How employers can fight back against fake job references

Many businesses now offer fake job reference services to people looking to fudge the truth when searching for employment. How can companies protect themselves from fake references and potentially bad hires?

Here's whats on the homepage of "The Reference Store," which bills itself as the world's leading virtual reference service: "Unemployed? Fired? Forced Out? Bad Reference? Create an entirely new work history using our fake reference service. Dont let these issues keep you from finding meaningful work. Explain away these periods using one of our Virtual Companies. Our fake companies are so real, our Virtual Companies actually get sales calls from the public."

There are plenty of businesses that offer similar services to people looking to bolster their chances of getting hired in a competitive job market. And these types of offerings have been available for some time. The question is, what can companies do to keep themselves from getting hurt because of fake references and potentially bad hires?

Clearly, many businesses still rely heavily on references when they are evaluating potential hires, and there are lots of fake references being listed. According to a study by employment services company CareerBuilder released in November 2012, about 30 percent of employers surveyed reported that they have caught a fake reference on a candidate's application.

[Related: How to spot fake job references]

The study, conducted by Harris Interactive and including 2,494 hiring managers and human resource professionals and 3,976 workers across industries and company sizes, says a healthy majority of employers (80 percent) reported that they contact references when evaluating potential employees, and 16 percent contact references even before they call the candidate for a job interview.

One obvious thing companies can do to avoid the problem of fake references is to not place so much importance in the references candidates provide when they apply for a job.

"Having set up advanced recruiting systems in [small and medium-sized business] and large multinationals, I( have always advised decision makers not to put too much stock in references," says Tom Armour, founding partner at management consulting firm High Return(Selection in Toronto.

"They are easily manipulated and 99 percent of the time [are] positive," Armour says. "Most (people don't like to give critical feedback on a reference check, and large (companies, for legal reasons, provide only basic data."

But if checking references must be part of the hiring process —and clearly for many types of jobs it's a good idea to get the opinions of references such as previous employers —experts says recruiters and human resources departments should take advantage of legitimate online resources such as LinkedIn and other business social media sites.

"LinkedIn is becoming a powerful recruitment tool," Armour says. "It can be used( for reference checking by looking for common contacts."

References can be checked out in additional ways. One is to engage a reputable background vetting service thats adept at identifying fake references, and will provide some type of guarantee of this in their statement of work, says Hank Boyer, president and CEO of Boyer Management Group, a Holland, Pa., workplace services consulting firm.

"Many of the good services have deep sources that cross-check the validity of references," says Boyer, who says he has conducted more than 10,000 hiring interviews and now advises employers on best practices in hiring.

[4 ways to catch a liar]

If a company plans to do the validating itself, there are several steps Boyer recommends. One is to personally look up the reference via LinkedIn or some other database, and confirm via the information on the person's profile that he or she worked at an organization at the same time as the candidate.

"I will often contact the employer through LinkedIn or an employer's Web site to make sure I'm speaking to the actual person," Boyer says. "When speaking to the reference, does what he or she says about the work environment in which the candidate was known match what you learned from the candidate?"

For more important positions, Boyer suggests not speaking with the references provided by the candidate, but asking the candidate's references who else the candidate worked for or with, and then contacting that person.

"Few do this, but it is too easy for a candidate to give you a reference that he or she has pre-arranged to give only positive information," Boyer says. "Secondary references are much more reliable."

Executives have had some rude awakenings because of fake references —but it has led them to take steps to address the problem. As the head of human resources at his organization, Andrew Schrage, founder and co-owner of online financial services information site Money Crashers Personal Finance in Denver, has grappled with the issue of fake references.

"I once had a very well-qualified candidate that I was planning to hire; all I had left to do was check his references," Schrage says. "I called two of them and both spoke glowingly about the candidate. However, I later came to find out that the references were fake &mdash: they were friends of the candidate."

In the meantime, though, Money Crashers had hired the person.

"A few weeks later he must have had a falling out with one of his friends," Schrage says. "That person called me, explained that he was a friend and not a professional reference, and that the person I hired had lied during the interview. I terminated the individual on the spot."

Now, at the end of interviews Schrage asks candidates to review their resume one final time for any errors, "and I specifically mention their references," he says. "Then I ask them to sign the resume. That has caused a candidate or two to ask if they can resubmit their resume to me at a later date."

Also, background checks are now an important part of Money Crashers hiring process.

"Recently, there has been an abundance of fake job reference Web sites popping up, which makes the process of spotting fake references that much more difficult," Schrage says. "So these days, I also ask the candidate to provide the names of three coworkers in addition to the reference, and I also do a generic Internet search on the name of the company to see if it's real."

Another hiring executive, Eric Lagerquist, senior consultant at Eliasen Group, an IT recruitment and staffing firm in Wakefiled, Mass., has been burned by fake references.

"In one instance, I had a consultant give me two manager references from his last assignment at a company in New Jersey," Lagerquist says. "He told me that they were both current, fulltime managers at the company. I knew something was up when the phone numbers for each reference did not have New Jersey area codes."

Lagerquist called the first number and got a glowing reference.

"I asked the manager how long the consultant had been in that office and was told five years," he says. "When I asked the manager for his title, he gave me one. When I asked him for his landline office number, he hung up. The same thing happened with the second call."

A fake reference "is far worse than a poor reference, and once I uncover the deception, I will not consider that candidate for any future openings I have," Lagerquist says. "My rationale is simple: a fake reference tells me that the candidate knows that he or she is not fit for the role and is underhanded enough to try and fake his or her way in. If a candidate will lie about a reference, what will keep him or her from lying about other things?"

In Eliasen Group's case, fake references can also hurt business.

"If a fake reference gets past us, the possibility of a bad client experience with the consultant increases, which is an outcome that staffing firms cannot allow to happen, ever," Lagerquist says.

LinkedIn has played a vital role in combating fake references, Lagerquist says this.

"As soon as I get a reference name and title, I will look it up on LinkedIn," he says. If the name, title and company all match up, he feels more secure about the validity of the reference.

"We use all of the available Internet tools to be sure that the person on the phone is really an employee of the referenced company," Lagerquist says. "On the process side, we investigate until we are confident that we have strong, valid references."

At online recruitment firm Mojo Master in Larkspur, Calif., "everyone that's been fired has had great( references coming in the door," says John Younger, (president. "So, there are some things we now do (throughout the interviewing and hiring process to mitigate this."

That includes asking for at least two references from people who managed the candidate in the past.

"Peer and subordinate level references are significantly discounted," Younger says.

Mojo Master also researches the profile of the reference, verifying that the relationship did actually exist in the form represented by the candidate. This is done via Web searches and social networks.

Finally, when the company connects with a reference, it verifies the relationship to the candidate, and asks a series of pertinent questions such as where the candidate struggled or did not succeed at projects, how the reference would suggest the candidate develop professionally and personally, and what is the optimal work environment and role for the person.

It might seem like a lot of extra work in the hiring process, but this kind of diligence might help companies avoid hiring people who jeopardize the trust factor even before walking in the door.

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