The A to Z of reference checks

If a few phone calls to the prospective candidate's ex-boss and erstwhile team members is your organisation's style of doing reference check, it is time to think again

In 2002, Sujoy Bhatt, head of marketing in a leading consumer electronics multinational, was sacked following an investigation into embezzlement charges. To minimise media attention, the company politely showed him the door with a handsome severance package and the matter was brushed under the carpet. Later, Bhatt joined an IT company. During his stint at this IT company, its PC business began to rapidly lose market share. In no time he moved out, this time to head the India operations of a smartphone manufacturer.

To be sure, the name of the executive in the aforementioned episode has been changed. It highlights the example of a controversial executive who doesn't seem to have problems hopping from one company to the next. This also demonstrates that in India the whole process of reference checks is still a loose and informal procedure, which is full of holes. Even today, most companies ask for the contact details of a few senior hands at a prospective employee's immediate previous workplace only. Also, since traditional phone-based reference checks are often seen as a drain on the company's time and resources, this job too is outsourced to agencies that prepare a report largely outlining the candidate's work history.

Most hiring organisations underestimate the amount of information they can obtain from reference checks. Mind you, when doing reference checks you are not just looking for things that will rule out a candidate but for things that will help you make trade-offs among candidates, or will help ensure that the person you pick will not take the organisation down with him or her.

Then, reference checks can be really tricky in Asia. The problem: ex-employers speak evasively about their ex-employees at the time of reference checks. Mostly they end-up painting a positive picture. You could put it down as a culture thing, but people do not like to burn bridges by speaking ill of one another.

Fortunately, some companies have seen the dangers and are tightening up their screening processes, thanks largely to some high profile corporate scandals in recent years. Take HP, which has recently strengthened the screening of its payroll workforce with the help of First Advantage, a background screening and employment solutions provider. When hiring a mid-level executive, the company checks the person's previous work history of the last four-five years. Such checks can go back to more than a decade, especially for senior roles of directors, chief executive officers, vice presidents and so on.

Informal and exhaustive one-on-one conversation is also emerging as a key tool in background screening. This is done by speaking to co-workers or people who may have worked with the candidate in the past. Since there is no conflict of interest, the inputs are largely objective. According to the founder of a leading executive search firm, companies are even asking consultants to keep their ears open to industry grapevine. This is becoming a source of information on a candidate and his or her work ethics.

Honda, for instance, works with consultants for reference checks to see how prospective candidates fare on the 'humility' quotient in their previous organisations. Chatting with people, those of whom the candidate has worked with before, allows the company to hire someone with the right 'cultural fit'. These are just two examples of how stringent things are going to get going forward.

As we enter an era where organisations have a wide source of data to dig into - from a candidate's online behaviour to even hiring detectives to follow up on a companies credit card or movie viewing habits - it is easy to assume that many more corporations will put their best minds together and work out a blueprint to follow while hiring potential candidates.