The Hidden Cost of Skipping Reference Checks

Today’s global hiring environment is fast-paced and organisations often feel pressure to fill vacancies as soon as possible – after all, if there’s a critical role unfilled, it puts pressure on the wider team. However, one thing can get lost when hiring and onboarding new employees – reference checks. They are typically either rushed or bypassed completely. Missing out this critical check can have far-reaching consequences, costing companies far more than time. It can lead to reputational damage, a drop in workforce morale, and even cause other employees to leave if they simply cannot get along with a new hire.

Defence against reputational risk

An organisation's reputation is one of its most valuable assets. One wrong hire, especially in a senior leadership or client-facing role, can destroy public trust, erode stakeholder confidence, and even result in legal liability. Reference checks act as a first line of defence against this. While a candidate’s CV and interview skills may be polished and impressive, they don’t always give the whole story of who someone is. By speaking with former managers or colleagues, hiring teams can discover important information about a person’s professional conduct and consistency. If a previous employer hints at concerns around inappropriate behaviour or underperformance, this could prevent a mishire, therefore protecting an organisation from reputational damage.

Protects workplace culture

Workplace culture is a pillar stone of working life – it shapes and dictates the way of working and interpersonal relationships. A healthy workplace culture isn’t only beneficial for staff, but their productivity. It’s cultivated over time and is maintained through the values of employees. Introducing someone who is disruptive, toxic, or unwilling to collaborate can swiftly unravel this delicate balance.

Colleagues who have to pick up the slack for underperforming or difficult teammates often experience a drop in morale, increased stress, and reduced job satisfaction. Worse, top-performing employees may eventually leave if they feel the culture is compromised. Reference checks can give early warning signs of such risks. If a candidate has a history of interpersonal issues, hiring managers can address this ahead of time and protect their workplace. 

Helps build a picture of how the person will fit the role

The recruitment process often allows candidates to present their best self – interview responses are well-rehearsed and skills can be overstated. Reference checks provide a valuable opportunity to build a fuller, more balanced picture of how a person operates in practice.

What are they like under pressure? How do they interact with others? Do they take feedback constructively? These are the kinds of insights that don’t appear in interviews or much of the hiring process. Speaking to former colleagues allows hiring managers to assess whether a person’s working style, personality, and strengths truly align with the demands of the role and the culture of an organisation.

Why reference checks should be conducted on internal candidates

Reference checking isn’t only relevant at the point of hiring external candidates. It can be just as important when considering current employees for new roles, especially those involving increased responsibility or influence. By conducting reference-style checks (e.g. speaking to current team members and managers), decision-makers can gain a broader understanding of an employee’s track record. This ensures promotions are based on holistic performance and potential and supports a culture of meritocracy and fairness.

Early warnings can be addressed

Critics of reference checks sometimes argue that past performance doesn’t always predict future behaviour. However, this misses the point: the purpose of a reference check is not to make or break a hiring decision on its own, it’s about gathering evidence to produce a more rounded, thoughtful judgement.

In some cases, reference checks might raise red flags that warrant deeper investigation or caution. In others, they might highlight impressive attributes, such as resilience, empathy, or initiative, that weren’t fully apparent in the interview process. Either way, it’s better to have this information before a hiring decision has been made or a contract has been sent out.

Strengthens an organisation’s future

The entire purpose of any hiring process is to bring in people who will contribute meaningfully to an organisation’s objectives. A poor hiring decision can stall organisational progress, derail projects, and demotivate entire teams. Reference checks help ensure that each new hire is the right fit for the long term. By taking the time to understand who a candidate really is, how they have worked with others, and what they might bring to the role, organisations position themselves to hire individuals who will thrive, collaborate, and drive results.

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