Pre-hire due diligence: Five tips for getting the most out of references

This article was published as part of the Denver Business Journal Leadership Trust, an invitation-only network of influential business leaders, experts, executives and entrepreneurs.

I hear regularly from business owners who think checking references on candidates is a waste of time. “Why would someone provide a reference who wouldn’t call them the best employee ever?” I’d like to unpack that assumption and offer some justification for checking references and making sure you are hiring people you are proud to have represent your company. Let’s start with a few true stories:

• The CEO who made an offer before following up with references. The references revealed several character traits that were not aligned with the company’s values. Once the CEO reviewed the references, he retracted the offer.

• The entrepreneur who hired a VP of Sales, announced the appointment, then had a customer email him with information that the new VP of Sales was a registered child predator. Not something you want to hear from a customer, is it?

• The candidate who gave permission for a background check. The results revealed two felony convictions. His response: “I didn’t think they would show up since I moved out of state.”

• The VP who was so pleased with the information he learned from references about how to nurture his future team member that he was certain it significantly impacted their working relationship.

There are a multitude of success stories about the impact of information gained from pre-hire due diligence. In addition to protecting you and your company from potential liability, effective reference checking can confirm your decision to hire — or not to hire. And finally, doing some unofficial digging can prevent embarrassment. So, how can you get good information from a reference? Here are five tips.

1. Build your reference template

At my company, we use a template for standard references. The questions include personal work style, strengths, areas of development, a description of the role and the reference’s opinion on how the candidate would perform, and finally, if a role were available at their own company, would the reference hire the candidate. When a reference is resistant to offering information, we assure them that all responses are confidential and that we are asking for their personal opinion, not the opinion of their company.

2. Talk to at least two managers

There are a number of reasons why a candidate may not be able to provide manager references. But unfortunately, after years of experience, we won’t make a hire unless we can talk with two former managers. As a professional, it’s important that you maintain positive relationships with managers, so a candidate who isn’t able to offer manager references isn’t someone we want on our team. In addition, I mine my network for “unofficial” references — people who have worked with my candidate but aren’t on the supplied reference list. I’ll likely get raw honesty from them, which is useful in determining whether to hire or not hire.

3. Talk to a peer or other business partner

When I am ready to make a hire, I want to know how my future team member works with others. Are there peers who will climb into a foxhole with my new hire? I’ve found that peer references reveal character traits more readily than managers, so I focus on work style, loyalty, commitment, follow up and follow through, etc. It’s important to note that peer references are often less useful about specific job duties since they may have worked in a different department.

4. Perform a background check

This step largely depends on the industry your company is in and the nature of the role. In my opinion, anyone who is working with children, at-risk populations or financial information, or anyone who will be working inside customers’ offices or homes, requires an in-depth background check. There are a number of reasonably priced services available. Note: Do not outsource reference checking to a background service. You, the manager, need to own this particular task for it to be useful.

5. Perform a Google search for senior leaders

The volume of information available on the internet is mind-blowing. Before you hire an executive onto your team, you need to know what “the Google” knows about them. There may be unattractive or unpleasant information out there that would reflect negatively on you and your company. You’ll want to know if this future executive you’re about to hire sued his former company or has a restraining order against him. Your reputation is precious — protect it.

Final thoughts

As a busy CEO, it’s easy to neglect the details when you are feverishly trying to grow your team and keep up with customer demand. But failing to conduct pre-hire due diligence exposes you, your company and your reputation. Take the time to get to know your team, inside and out.

Read the full article here.