Reference Checks That Actually Work: 6 Rules Before You Hire a Senior Executive

In May 2012 Yahoo lost its chief executive after four months on the job. Scott Thompson had arrived from PayPal with a strong track record, and both Yahoo's official biography and its SEC filings said he held degrees in accounting and computer science. The activist fund Third Point, which owned about 5.8% of the company, checked. The accounting degree from Stonehill College was real. The computer science degree was not. Thompson was gone by May 13.

Eleven years earlier, Notre Dame hired George O'Leary as head football coach and lost him five days later, when reporters found that his résumé claimed a master's degree he had not earned and college football letters he had never won.

Neither failure needed a private investigator. Both would have been caught by one hour of disciplined checking before the offer, which is exactly the hour most companies skip.

I have hired senior people for wine, real estate, hospitality and distribution businesses in Spain and the United States. The interview tells you how someone presents. The references tell you how they behave when nobody is presenting. Here are the six rules I use before a senior hire signs anything.

Why most reference checks tell you nothing

The research is not flattering. In their widely cited 1998 review of 85 years of hiring studies, Frank Schmidt and John Hunter found that reference checks had a validity of about .26 for predicting job performance, lower than even an unstructured interview (.38) and far below a structured one (.51).

That number does not prove references are useless. It proves that references done the usual way are weak. The usual way is a friendly call, to a name the candidate chose, from someone in HR who asks whether the person was "a good team player" and ticks a box.

A reference check is only as good as the questions you ask and the people you choose to ask. Fix those two things and it becomes one of the cheapest risk controls in the whole hiring process.

Rule 1: Verify the facts before you discuss the person

Start with what can be proven: degrees, job titles, dates, the size of the teams and budgets the candidate says they ran. Call the university registrar or use a verification service. Compare the dates on the résumé with public filings, press releases and the company's own announcements.

This sounds basic, and it is. That is why it is skipped. In Thompson's case the claim sat in official filings for years, and Yahoo blamed the search firm while the search firm denied it. When a credential matters to the job, verify it yourself; never assume the recruiter or the last employer did.

Rule 2: Treat the candidate's list as a starting point, not the answer

Every candidate gives you the three people who like them most. That list is useful, but only as a door. For a senior role, ask the candidate for specific relationships instead of names:

• The person they reported to in their last two roles.
• A peer who competed with them for resources.
• Two people who reported to them, including one who struggled.
• Someone outside the company who negotiated against them: a customer, supplier or partner.

A candidate who cannot produce a former boss or a former direct report is telling you something. The references a strong executive cannot find are often more informative than the ones they can.

Rule 3: Go off-list, but do it openly

The most candid information usually comes from people the candidate did not nominate. Practitioners call these backchannel references, and for senior hires they are common. They are also where companies get into trouble.

My rule is simple: tell the candidate at the start of the process that you will speak with people beyond their list, and never contact their current employer without their explicit permission. A good candidate accepts this. A candidate who objects strongly to anyone else being called deserves a second look.

There is a legal reason as well as an ethical one. In Europe, the GDPR requires that people be informed when personal data about them is collected from third parties, and in the United States many companies require written consent before checks. Being open about backchannel calls protects the candidate, protects you and, oddly enough, makes the references more honest, because nobody is whispering.

Rule 4: Ask questions that force specifics

"Would you recommend her?" produces a yes almost every time. Ask questions that cannot be answered with a compliment:

• "On a scale of one to ten, how does he compare with the best person you have seen in this role? What would make him a ten?"
• "What did she leave behind that still works today?"
• "Tell me about a decision of his you disagreed with. How did it end?"
• "What kind of boss and team does she need around her to do her best work?"
• "Would you hire him again, for the same job, tomorrow?"

Then listen to what is not said. Many companies in the United States follow a neutral reference policy and will only confirm dates and title, so a former manager speaking personally is often choosing words with care. Faint praise, a long pause before "would you hire again," or an answer about a different quality than the one you asked about is the reference telling you no without saying it.

Rule 5: Make the important calls yourself

For any role that will report to you, make at least two of the calls personally. A reference talks differently to the future boss than to a recruiter. Peers speak frankly with peers, and you will hear the hesitation that never reaches a written summary.

It also changes what you ask. You know the actual problems the new leader will face, the team they will inherit and the mistakes your company cannot afford. I wrote about this in how to hire senior executives who actually deliver: the track record you verify yourself beats any interview performance. Delegating the reference calls for a senior hire is delegating the decision.

Rule 6: Decide what would stop you before the first call

The most dangerous moment in hiring is when you have already fallen in love with a candidate. From then on every reference call becomes a search for confirmation. So write down, before you pick up the phone, what you would need to hear to walk away: a pattern of conflict with peers, numbers that do not match, a team that left after them.

Then hold the line. One lukewarm reference can be a personal grudge. Two independent people describing the same weakness is a pattern, and patterns do not improve with a bigger title. Use the same questions for every finalist, keep short written notes, and check references before the offer, not after, when the cost of saying no has already tripled.

A senior hire that fails costs far more than a salary. It costs months of drift, a damaged team and, often, the people you lose before you notice. That is why I treat it the same way I treat key person risk and why the work does not stop at signing: the first months matter just as much, as I explained in the six rules for onboarding a senior executive.

Key Takeaways

• Reference checks done the usual way are weak predictors; Schmidt and Hunter measured a validity of about .26. The method, not the idea, is the problem.
• Verify degrees, titles and dates yourself before discussing the person. Yahoo and Notre Dame both learned this in public.
• Ask the candidate for relationships, not names: a former boss, a peer, two direct reports and an outside counterpart.
• Go beyond the list, but tell the candidate you will, and never call a current employer without permission.
• Ask questions that force comparisons and examples, and treat faint praise or a long pause as information.
• Make the key calls yourself; the future boss hears what a recruiter never will.
• Write down your walk-away conditions before the first call, and check references before the offer.

Frequently Asked Questions

How many references should you check for an executive?

For a senior role, aim for five to seven conversations rather than the standard three. Include at least one former boss, one peer, two people who reported to the candidate and one outside counterpart such as a customer or supplier. Fewer than that and you are hearing one side of the story.

What questions should you ask during a reference check?

Ask questions that require comparisons and examples, not opinions. Good ones are how the candidate ranks against the best person the reference has seen in the role, a decision they disagreed with, what the candidate needs around them to succeed, and whether the reference would hire them again for the same job.

What is a backchannel reference check?

A backchannel reference is a conversation with someone who knows the candidate's work but was not on the list the candidate provided. It is common for senior hires because it tends to be more candid. Done responsibly, the candidate is told in advance that these calls will happen and the current employer is never contacted without permission.

Is it legal to contact references the candidate did not provide?

In many places it is, but the rules vary by country and state, and many employers ask for written consent before any check. In the European Union, data protection law requires that candidates be informed when information about them is gathered from third parties. Check with employment counsel and be transparent with the candidate.

Can a former employer give a bad reference?

In general a former employer may share truthful, job-related information, but many companies limit themselves to confirming dates and title to avoid legal risk. That is why personal conversations with former managers and colleagues are more valuable than a call to the HR department.

Before You Make the Offer

Take your current finalist and ask yourself one question: who have I spoken to who saw this person fail at something? If the answer is nobody, you are not ready to hire. To see how we build leadership teams across our businesses, explore the Manzanos Enterprises group.