Do job references matter?

0:01NPR

0:11If you've ever agreed to give an employee or colleague a reference when they're applying for a job, you know the drill. You hop on the phone or Zoom, you answer a few questions, and this used to be quick, maybe a couple of minutes. But lately, if you agree to be a reference, odds are it's going to take a lot longer. And that's because now this kind of conversation that used to be a quick phone call, it's morphed into a written process. There are multiple essay questions you have to answer about the candidate, forms you have to fill out. You have to rank their skills using those little circles on a scale of one to 10.

0:48I mean, we all want to be helpful, right, Darian? Of course, especially for our good colleagues that we've worked with. Of course. But how did the burden switch to us? We're like a third party. Shouldn't the employer who's doing the hiring be the one who is doing the work here? This is unpaid labor. That's pretty easy for me. I just put 10 for everybody. This is The Indicator from Planet Money. I'm Darian Woods, here with reporter Sally Hersheps. Perfect 10. Thanks for having me. Today on the show, we do a check-in on reference checks. We ask why employers are increasingly asking for them in writing, and we look at what that shift tells us about how the hiring process is changing.

1:31This message comes from NPR sponsor Zendesk. Introducing the next generation of AI agents built to deliver resolutions for everyone. With an easy setup that can be completed in minutes, not months, Zendesk AI agents resolve 30 % of interactions instantly, quickly giving your customers what they need. Loved by over 10 ,000 companies, Zendesk AI makes service teams more efficient, businesses run better, and your customers happier. That's the Zendesk AI effect. Find out more at zendesk.com. References can seem so important. At least that is what I always thought until I started reporting the story, when my entire worldview of the hiring process, or more specifically of references, was shaken to its core.

2:15That started when I spoke with sources like Spencer Campbell. Now he runs a talent agency. It's his job to help people find jobs. And before that, he worked as a recruiter. I mean, listen, from a recruitment perspective, I think they're next to useless. Spencer has seen references up close for years. I was struggling to think of a single instance in my career where we uncovered something through a reference check that led to an offer not being made. That is what was so surprising to me, that Spencer says references are just kind of a three on a scale of one to ten. There may be some hiring managers who debate that, but we heard the same thing from many of the sources we spoke to for the story.

2:58Spencer says there are a myriad of ways of predicting how someone will do in a new job that are so much more useful. Job simulations, tests, and, of course, the classic interview. So why are so many employers now insisting on getting references in writing? We did a little unscientific polling of employers and heard two main reasons. The first, legal. Employers, they do not want to be sued. So say you are an employer in, could be the hospitality industry. Jason Solomon is a lawyer and director of the National Institute for Workers' Rights. And you hire a, let's say it's a hotel, and you hire someone, a maintenance person, janitor.

3:43And that person ends up assaulting one of your guests. That is bad. Jason says the hotel wants to be able to say, look, we got references. We checked this guy out. Otherwise, it could look like they were negligent, careless in the hiring process, which could end up in a pretty pricey lawsuit. So those are lawsuits that employers might worry about. And so getting something in writing could be helpful in that sense. And then if you were shooed for negligent hiring, you could say, look, we've got these references from the prior employer. They didn't say anything, et cetera. You know, these cases do go to trial every year.

4:22But on average, under 50 or so employers are held liable. And that's far less than other civil action cases against employers. That's according to a report from the Legal Action Center and National Work Rights Institute. But on the flip side, the person who provided that reference for that potentially problematic employee, they can also worry about being sued. They sometimes worry with references that if they say something at all negative, that they might be sued for defamation if the person doesn't get the job. Like when a firefighter in South Carolina who didn't get a promotion that he wanted at his new job, he found out his old employer had called him, quote, defiant.

5:03He sued and the old employer settled and had to publicly apologize. We checked with Legal Aid at Work, a nonprofit in California that helps workers, and they said these cases happen. So employers often enact policies where they won't allow their employees to provide references at all because they're so worried about being sued for defamation. They may agree to confirm dates of employment, but that is it. And these kinds of policies, they go all the way back to when we were giving references on courted landline phones. Jason thinks asking employers who are already nervous to now put their thoughts in writing is going to have a chilling effect on the process, which kind of makes it a wash.

5:47If you move to a written reference, then the employer giving the reference, I think, is just going to not put anything negative in writing or be very careful about what they put in writing. And Jason says that could be hard on job seekers. So I would worry that it means that certain employees who are looking to leave their jobs aren't able to get those references and therefore their mobility might be limited. But there was a second reason we came across in our poll that employers gave for requiring written references. Raina Nigam is the founder of Metier, a hiring platform. I mean, I actually think the reason is very simple.

6:33It's about doing things at scale. It's about speed. Translation. It is about saving money, efficiency. It takes so long to set up and conduct and document a verbal reference. And so many emails are exchanged to actually set that up. Hiring can already cost so much. You may have to pay a recruiter a commission. There's all that time involved, writing the job posting, interviewing, maybe covering relocation costs once somebody's hired. It is way cheaper to send out an email or a form. And then with a written process, you can also send it to a far larger set of people. And, you know, you can cover more references for more prospective employees.

7:20Reina says she is seeing a move to written references, but also she's seeing a change, a decline in references overall. all. She says a lot of companies are worried about the risk of those defamation lawsuits, so they have a policy. They don't provide references, and they've also stopped asking for them. My personal opinion is references are not particularly useful. They have a selection bias. If you ask me to provide a reference, I'm likely to give somebody who's an advocate. And so you are not likely to get any nuanced or very deep insight. But Raina says the final reason for the decline in references is that employers have access to so much data.

8:05When candidates are interviewing with recruiters, there are often AI bots that are transcribing, that are summarizing. There's analysis of video, of one-way video interviews. interviews. And then there are references and recommendations on LinkedIn. So there are signals everywhere. And you have a lot more data and hence a lesser reliance on references to begin with. So it sounds like, Darian, the bots are giving the references now. Things are changing. They may not give a perfect turn, I'm sorry to say. What? Who's writing that algorithm? Now, Raina says there are exceptions where reference checks can be important and even regulated.

8:50Healthcare, like a heart surgeon or someone who works with kids. And for jobs where someone is going to manage your money. I'm just going to let a bot manage my money. Robo-investors are a thing, but good luck getting a reference for them.

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9:44It was fact-checked by Sierra Juarez. Kate Concannon edits the show and The Indicator is a production of NPR.