required by the job. Third, they uncover background information on applicants that may not have been identified by other selection procedures.

Reference checking has been shown to be a useful predictor of job performance (as measured by supervisory ratings), training success, promotion potential, and employee turnover. Verifying critical employment information can significantly cut down on selection errors.

Reference checks also help employers avoid significant risks. With the high cost of hiring, the impact of the ongoing skills shortage, and the effect on morale that high employee turnover can have, making a single bad hire can cause serious damage to an organization. Conducting reference checks can reduce the risk of lawsuits for negligent hiring, which is the failure to exercise reasonable care when selecting new employees.

The best time to check an employee's references is when you are screening them, either before or after their first job interview. Reference checks should be reserved for your top final candidates, typically after face-to-face interviews are complete but before making a final decision or the signing of the employment contract.

As a practical matter, reference checking is usually conducted near the end of the selection process after the field of applicants has been narrowed to only a few competitors. This timing allows you to make informed decisions that are based on facts rather than assumptions and will help you see if there are any red flags or warning signs that would indicate that you should not hire the person.

Employers must always ask for permission from the candidate before they contact any references. Final candidates are notified by their talent acquisition recruiter when the reference check process begins.

Reference check questions fall into 4 main categories that provide deeper insights about your potential hire:

• Job Performance: Focuses on the tasks and assignments your prospective employee has tackled before, such as "Could you give me an example of a project where the candidate particularly excelled?" or "How did the candidate respond to challenging situations in their previous role?"
• Professional Strengths & Weaknesses: Identifies what the candidate does best and where they might need extra guidance, such as "Could you name a skill or ability where the candidate particularly shines?" or "Can you identify any areas where the candidate has room for improvement?"
• Work Ethic: Gets a read on a candidate's dedication and integrity, such as "Did the candidate consistently meet deadlines?" or "How committed was the candidate to maintain high standards of quality work?"
• Style of Working: Helps you understand how a candidate approaches work, how well they integrate into a team, and if their style will fit in with your existing team, such as "How does the candidate handle feedback?" or "Could you describe the candidate's ability to work as part of a team?"

All questions should be work related, focusing on direct work interactions of the candidate and the reference. Strategies for structuring reference checking include basing questions on a job analysis, asking applicants the same set of questions, and providing interviewers with standardized data collection and rating procedures.

You may want to consult your legal counsel to determine if any types of reference check questions are prohibited by legal regulations in your region.

Reference checks and background checks serve different purposes and involve distinct processes:

Reference Check vs. Background Check

Reference checks rely entirely on input from former colleagues and managers that the candidate has chosen. During reference checks, references give feedback on how the candidate performed when they worked together. This information is valuable but only covers a part of the candidate's employment history.

Background checks are more detailed. Here, the employer does much of the investigation themselves without relying as much on input from the candidate's selected sources. Background checks may involve contacting the candidate's former schools or universities for education verification, validating their job history with all their previous employers, investigating employment gaps, and conducting criminal record or credit checks.

Reference Check vs. Employment Verification

Employment verification confirms basic facts about previous jobs such as dates of employment, job titles, and responsibilities. Reference checks go beyond simple verification to provide qualitative feedback on how the candidate performed, their work style, strengths, weaknesses, and how they interacted with colleagues.

Reference Check vs. Character Reference

A good employment reference check includes some details about the candidate's personality, but the main focus of personal and character reference checks is the candidate's moral character and personality traits. Character references are mostly required in organizations where the candidate's good character is particularly important, such as roles requiring security clearance.

Reference checks offer several benefits but also come with certain limitations that employers should consider.

The benefits include providing a deeper understanding of the candidate's abilities, how they approach their work, and other details that may not be apparent in an interview. Conducting these checks can help you identify any inaccuracies or exaggerations within job applications. They can also help you mitigate risk for your team during the recruitment process by helping you hire the right person for the role. Reference checks ensure a good cultural fit by providing a well-rounded and accurate picture of how candidates are as employees from former colleagues and managers.

The drawbacks include the fact that candidates may only supply reference information for people who are likely to give them a positive review, skewing the results of the check. You might not be able to speak with their current employer, as they may not want to disclose they're job hunting. Sometimes, you may need to use your best judgment about whether a reference's perspective is relevant to your hiring situation. Many employers refuse to give negative information about former employees, fearing a lawsuit for defamation, though this is generally not deemed a serious problem for Federal reference providers and reference checkers because of legal protections provided under the Federal Tort Claims Act.

There are 2 primary methods by which employers can check references of a candidate: online reference surveys and reference calls.

Online reference surveys use platforms like Skill Survey that provide on-line applicant reference checking surveys to collect feedback on behaviors and skills that correlate to success in a given job type. With these tools, candidates enter their references online directly into the tool, and an email notification is sent to each reference requesting their anonymous feedback. The references complete the survey online. Because the references are assured their input is not personally identifiable, they tend to be more forthcoming and have a high response rate. Candidates are required to input at least five references, including at least two supervisors. A summary report is available when at least three responses are received and at least one of the three should be a supervisor.

Reference calls represent the traditional method of checking references, where either the talent acquisition recruiter or hiring manager calls each reference and asks each a common set of questions. All questions should be work related, focusing on direct work interactions of the candidate and the reference. Compared to written requests, phone interviews allow the checker to collect reference data immediately and to probe for more detailed information when clarification is needed. Phone interviews also require less time and effort on the part of the contact person and allow for more candid responses about applicants.

Employers are able to check employment references without consent, but there are a few exceptions and important considerations. Employers cannot ask for information that is protected by the law or that would violate an individual's privacy. Employers can also check work references without consent if the employer has a good faith belief that the individual might be an employee of a competitor and it is necessary to protect the employer's business interests.

However, there are certain limits on how employers can use this information. They cannot use it for discriminatory purposes or to discriminate against someone in hiring, firing, promotion, or compensation decisions. Under privacy regulations like GDPR, collecting a candidate's data as part of a reference check is typically considered legitimate. However, background checks carry a higher risk of uncovering sensitive data about things like the candidate's health or personal relationships, which cannot be stored unless in particular situations.

Many US states have laws in place that regulate how employers may conduct reference checks. Many states require that employers receive consent for a reference check in writing from a job candidate, and some may prohibit employers from asking about certain information such as previous salaries or personal details not related to job performance. Employers who work with a consumer reporting agency (CRA) to conduct background checks, including reference checks, are required to adhere to federal regulations outlined in the Fair Credit Reporting Act (FCRA). Notably, employers need to give candidates written notice of their intent to perform a background check and receive their written consent before proceeding.

During reference checks, employers typically verify several types of information about the candidate. On the most basic level, candidate references are checked to verify employment details such as whether the candidate had the role they said they had and how long they worked at their previous company.

Employers often specify what information should be included in their references, such as name, address, phone number, and email address. They may also ask for specific information such as dates of employment or salary history. Reference checks help verify information provided on a candidate's resume or in the interview process, including tasks and responsibilities previously handled, proficiency in certain skills, and the circumstances under which they left previous employment.

Beyond basic verification, reference checks are also an excellent opportunity for employers to get a fuller picture of a potential employee and a chance to confirm their positive impression from the candidate's job application and interviews. The reference check provides the new employer with a theoretically unbiased, third-party account of what the candidate is like as an employee.

Employers should contact multiple references to get various insights about the candidate. A minimum of three contacts is recommended, with at least one of the three being a supervisor. When using online survey platforms like Skill Survey, candidates are required to input at least five references, including at least two supervisors.

Contacting multiple references provides a more comprehensive and balanced view of the candidate's work history and performance. Different references may have worked with the candidate in different contexts or capacities, offering unique perspectives on their skills, work ethic, and professional behavior. This approach reduces the risk of relying on a single, potentially biased perspective and helps employers make more informed hiring decisions.

Many employers choose to outsource reference checks to professional background check services to improve efficiency and maintain consistency. Background check companies can help you find out what kind of references they will need to talk with before they do any further research on the candidate. They are also able to provide information about their candidates' educational history, criminal history, and more.

Outsourcing reference checks offers several advantages. Managing reference checks in-house can be challenging and time-consuming. Professional services specialize in providing detailed and prompt reference checks as part of a comprehensive background check process. They help improve turnaround times and lighten your hiring team's load so they can focus on what matters most, choosing the best candidate for your organization.

When considering outsourcing, find a reliable background check company who has experience in this field and has a good track record. You should also ask them about their pricing structure so that you know what they will charge for your project. It is important to ensure that any third-party service you use complies with relevant laws such as the Fair Credit Reporting Act (FCRA) and state-specific regulations.