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Taking the Pulse of Reference Checking: It’s Stronger Than Ever

Taking the Pulse of Reference Checking: It’s Stronger Than Ever

How vital is reference checking? More important than ever, according to new research we just conducted at SkillSurvey.

In a survey of 300 HR professionals, the majority of respondents said reference checking is considered critical for improving the quality of candidates a company hires. And nearly 70% say they reference check for every job candidate.

So why is reference checking finally making it back into the limelight? One explanation may be that turnover is costly. In a survey of more than 6,000 hiring managers and HR professionals by CareerBuilder, 41% said that a wrong hire cost them at least $25,000; another 25% said the cost was at least $50,000. And those figures don’t include the indirect – but very real – costs of damaged employee morale and reduced productivity. With stakes like these, it is no wonder that recruiters in LinkedIn’s annual Global Recruiting Trends study said that quality of hire and retention were their top priorities for 2016.  Better reference checking is a great way to accomplish both of these goals.

Our research shows that reference checking is not only another piece of the recruiting puzzle, but has become an integral part of the hiring process that allows employers to gain more strategic insight when making hiring decisions.

Nearly a quarter of those surveyed, 24%, are using reference checking technology to check references and cited efficiency and obtaining more strategic insights as their reasons for using technology.

Reference checking now goes far beyond its old perfunctory ways. It’s helping recruiters and employers evaluate a range of criteria so that they can deliver deeper, more predictive insights about a candidate to assure a better fit with an organization’s needs.

Adding up the numbers

It is worth noting that respondents in higher-ranking positions are the most likely to do reference checks. This indicates a greater recognition of its value by top level executives, and perhaps it’s an added incentive for recruiters and hiring managers to strengthen their reference checking tools. Here’s the breakdown by position of who conducts reference checks:

  • Executives: 84%
  • HR, recruiting, staffing, talent acquisition, and talent management: 68%
  • Operations and finance: 65%

Not surprisingly, 98% of respondents ranked the interview as the most important step in the hiring process, but completing reference checks before extending a job offer was a close second at 86%. Netflix CEO Reed Hastings has his own take on it, putting reference checking at the top of his list. The respondents seem to recognize the inherent issue with the interview – and resumes, too. All the information is coming from the same naturally-biased data source: the job candidate.

In addition, 69% of survey participants ranked reference checking as the second-most-used candidate screening or assessment method. It placed second after background checking (77%) and above behavioral, skill, and personality assessments. And the smart majority (61%) use reference checks to supplement the interview process.

Adding all of the percentages up makes a convincing case for the strategic value of reference checking. According to survey participants, three of the top five reasons for reference checking are:

  • It helps us hire better employees (63%)
  • It helps us avoid bad hires (59%)
  • It helps us reduce turnover (35%)

Companies understand the value of objective and informed feedback on how candidates performed in previous positions. The majority of respondents (73%) say they are looking for more strategic insights into candidates. An almost equal number (75%) say they are struggling with ways to do this efficiently.

The bottom line is that recruiters and employers alike are beginning to see the potential reference checking can have on really understanding the whole picture of a job candidate. An interview can only tell you so much, especially given the coaching that many people receive today. However, a reference check offers another person’s perspective into someone’s true ability and potential. Given the recent research that has been conducted on reference checking, it seems that more and more recruiters and employers are beginning to think along those lines.

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Ray Bixler is the CEO of SkillSurvey a reference checking technology firm that harnesses the power of references to help organizations more effectively recruit, hire and retain talent. Visit here to see SkillSurvey’s infographic on the current state of reference checking.

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