With the post-pandemic economic recovery well underway, more than a few employers are finding themselves short-handed with overbearing workloads and too few employees to handle them.  Many such employers have already turned to third-party reference checking firms to aid their HR and management personnel efforts in assessing new-hire candidates.

What’s more, countless employers have learned – through legal action taken against them by former employees – that current employees often offer negative commentary about their former associates when contacted for a reference.  Most companies have a policy stating that reference inquiries will be redirected to HR who will only confirm employment dates and titles of former employees.  While this policy is for the company’s legal protection, too many employers have “loose cannons” in their organization who knowingly, or inadvertently, violate appropriate company policy on a regular basis.  Typically these parties are supervisory employees being contacted as a reference for a former subordinate.

Current research conducted by Allison & Taylor, The Reference Checking Company reveals the following needs/concerns as conveyed by corporate Human Resources personnel:

  1. Often-overworked HR departments wish to outsource the reference checking function to focus on higher company priorities.
  2. Poorly conducted/overly brief reference checks that don’t identify warning signals about potential new employees.
  3. The fact that almost 1 in 3 new hires leave any given company within 2 years, is often because HR/Management didn’t do the proper “due diligence” in their original employee hiring process.
  4. A concern is that too many managers are offering candid commentary about former employees instead of redirecting reference checking inquiries to HR for an “employment dates/title only” response.
  5. Legal action against the company resulting from a violation of severance agreements, e.g. commentary constituting employee defamation, wrongful discharge, etc.

These reasons attest to the desirability of companies using third-party reference checking firms to assist with vetting new employees.  Some of these companies even take the additional step of becoming affiliate partners of reference checking firms, which provide them with customized content for corporate newsletters/articles and a commission structure that rewards corporate partners for business brought to the reference checking firms.

Regardless of the services offered, reference checking services have come to play an ever-increasing role in helping companies ensure that their prospective new hires are fully vetted, and protecting the company from intentional or inadvertent employee commentary that could put the firm at legal risk.