In this lesson, you learn how to obtain good reference information that will help you conduct a more meaningful interview. You also learn what questions you can legally ask and what areas to avoid.
Of all the tasks associated with hiring new employees, checking references has historically ranked among the least favored. All too often, managers don't bother to contact former employers because they think that reference checks are an exercise in futility. Some studies by the American Management Association estimate that the references of as many as 70 percent of all new hires were never checked. Big mistake.
Here are the two best reasons I know for conscientiously checking the references of prospective employees:
Reference checks help prevent lawsuits for negligent hiring.
Reference checks help prevent costly hiring mistakes.
Workplace crime involving assault, terrorism, fraud, arson, theft, and even murder is on the rise. In fact, statistical evidence from the United States Department of Labor identifies violence in the workplace as one of the fastest-growing causes of death on the job. Moreover, studies seem to demonstrate a strong correlation between past criminal activity and job-related crime.
Most states have already adopted the legal doctrine of " negligent hiring " and "negligent retention." These legal theories maintain that an employer is liable for the harmful acts of an employee if the employer knew—or should have known—of similar incidents in the employee's background. An employer's negligence is based on the fact that, had the employer done an adequate job of evaluating and investigating the applicant, the harm would not have occurred.
Plain English
Negligent hiring . The failure to exercise a reasonable amount of care in recruiting and selecting a candidate for a job, which ultimately results in injury or damage to another.
In the past, employers were considered liable for the acts of an employee while performing the duties of the job. Today, under the tort of negligent hiring, employers are liable for the harmful acts of an employee even when those acts are beyond the scope of the job.
The legal adage remains true: The best defense is a good offense. Thoroughly checking an applicant's employment history and personal references is the best way to keep your workplace safe and avoid becoming embroiled in costly negligent hiring claims.
Caution
Regardless of how impressive a candidate may seem, always verify academic credentials and check the references provided. No exceptions.
Hiring mistakes are expensive. They take a major toll on an organization's finances and employee morale.
A few years ago, a Minnesota firm hired a chief financial officer whose resumé stated that he had graduated with honors from a prestigious Ivy League university with an advanced degree in accounting. The candidate had interviewed well and had impressed management with his prestigious background.
Management was so convinced he was the right man for the job that they immediately offered him an excellent salary and benefit package, and included some truly exceptional perks such as a liberal stock option arrangement. But in their rush to fill the position, no one bothered to verify the individual's educational credentials.
Almost two years later, a federally mandated audit revealed that the company's financial records were in a state of absolute disarray. That's when the board of directors decided to take another look at the resumé of their CFO. When they contacted the Ivy League university listed on it, they learned that the closest this individual ever got to the prestigious campus was, in all likelihood, driving down the freeway that passed nearby.
The result: embarrassed managers, an irate board of directors, a demoralized staff, the loss of a federal contract worth more than a million dollars, and an expense of $185,000 for an outside accounting firm to repair the company's financial records. And all of it could have been prevented with a five-minute phone call to the Ivy League university to verify a degree.
Will performing thorough reference checks keep you from making hiring mistakes? No. But your percentage of bad hires will decline significantly. In fact, some informal research conducted by my organization suggests that as many as 85 percent of hiring mistakes can be avoided by thorough reference checks.
Reference checks present a genuine opportunity to learn more about an applicant. Former employers are in the best position to provide useful information about a candidate's skills, abilities, prior work performance, and character.
Tip
Consider asking candidates to submit as many as ten "personal" references that may include previous employers. That way, when you contact a former employer, you can truthfully explain that the applicant provided his or her name as a "personal" reference (instead of as a former employer or business reference). This approach usually yields better information, and more of it.
Getting previous employers to level with you about an ex-employee may prove difficult. Conspiracies of silence are very real. In many organizations, disclosure agreements make it next to impossible for previous employers to speak candidly about former workers.
Plain English
Disclosure agreement . A legally binding agreement between an employer and an employee who is leaving the organization. The agreement purposely limits the information that can later be disclosed to prospective employers.
Whether or not employees leave under less than favorable circumstances, disclosure agreements are often used to limit the information that former employers can disclose. Some employers adhere to the "name, rank, and serial number" approach, providing only minimal information. It's not uncommon for such firms to restrict disclosable information to dates of employment, job title of the last position held, final salary, and a touch of murky narrative that has been carefully worded and mutually agreed upon concerning the character of the employee and the general quality of work that he or she performed.
The use of disclosure agreements is motivated by the fear of costly, and often well-publicized, defamation or invasion of privacy litigation. Ex-employees sometimes sue former employers, claiming substantial damages as a result of negative reference reports. Juries in many of these cases have been sympathetic to employees, handing down megadollar judgments against corporate defendants.
Here are some suggestions that will help you in your quest for meaningful reference information. Think about implementing them in your organization:
Always have applicants complete an application that grants permission to contact references. A resumé is not an application. Be sure that your application contains an authorization permitting you to contact any and all former employers and others who have knowledge of the applicant's work history, experience and education, and that allows them to provide information about the applicant.
Include a "hold harmless" agreement with your employment application that will prevent former employers from being sued by an applicant as a result of releasing reference information. Then send a copy of the signed agreement to each reference before contacting them. Hold harmless agreements can go a long way in lowering the guard of former employers.
Check references before interviewing those you've selected for further consideration. Having done so will not only provide a better understanding of each applicant, but it may also direct you to areas that require further exploration.
Check references yourself—don't assign the task to others. Managers will have more success talking with other managers. Also, by contacting references directly, the manager can listen intuitively to what is (and is not) being said.
Be sure to ask each reference for the names of others in the organization who may be familiar with the qualifications of the applicant. It's astonishing how much information you can obtain from those whose names weren't provided by an applicant.
Share the information received from reference checks with other members of the interview panel.
Always contact colleges and universities to verify degrees. The most common form of deception involves applicants who overstate educational accomplishments. Colleges and universities are eager to provide information about the academic achievements of former students. It's fast and easy information to obtain.
Document all information that you receive. Your documentation will be vital if you ever have to defend your actions.
Don't contact only one or two references. Make it a practice to contact all of them, without fail. And be sure to ask each reference to provide you with the names of others who have knowledge of the applicant's skills and work experience.
The quality of information that you receive from references depends upon how well you ask questions. Here are a few things to remember:
Don't ask leading questions that provide the reference with the information given by the applicant. Instead of asking, "Mr. Peterson said that you worked in his unit for 5 years. Is that correct?" ask instead, "How long did you work for Mr. Peterson?" Let the reference provide the information.
Don't ask closed-ended questions (questions that can be answered with a simple "yes" or "no"). You want to hear what the references have to say. Give them a chance to speak freely without limiting their replies.
Be sure to ask questions that verify basic facts such as dates of employment, salary, title of last position, duties, and so on.
Limit your questions to those that directly relate to an applicant's qualifications for the job (that is, the mandatory success factors—see Lesson 1, "Analyzing the Position" ).
Some questions you can't ask when talking to references. Questions regarding any of the following categories are illegal:
Age
Race
Religion
Marital status
Children or childcare arrangements
Pregnancy or family plans
Sexual orientation
Parents of the applicant
Medical status, disabilities, or impairments
Psychological or physical well-being
Residence
Membership in social organizations
Union membership
Previous use of drugs and alcohol
Arrest record
Visible characteristics
In addition to these, a prospective employer is prohibited by law from asking a reference (including former employers) anything that the employer is prohibited from asking the applicant directly (see Lesson 9, "Navigating the Legal Minefield" ).
There are three primary methods of interviewing references—by mail, by telephone, and through the use of a private search firm
Requesting references by mail (or e-mail) is decidedly the poorest method. It always results in the fewest responses. Those replies you do receive are likely to be written in an extremely guarded fashion.
Why? Written information about an ex-employee can easily be construed as demeaning and can become the basis for litigation against the former employer. Even when the intent was to provide a positive reference, certain words or phrases can imply something else. Most former employers simply avoid responding in this manner.
Use mail to send references a personal note informing them that John or Jane Doe has applied for a position with your firm and has given you their name as a personal reference. Inform the reference that you will be phoning in the next few days to talk about the qualifications of the applicant. Be sure to include a copy of the applicant's consent form and hold harmless agreement. This helps set the stage for the reference interview and knocks down barriers in advance.
The telephone is by far the most common way of obtaining references. It's fast, inexpensive, and effective.
Begin your phone conversation with a reference by referring to the letter that you sent earlier, together with the consent and waiver signed by the applicant: "John Doe gave me your name as a personal reference and asked me to phone you. Is now a good time to talk, or would you prefer that I phone later today?"
Get the details out of the way first. Start by asking questions that verify factual data. Ask for dates of employment, title of the applicant's last position with the firm, salary information, duties and responsibilities of the job, and so on.
After the preliminary information has been gathered, tell the reference a little about the job for which the applicant is being considered and the requirements of that job. Use the mandatory success factors that you developed in Lesson 1 to formulate specific probes. Consider these examples:
Can you tell me about a time when Pete had to use his problem-solving skills? (problem solving)
What did Mary do to contribute to an environment of teamwork in your organization? (team building)
Can you tell me about a time when Helen positively influenced the action of others? (leadership)
What was the most creative thing Bill did while he worked for your company? (creativity)
Many firms today specialize in checking the backgrounds of applicants for employment. Many of them have an Internet presence, and their services can be obtained electronically.
Most search firms perform in-depth interviews with previous employers, check educational credentials, and confirm dates of attendance and degrees earned at any institution of higher education. Some will even check the credit of applicants, obtain motor vehicle reports, and perform criminal background checks (if appropriate).
Typically, these services are fast and relatively inexpensive, and provide professional reports of their findings. However, in my opinion, they are a poor substitute for personal contact by a prospective employer. Be careful about delegating this important task to an unknown investigator.
And, incidentally, if you think that by using a professional search firm you somehow diminish your potential legal liability in a negligent hiring lawsuit, think again. A firm that you hire to help gather information about an applicant becomes your legal agent. You remain responsible for the completeness and accuracy of the information used to make employment decisions.
It's common practice for applicants to ask you not to contact current employers. Until they find what they're looking for, applicants often don't want it known that they're searching for another job. That's understandable.
Although it's important to honor such a wish, it's also important to protect your interests. I suggest that in these instances, you make it clear to an applicant that any offer of employment would be contingent upon a satisfactory reference from the current employer. If the current employer provides a less-than-satisfactory reference, the offer would be subject to immediate withdrawal. Be sure to include language to this effect in any job offer and letter of confirmation.
Always follow up with a call to the present employer after a conditional offer of employment is made and accepted. Don't neglect talking to the person who has the most current information about your candidate and is in the best position to discuss his or her skills and abilities.
If personal financial conduct is relevant to the job for which an applicant is being considered, consumer credit reports can be an important source of information. However, on September 30, 1997, the Fair Credit Reporting Act was amended to include strict notice requirements whenever credit reports for employment purposes are sought. Under present law, an employer must do the following:
Notify an applicant in writing before a consumer credit report is procured, stating that such a report may be obtained for employment purposes.
Obtain the applicant's written authorization to procure such a report.
Provide the applicant with a copy of the report, together with a description of the applicant's rights under the Fair Credit Reporting Act before taking adverse action based in whole or in part on the report.
Refrain from taking adverse action based in whole or in part on the report until the applicant has had sufficient time to respond to any discrepancies in the report.
An investigative consumer credit report that involves questioning friends and neighbors of the applicant may also be used to obtain important background information. A written notice must be sent to the applicant within three days of requesting the report. In addition, the applicant must be informed of his or her right to demand disclosure of the nature and scope of the investigative report and to receive a written summary of his or her rights under the law.
Caution
The use of consumer credit information in making employment decisions is legal. However, exercise extreme caution in using this information. Credit information can have a disparate impact on minority or women applicants and can provide a basis for litigation against employers. The likelihood of becoming embroiled in litigation is enhanced by the notice requirements of the law. Consult your corporate attorney before obtaining credit information and using it to qualify or disqualify an applicant.
Plain English
Disparate impact . A term used by the United States Supreme Court in a 1977 case involving the International Brotherhood of Teamsters. According to the court, disparate impact results from employment practices that appear to be neutral in their treatment of different groups, but that actually impact one group more harshly than another and cannot be justified by business necessity.
Obtaining information about an applicant's prior arrests can be problematic. Some states prohibit employers from accessing such information.
But the real concern is with the federal law. Members of minority groups have been effective in asserting that their groups are over- represented in the population with arrest records. If this fact can be demonstrated by state or local statistical evidence, chances are good that inquiries into the arrest records of an applicant of the minority group involved will violate federal law.
Most states allow prospective employers to inquire about felony convictions. However, not all states allow employers to deny employment on the basis of a felony conviction.
Exercise care if you intend to use information about an applicant's record of arrest and conviction. Remember that you are likely restricted by state or federal law in the way you can use the information. Consult your organization's legal counsel to determine the advisability of performing criminal background checks and to learn what restrictions apply to you.
If a prospective employee's duties include driving, checking motor vehicle records may be in order. But access to this type of information is often limited and difficult to obtain. And obtaining motor vehicle records in other states presents an even greater challenge since each state has its own regulations governing the release of such information.
Thorough reference checks can prevent negligent hiring lawsuits and reduce hiring mistakes by as much as 85 percent.
Ask for ten "personal" references that may include former employers.
Ask each preselected applicant to complete a formal job application that contains written permission for you to contact references and others having knowledge of previous work, and that allows others to release information to you.
Consider developing (with the help of your legal department) a hold harmless agreement that would prevent former employers from being sued by an applicant as a result of releasing reference information.
Make it a practice to phone each reference provided by the applicant before an interview.
Network references by asking each reference for the names of others who have firsthand knowledge of the applicant's work.
Make your job offer contingent on a positive reference from a present employer.
Use credit checks, criminal background inquiries, and checks of driving records only after receiving legal guidance from your corporate attorney.