How Reliable Are Employment References?
Given the fact that references have proven to be the least reliable form of assessment by a long way, according to studies by Beardwell et al, 2004 and CIPD (2007), it’s a wonder that any employer uses them. In fact, it’s even surprising that 45 percent of employers use them when you consider they have 0.13 percent reliability, meaning that they effectively predict how likely a candidate is to perform in a job just 13 percent of the time. When you compare this to the next least reliable method of assessment—unstructured interviewing (31%)—which is generally frowned upon in HR and hiring circles, you realize just how unreliable references are compared to other methods.
So, why are there such huge holes in the referencing paradigm as a means of candidate assessment?
Insufficient information and positive bias. Well, for starters, due to a combination of reference misuse by some employers and an increasingly litigious culture, employers are moving away from giving detailed references about performance, preferring to provide basic, indisputable factual information, such as salary, job title and perhaps the number of sick days, if they are feeling daring. Employers fear that a bad reference could lead to a claim against them of misrepresentation, defamation and an invasion of privacy. So, these days, most references will contain insufficient information to make any sort of reliable conclusion about performance and will be more likely to exclude negative aspects, meaning it has a positive bias.
Another reason for positive bias is that candidates are likely to pick people who have positive things to say about them as referees.
Procedurally flawed. The reference process is procedurally flawed in that the prospective employer is expected to rely on one person’s point of view, which is not subject to cross examination and to which the employee being talked about has no right of reply to. It is fundamentally unfair and enables positive and negative bias, inaccuracies, exaggerations, and misrepresentations to go completely unchecked.
Prone to attribution errors. Studies show that the context in which performance takes place is crucial in determining a person’s performance level. Star performers in one context may be terrible performers in another context. We see it all the time in sports when stars change teams or divisions. Not considering the context in which an individual performed well or badly and assuming that the person will perform to the same level on your firm’s different context is known as an attribution error. References are, in many respects, one great big attribution error as they talk, quite lazily, about performance in the old context and the company attributes this into the new context in a mistaken way.
So, personally, it’s hard to see the value and point of employment references for performance verification as they are so unreliable, and there are many much more reliable methods to use. As a final note, I do not want to confuse background checking to verify information with performance verification, because of course if you need to check factual things like criminal records, credit status, certificate earned, institutions attended, etc. This kind of background checking is absolutely necessary and completely reliable. But, even this kind of background checking is not necessarily going to be a reliable predictor of future performance.