Okay, friends, let’s get real.
If potential new hires could claim they’d single-handedly increased revenues by 600% while making the best coffee in the office and eradicating workplace drama all at the same time… they probably would. And to be fair, perhaps some do.
The truth is that 64.2% of employees admit to having lied about their experience, skills, or references at least once. And here we all are, whistling, sitting around pretending it’s fact instead of fiction (with better formatting, obviously).
But if you’re a savvy CEO, this is the part that’s really keeping you up at night. Average costs for new hires leaped to $4700 smackaroos in 2024, and exec hires? $28k, sometimes more.
Sadly, if they don’t work out, replacing them can cost upwards of 50-400% (yes, you read that right) of their annual salary, depending on the level. Do the math, for a $60k a year employee, their exit could be $30k to $240k down the drain.
With that perspective, spending a few hours checking references suddenly doesn’t seem like such a bad idea, now does it?
Hiring the Wrong Guy/Gal is an Exact Science
Ready for a bit of role-play? Imagine interviewing a parade of folks who all claim to be “team players, results-driven, and have excellent communication skills,” which is like saying you enjoy breathing and your eyeballs work.
However, research backs up the value of reference checks in predicting job performance. Think: more insightful than education or job experience.
The real power, though, is when you pair reference checks with structured questions; suddenly, you’ve got a potent crystal ball giving you the lowdown on how folks handle deadlines, stress, and whether they’re that one culprit who microwaves fish in the office kitchen.
Sure beats relying on self-reported “communication skills,” don’t you think?
Businesses in the US lose out on about $1 trillion every year from turnover. Yep, trillion with a T, friends. That’s like the GDP of the Netherlands being tossed out the window, all because collectively, we’ve gotten really good at hiring folks who look great on paper but are about as effective as a chocolate teapot.
Revolution of Reference Checks (AKA How to Stop Hiring Human Disasters)
Want to know what the data geeks discovered when they studied this stuff out? A solid 92% of employers conduct background checks, but many also perform reference checks with the same rigor as asking their aunt if they’re a good person.
The companies that are succeeding in the hiring game have learned that checking references isn’t about asking “What are their strengths and weaknesses?” – a question so useless it makes small talk about the weather seem profound.
Instead, they’re using the secret sauce, which is specific, behavior-focused questions that dig into the nitty gritty, like:
- How do you navigate tough deadlines?”
- “Walk me through how you approach a big challenge.”
- “What environment makes you shine or unravel?”
Questions like this are the intel you need to make solid hiring decisions.
The real payoff is that this intel isn’t just helping you decide who to hire. It’s giving you cheat codes to help the new hire thrive from day one.
Imagine knowing the kind of leadership style that brings out someone’s best work, the kind of projects that light them up, or what communication style they respond to best… all before they even start. You’re not just hiring someone new; you’re setting them up for success before they’ve started.
Phone Call = Insurance Policy
You can think of reference checks like the boring insurance policy you avoid buying until it’s desperately needed. One infamous case: Charter Spectrum, which faced a judgment of $1.147 billion after missing several red flags in an employee’s background.
The legal eagles called it “negligent hiring,” and the courts basically said, “You should have known better.” Reference checks and their subsequent paper trail are vital in showing you did your due diligence and serve as protection in a court of law.
Since hiring costs can be so high, spending a few hours chasing honest references seems like a no-brainer.
Your Wake-Up Call: Questions That Matter
It’s time to think smarter. If you want to thrive, you must start treating talent acquisition as a strategic priority, not an afterthought you dump in HR’s lap.
If you want to know why you keep hiring folks who ace their interviews but can’t handle a basic spreadsheet, it’s because you’re still treating reference calls like a nice option, not necessarily intel.
Bottom Line?
Structured reference checks offer a big bang for your buck when hiring.
Though they’re not a magic bullet, they efficiently reduce risk and give you a surprisingly robust peek at future performance potential. All at a fraction of the cost of a bad hire!
Businesses that are winning in talent acquisition have figured this out and are using it to their advantage. They’re training their teams to ask better questions, using digital tools to streamline and save time, and mining reference data like the actual business gold it is.
Ready to stop hiring beautiful disasters to build a team that delivers?
If you’re ready to transform your hiring process, eliminate expensive guesswork, and convert it into a strategic advantage, reach out to StellaPop for Angie O’Grady’s Talent Acquisition Services, and let’s chat.
After all, mediocre hires are too expensive for mediocre results.
