Finding a candidate who ticks all your boxes for experience, skills, performance, and culture fit can feel next to impossible. A resume rarely gives you the full picture, and even interviews only offer a limited glimpse into a candidate’s skills and abilities. To get additional insights into top candidates, many hiring managers choose to do background checks, reference checks, or both.
While some employers use the two terms interchangeably, there are key differences to know about a background check versus a reference check. A background check confirms details about a candidate, while a reference check provides more context about their work style and performance. In this article, we’ll go over the differences between a background check and a reference check and share how both can help you hire the right people for your organization.
What is a Background Check?
A background check is a formal process used to verify a candidate’s information. Depending on a company’s needs, a background check can include:
- Identity verification: A background check may verify a candidate’s identity using biometric data.
- Criminal records: Most background checks review state and/or county records to search for criminal offenses.
- Education and employment verification: Background checks can confirm a candidate’s degree or diploma and past employment.
- Motor vehicle records: For positions that require driving, background checks may include motor vehicle records (MVR) reports, which show an applicant’s driving record, including any violations and accidents.
What’s the Advantage of a Background Check?
A background check can reveal whether a candidate has provided accurate, truthful information during the hiring process. For many employers, it’s the final step before extending a formal job offer. Research from the Society for Human Resource Management indicates that 92% of companies conduct background checks, most commonly during the pre-employment stage.
Some industries, such as healthcare and finance, may require background checks for certain positions. Even if they’re not required, background checks can provide peace of mind that you’re hiring qualified and trustworthy employees.
What is a Reference Check?
A reference check is the process of collecting information about a candidate from people who know them well. Usually, this check involves contacting the references an applicant has provided, such as their former managers or colleagues.
A reference check can offer insights into a candidate’s:
- Past job performance
- Job duties
- Skills and strengths
- Work ethic
- Character and culture fit
What’s the Advantage of a Reference Check?
Conducting a reference check can give you a better sense of how a candidate may perform in the new role. It can also give some indication about how they may fit into your organization’s culture.
A reference check might also bring up some red flags that you wouldn’t notice on a resume or during an interview. For example, you might learn that a former manager had concerns about a candidate’s reliability and time management. This information can help you make better hiring decisions.
What’s the Difference Between a Background Check and a Reference Check?
A background check is a broader process than a reference check. Sometimes, a background check will include a reference check, but not always. You can also conduct a background check without doing a reference check (and vice versa).
Knowing the differences between these two checks can help you decide what to include in your pre-employment screening process. Here are the biggest differences between a background check versus a reference check:
Purpose
A background check verifies objective facts and information about a candidate. For example, it can confirm a candidate’s previous job title and employment dates. It won’t tell you anything about how a candidate performed in the role or whether they met an employer’s expectations.
In contrast, a reference check gathers more personal information. It gives you subjective information about a candidate based on other people’s opinions of their job performance and work style.
Scope
The scope of a background check can vary widely. A basic pre-employment background check typically covers the search for criminal records. Background checks can also be more extensive, including employment and education verification, employment credit checks, and license verification.
The right pre-employment screening package for your business will depend on a few factors, like the types of positions you’re hiring, company size, and industry regulations.
In comparison, an employment reference check is more limited in scope. It only involves speaking with a candidate’s professional references.
You can decide how many references to request from applicants, though asking for two to three is common. A few references should be enough to offer the perspective you’re seeking.
Sources of Information
The information in a background check report comes from public records and databases. For example, a criminal background check typically sources data from state and county courthouses, civil records, and sex offender registries.
Reference checks, on the other hand, rely on information you get from a candidate’s professional contacts. Keep in mind that applicants usually choose references who will give them positive reviews. Even so, the insights can help to supplement the information you get from a traditional background check.
Risk Management
Both reference and background checks can help you minimize risks when hiring a new employee. With a background check, you can make sure the facts match the information a candidate has provided. Background checks can provide the data you need to make safe, compliant hiring decisions.
Reference checks can help you mitigate the risks that come with making a bad hire. These checks can offer valuable feedback about qualities that can be difficult to evaluate, such as culture fit. With this information, you can feel more confident about extending an offer to the right person.
How to Conduct a Reference Check
Before you start contacting a candidate’s references, familiarize yourself with these best practices for conducting reference checks:
- Ask for multiple references. It’s best to speak with a few references to get a balanced perspective. Ideally, you should speak with a candidate’s past managers or supervisors and other professional contacts.
- Keep detailed records. Document the responses you receive from candidates’ referrals. Use these records to compare feedback and make fair hiring decisions.
- Have a consistent policy. Similar to background checks, you should have a consistent policy for conducting reference checks. A standard background and reference check policy can minimize potential bias and help you comply with regulations.
- Partner with a third-party company. While valuable for hiring, reference checks can be incredibly time-consuming. A trusted third-party provider can provide thorough reference checks to save you time and resources.
What Are Some Good Reference Check Questions to Ask?
It’s best to ask open-ended questions, which can encourage the person to open up and provide additional details. If you’re stuck on what questions to ask, here are some ideas:
- What responsibilities did the candidate have?
- How would you describe their job performance?
- What are the candidate’s biggest strengths?
- Are there any areas where the candidate could improve?
- Do they work better independently or as part of a team?
- How well does the candidate respond to constructive feedback?
- How well do they deal with stressful situations?
- Did the candidate get along with other team members?
- How quickly did they adapt to new tools or processes?
- Would you hire the candidate again if you had the chance?
Make Fully Informed Hiring Decisions with InCheck
Background checks and reference checks both add a layer of verification to your hiring process. A background check confirms the facts, while a reference check can tell you more about how a candidate performs on the job. Together, both checks can eliminate some guesswork and give you confidence about who you’re bringing into your organization.
At InCheck, we can work with your team to create a consistent and efficient process for handling both background and reference checks. For reference checks, we can work within an existing format or help you create a customized template with questions tailored to the position type. Once we’ve collected the feedback either via phone call or email, you’ll receive a word-for-word copy of the responses to help you make the best hiring decisions.
Want to strengthen your screening policy with employment reference checks? Reach out to our team today.