What References Won't Tell You ... Can Hurt You!

What will references (almost) never tell you about a candidate? Only the most important information you need to avoid bad hires!

According to SHRM’s 2004 Reference and Background Checking Report, HR professionals giving traditional references (by phone or letter) are poor sources of critical data on current or former employees.  About half of respondents say they “always” provide information about, dates of employment (big deal!).  How much will they disclose that could help you to avoid hiring incompetents, the "ethically challenged" or lunatics? Virtually nil.

Here are some kinds of information about candidates that are essential to making low-risk selection decisions… and the percentage of HR professionals who say they “Never” or “Rarely” disclose such information:

	Never	Rarely	Total
Interpersonal Skills	74%	10%	84%
Work Ethic	75%	7%	82%
Personality Traits	78%	12%	90%
Violent or Bizarre Behavior	76%	9%	85%
Malpractice/Professional Disciplinary Action	82%	9%	91%
Job Performance	72%	9%	81%

Why not? For 64 % of HR professionals in large companies, it’s fear of legal action, such as defamation claims.  But as the report explains, not providing such information can actually prove dangerous to organizations trying to protect themselves - and if you're hiring, not managing to access it can also be dangerous.

Want to know the average annual number of Defamation Claims based on references given to potential employers?  99!!  That's right - only 99 in the entire US! (Compare this with 45 million people hired.)

Here’s the really interesting part.  According to SHRM, “policies put in place to prevent this liability by providing little or no employment information have begun to backfire… [About 100 organizations a year] are accused of being liable for not providing adequate warning about the threat posed by a former employee who went on to commit a crime at a future employer.”   Furthermore, about the same number face “accusations of negligent hiring for hiring an individual who goes on to harm another employee or customer or commits another crime as an employee.”  So providing adequate information doesn’t only protect you, it protects the next guy too.

Even though 40 states have enacted laws shielding reference providers from legal liability “if the reference was given in good faith (i.e. complete and accurate to the extent of the individual’s knowledge),” corporate legal departments have been very slow to react to this changed landscape.   The result? Bad hiring decisions, enormous annual turnover (30%) and billions of dollars in costs.

Given the pace of change in most legal departments, the prospects for getting fuller disclosure appear dim.  But there’s one bright spot - HR people (according to SHRM) are much more forthcoming if a candidate executes a waiver of liability. My organization, SkillSurvey, has been able to get a high volume of excellent information by giving reference providers a confidential and anonymous method of reporting on candidates’ competencies, past behavior and job qualifications via web-based surveys – that includes just such a candidate waiver.

There are other innovative methods available to secure the information we need to hire top performers and avoid getting stuck with losers.  While waiting for the legal glaciers to move, why not use them?

Comments

[Jack Gordon]

About time! As an HR professional, I've never understood why for all these years we haven't figured out a better way to get references. The potential for getting useful information is so high, but we've succumbed to the fear of litigation over the years without looking for a better way. I work with HR generalists who have talked about their frustration in doing reference checking - going through the motions, not expecting anything meaningful to come out (and it doesn't). I've also seen a number of high-profile senior hires over the years who were clearly not a good fit from Day 1. I cannot imagine that if we had gone to enough of their colleagues, bosses, and/or subordinates and asked them to share feedback anonymously -- based on our firm's key success factors -- that we would not have uncovered major red flags before it was too late.

This sounds extremely promising, definitely the direction we should be moving toward, though I do have a question -- can you share statistics on ratings differentiation based on the surveys that have been done to date?