Australian Hirers Must Put Down the Phone and Recognise the Risk of Poor Referencing

Posted on 25 May 2017 by Lee Seymour

The HR industry has a major problem. It’s a process that’s disliked by HR professionals – and liked even less by the people they’re calling - but is critical in ensuring the appropriate and proper hiring. In its traditional form, it’s seen as a drain on time and resources and often regarded as a valueless box-ticking exercise. Some recruiters say they see little to no value in it, which is a scary thought for senior executives out there. The problem is, of course, reference checking.

In October 2016, we released the Xref Recruitment Risk Index, which provided insight into the behaviour of Australian candidates during recruitment. When the results showed that more than 70 per cent of applicants admitted to exploiting flaws in reference checking and more than 40 per cent had deliberately lied to potential employers when applying for a job, we began to wonder how our HR professionals are behaving and whether they are properly using the process to help inform hiring decisions.

Are they doing their due diligence? Is the value of well-conducted reference checking being realised? We wanted to find out more.

So, we surveyed Australian HR professionals who undertake reference checking as part of their job. The results shone a light on the magnitude of the referencing problem.

Perceived value of reference checking

The cavalier approach taken by many HR managers and recruiters is putting organisations at risk. Recruiters who see referencing as simply a frustrating and time-consuming step in the recruitment journey are hiring fraudulent candidates – given what our first survey showed about candidate honesty.

The research found that almost 40 per cent of HR managers and recruiters consider reference checking a formality that serves little purpose, and 32 per cent see it as a drain on time and resources. Given the Xref Recruitment Risk Index showed that 42 per cent of candidates had admitted to lying to employers during recruitment, this lax attitude towards the process means Australian businesses are giving fraudulent or unsuitable candidates a ‘free ride’ to employment.

While they are still conducting the process, 78 per cent of respondents told us they are not making maximum use of the referencing data gathered. And although 96 per cent agreed that negative feedback is an area of concern highlighted during the referencing process, only 57 per cent said they would be willing to take the time to request more information should they receive negative comments about a candidate.

Get your full copy of the report here.

Poor outcomes a risk for employers

But it’s not just the threat of fraudulent candidates or poor information that organisations should be concerned about. The delay that traditional phone based reference checking can cause during the recruitment journey, is threatening the level of talent they are able to bring on board.

As we know, typically the process can take up to three weeks to complete by phone, so it’s no surprise that more than half of our respondents (52 per cent) cited the time taken to get to a hiring decision or the reference checking process itself as the most frustrating elements of the hiring process.

And, with two in five (41 per cent) of those surveyed aware they had lost candidates due specifically to delays in reference checking, it’s clear this inefficiency is having a significant impact on the productivity of organisations and their future talent pipelines.

Why the phone based system is broken

So where have we been going so wrong?

Picking up the phone to background check a candidate is the accepted approach – by both the reference taker and the referee – and it has long been considered the easiest and most efficient option given the direct contact it enables. But, with this research to hand, we can now promise you it is not. It remains the most widely used approach, but it is also the least desirable for referees.

More than three quarters (77 per cent) of those surveyed had received an unplanned phone call to provide a reference, but only a tiny fraction (7 per cent) nominated this as their preferred method of contact.

Our own data shows that referees prefer to provide a reference via a convenient method, at a time that suits them. Today, 54 per cent of Xref references are completed on a mobile device or tablet and 51 per cent of respondents are completing them outside of working hours. As the person tasked with collecting references, calling a referee on the phone during business hours will not only be bad timing, you’ll be limiting the quality and quantity of information.

Perhaps due to the inconvenience and disturbance it can cause, 56 per cent of respondents told us they avoid providing references altogether, with 72 per cent claiming they believe there are risks associated with doing so – predominantly the perceived risk to an employee’s privacy.

By now I hope I’ve painted the picture for you that we have seen as we explored these survey responses. The task – as it is traditionally conducted – is not being taken seriously, it is too much of a burden on busy HR professionals, and it’s frustrating for those who are on the receiving end. From our own data, we know that Xref users are getting far more out of a reference check than a tick in a box, with added value beyond the immediate data gathered. Four in five (82 per cent) Xref users surveyed agreed that the reference checking process has added value when managing employees once they’ve been hired, aiding in retention.

The evidence we have from working with clients around the world suggests we have a solution to the industry’s biggest bugbear, but this research gives us the validation we needed and supports the findings of our earlier research campaign. We hope this acts as a wakeup call for our entire industry, to recognise that reference checking must be reconsidered and taken seriously for the future success of the Australian talent market.

To download your copy of the complete report, click here


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