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Reference checks vs Background checks: Key differences and why both matter in hiring

Ever wondered how to avoid hiring blunders and bring in the perfect talent?

For any business, recruitment isn’t just about finding someone with the right skills. It’s about ensuring they’re reliable, trustworthy and a great fit for your team. This is where reference checks and background checks come into their own.

While often mixed up, these checks serve different roles in hiring. Grasping their differences can be key to building a strong, ethical workforce.

Let’s explore what these checks involve, how they function, and why both are vital for making smarter hiring choices.

What are reference checks?

Reference checks are all about chatting with people who’ve worked with a candidate, like former bosses, colleagues, or even clients. The aim? To get a real feel for the candidate’s work style, skills and how they perform on the job.

Say someone claims they're an ace team player - doing a reference check can help see if that's really the case. It’s a chance to discover how they tackle challenges, communicate with the team and stick to deadlines.

Typically, you’ll reach out to the referees the candidate provides. You might ask things like:

• “How did they boost team success?”
• “What could they work on improving?”
• “Would you hire them again?”

The tricky part? Reference checks are based on opinions from chosen individuals, which can sometimes be a bit biased or overly glowing. So, it’s important to ask the right questions to get honest, useful feedback.

What are background checks?

Background checks are all about confirming the facts from a candidate’s past. Unlike reference checks, which can be a bit more subjective, these are purely factual. They delve into records to verify a person's identity, qualifications and legal history.

Employers use background checks to ensure candidates have been honest in their applications and to spot any potential red flags that might affect their role. Here are some common checks:

• Criminal record checks - To make sure the candidate doesn’t pose a safety risk.
• Employment history verification - To confirm their work experience.
• Education checks - To verify any degrees, certifications, or courses listed on their CV.
• Credit checks - Especially crucial for roles involving finance or high responsibility.
• Driving record checks - Important for roles related to transport or logistics.

Background checks are often carried out by third-party agencies skilled in this area. But remember, it’s crucial to get the candidate’s consent and adhere to local laws on data protection and privacy.

Key differences between reference checks and background checks

While both reference checks and background checks are used to evaluate a candidate's suitability, they do so in quite different ways.

• Focus - Reference checks give you a more personal insight into someone’s character and work ethic, while background checks concentrate on concrete facts like education, legal records, and work history.
• Process - Reference checks involve chatting with people who know the candidate, whereas background checks are done through databases and official documents.
• Purpose - Reference checks are all about understanding soft skills, such as teamwork and communication, while background checks ensure compliance, safety, and accuracy.
• Timing - Employers often conduct reference checks earlier in the hiring process, while background checks usually come as the final step before making an offer.

Each serves its own unique purpose, but together, they offer a complete picture of a candidate, helping you figure out if they’re a good fit.

A comparison of reference checks and background checks in the hiring process.

Why both reference checks and background checks matter

Skipping either step can be a bit of a gamble. Here's why it's absolutely crucial to use both:

Complementary insights - A reference check might reveal that the candidate is a brilliant communicator, while a background check ensures their qualifications are as solid as they claim.

Risk mitigation - Combining these tools helps you spot any red flags early on. For instance, a background check could uncover undisclosed criminal activity, while a reference check might highlight struggles with teamwork.

Cultural fit - Reference checks often provide clues about whether the candidate will mesh well with your company’s values and culture.

Legal protection - Thorough background checks can protect your business from liability if any past issues with the candidate come back to haunt you later.

So, don't cut corners; these steps are your safety net!

Challenges and best practices

Challenges in reference checks

Sometimes, candidates only list referees who will give them glowing reviews. Plus, referees might not always be available or willing to share much. To tackle this, try asking specific, open ended questions that prompt genuine responses.

Challenges in background checks

Privacy concerns can be quite a challenge. Always ensure you have written consent before carrying out a background check. It's crucial to collaborate with reputable agencies that adhere to data protection laws.

Best practices

• When doing reference checks, chat with several referees to get a well rounded perspective and ask specific questions that relate to the job role.
• For background checks, choose reputable service providers and keep candidates in the loop about what's happening.

Real world examples

Picture this: you're hiring someone purely based on a stellar CV and a charming interview. Seems perfect, right? But without any checks, you might later find out they lied about their degree or had issues at their previous job.

Take, for example, a company that discovered through a reference check that a candidate had outstanding leadership skills that weren't obvious from their CV alone. This insight was key in making the right hiring decision.

On the other hand, another organisation dodged a bullet when a background check revealed inconsistencies in a candidate's employment history, saving them from a potential hiring disaster.

These stories underscore the vital role of thorough checks, both reference and background, to steer clear of hiring blunders.

Conclusion

Hiring isn't just about filling a spot; it's about building a reliable and strong team. Reference and background checks are crucial in making sure the right people join your organisation.

Reference checks give you a peek into a candidate's behaviour and work ethic, while background checks verify facts and help reduce risks.

Enhance your hiring strategy with our expert services. Contact us today to start making better hiring decisions!

Useful resources

Gobler, E. (2024). Background Check: Definition, Types, and Examples. Investopedia.

Team, S. (2015, February 23). Reference Check. SmartRecruiters.

‌Arfa Farheen