Conducting reference checks is one of those issues that business owners face frequently. More so, they face the dilemma of whether to actually check them or not.

Yet in my experience and in those of my clients, this should never, ever be an optional step. Yes, it’s time-consuming. And yes, we like to think our interview process and our intuition is so dialed in that ill-suited candidates won’t make the cut.

But as anyone who has ever done any hiring will tell you — that’s just not realistic. We’ve all had that one who’s gotten through and then we were completely blindsided when things went awry. Skipping this step of the hiring process may save you time. But a bad hire is certainly more time-consuming…and costly to boot!

Here are the DO’s and DON’Ts for conducting effective employee reference checks.

The DO’s

DO set your minimum. Decide how many references you will check for each potential new hire. A general rule of thumb is a minimum of three for hourly employees and twice that — a minimum of six — for managerial candidates. The higher the position, the more references you should verify.

DO keep detailed records. Have a system in place to track the data and information obtained from each reference check. Not doing so can undermine all of your efforts to really drill down into each candidate’s character and work history and make comparisons between the front runners. Something as simple as a spreadsheet can be a huge help to track responses as well as the contact information for each reference.

DO have candidates make the connection. When employees fill out an application, they not only list their job history but also professional references. Ideally, you don’t want to cold call references — many will be much more accommodating and willing to talk if you have the candidates provide a quick introduction and explicitly give the reference permission to speak with you.

One way to do this is to include a brief disclosure on the application such as, “At XYZ Company, we believe in checking references for new employees. To facilitate this process, please only list references for whom you have granted permission to speak with an XYZ representative about your former or current employment. By listing their contact information below, you are stating this permission has been granted.”

DO expect to get the cold shoulder. Unfortunately, some companies have adopted a “no reference check” policy. So if you call one of these companies, instead of meaningful insights about the candidate, you may receive only the offer of an employment verification letter which confirms dates of employment, position held, and salary.

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