Hiring the right person for the job may be the most critical management decision you will make. As such, it is vital that you decide exactly what you require of every position you are seeking to fill.

The cost of a wrong choice of employee is estimated to be three times their annual salary. This relates to costs of training and recruitment, consequences on productivity, client satisfaction, employee morale and turnover. A wage of $40,000 could quickly turn into a $120,000 liability.

One of the key areas overlooked in recruiting staff is reference checking. You have seen a resume – it looks good. You have interviewed the candidate – they said all the right things so let’s get them started. Wrong!

This part of the selection process is often overlooked because an employer doesn’t have the time or doesn’t want to pay a recruitment company to do the legwork for them. This could be a fatal mistake.

          Reference checks are generally used for three purposes:

• To verify information given by job applicants through other selection processes (eg. interview, resume)
  
• To serve as a basis for predicting job success of job applicants
  
• To uncover background information on applicants that may not have been identified by other selection procedures.
  
• One purpose of the reference check is to serve as a predictor of job success. A reference check used in this way assumes that past performance is a good predictor of future performance. While an application form may summarise what applicants say they did, a reference will assess how well others say that the applicants did.
  
  Four types of information are solicited through reference checks:
• Employment and education background data
• Appraisal of an applicant’s character and personality
• Estimates of an applicant’s job performance
• Willingness of the referee to rehire an applicant

         Who to contact?

• Former employers
• Personal references
• Investigative agencies
• Public records including criminal record checks
• Educational Records.

‘Former employers’ and ‘educational records’ are normally used.

Where to start?

You should get the candidate’s approval first before checking references provided, which gives the candidate an opportunity to notify their referees that they will be contacted. If you wish to pursue additional referees, you need the candidates approval to do so.

General rules.

Reference checks must be undertaken before an offer is made. A minimum of two references are done via a structured phone interview. Referees must have worked closely with the candidate and be in a position to comment about the candidates recent work performance.

Reference information sought must be job-related.