When a Salt Lake City company is conducting its due diligence prior to investing in or acquiring a company, does it take a short cut? Rarely. When the company does take the short cut in the due diligence, there are occasions where the company has lost its business as the result of missing a key metric or expense. The financial professionals understand the importance of completing their due diligence, even when it seems pointless.
When a Salt Lake City manufacturing firm is building their product, do they stop one or two steps before completion of the manufacturing process? Not without poor results. The manufacturing professionals, including production line workers, understand the need to complete the process.
When a Salt Lake City company is working through the recruitment process, do they take shortcuts in the reference check due diligence, i.e. skip them?
Of course there are all kinds of reasons (spelled “excuses”) why companies do not complete their due diligence in the hiring process.
1) “They are a waste of time.”
2) “We never get any good information from a reference check.”
3) “We don’t want to get sued.”
4) “With all of the calling back and forth, it takes too much time.”
Let’s go back to the first question – When a company is conducting its due diligence prior to investing in or acquiring a company, does it take a short cut?
When you are hiring a key player, and I submit that every employee is a potential key player, why would you take a shortcut in the final due diligence? Especially since most companies do not train their managers how to effectively interview, the entire recruitment process is fraught with danger for the company.
What is the cost of a poor hire in Salt Lake City – not just the acquisition cost? What about extra management time with a poor performer? Extra HR employee relations time? Morale of the other employees? Lost productivity? Potential lawsuits because of something the employee did or failed to do? These are all costs that hit the bottom line of the company and can be the difference between slim profits or losing money.
Well-structured reference checks can make that difference to the bottom line of the company. If they save a company one poor hire per year, they are well worth the time. Remember, executives are not the only people who can make or break a company’s name. Who is the company’s face to the public on a daily basis? A $14/hour customer service representative? A poor customer service representative has the potential to drive a bunch of clients away before their poor customer relations practices are caught – driving clients away impacts the bottom line of your company.
On the positive side, wouldn’t it be valuable to learn that this person is a top draft choice and is potentially positioned to move to the next level quickly? Having advanced heads up that the new employee could be a fast tracker could certainly impact the bottom line (spelled “bonus”) if they are identified early on.
Just as in the financial due diligence process And the interviewing process, there is the right way to conduct reference checks and the wrong way. While providing interviewing training, also provide reference check training. They are both interview situations.
If a company process is to ask the following questions as a reference check without asking behavioral questions to former managers, peers, potentially former clients, they are wasting their time:
1) When was the person employed?
2) Are they eligible for re-hire?
They can have their background investigation company ask those questions for far less than their recruiters can.
What is the history of the reference check? We have only become a very mobile society in the past forty years. Therefore in the past employees typically worked for a long time in a local company. When the person decided to make a change, their new manager usually knew their old manager, possibly even played golf or tennis with them.
Therefore a reference conversation was natural and expected. Generally the information exchanged was on target and reflected the former manager’s experience. Then one day a dumb manager decided to lie to the new manager in order to damage the person’s chance to land the job. Of course the information was passed on to the candidate – and they sued and won.
Suddenly the reference check became perceived as a liability for the organization. As a result, companies decided not to allow their managers to give references. Interestingly in an apparent conflict of consistency, they required candidates to give them several professional references to call. Companies began this very interesting reference check dance. “We want to receive references but we won’t give them.” Frustrating and a waste of valuable time. Actually this became a wonderful excuse for people that do not understand the potential damage the lack of effective references can do to a company.
What is the purpose of a reference conversation in Salt Lake City? A truly effective reference conversation is an interview of the former manager to understand where the candidate was effective while reporting to them; and where they may need some additional coaching to be successful in their new position. In order for the former manager to give pertinent information, it is important for them to receive a quick understanding of the new position and what challenges that person may face.
Since we are dealing with human beings, we need to understand the psychology of a reference check. If a recruiter calls an executive to conduct a reference check, it is natural for that person to conduct an adult (former manager) – child (recruiter) conversation. They will share the information they feel the “child” can handle. Remember that recruiters know a little about a lot of positions. They may not recognize a flag that a reference may raise because they do not have the in depth knowledge of the position that the manager has.
If the conversation is an adult (former manager) – adult (hiring manager) conversation, the reference check will be more relevant for a number of reasons. The value of this conversation is that they may build a relationship with the former manager. The hiring manager will be more direct regarding the information they seek. The previous manager will be more forthcoming with their assessments because they can probe the new manager’s needs. If they feel the new position is not one where the former employee can succeed, they are more likely to share that information with the new manager – and why they have their concern. One of personal favorites is to ask an open ended question, “What would the manager need to watch for?”
Why would they not recommend a former employee for a new position? It could be that they respect them and do not want them to work where they will not succeed. In that case, they genuinely care for their former direct report. Possibly the candidate is not qualified to work at that new level.
On the other hand, the person may not have checked with their references prior to giving out their name as a reference. I have had managers burst out laughing when I told them who used their name as a reference – not a good sign on one hand. The proper perspective could be that the reference check just worked.
Occasionally when I really connect with a reference, I recruit them for my current client in another position.
Conducting a proper reference check in Salt Lake City, even given the extra time they require, can save a company grief and money; and during the conversation may be a source of additional candidates.