Cost Per Hire, also known as CPH, is essentially the cost that a company incurs every time it fills up an open job position. CPH is calculated by including various costs such as advertising expenses, cost of the recruiting event, salaries of the HR personnel, fees paid towards recruitment software, relocation allowance, and more.

A study conducted by the Society of Human Resource Management (SHRM) indicates the average cost per hire of a new employee is $4129 taking 42 days to fill the position. This is a staggering number, especially when an organization needs to close multiple job openings. 

Considering the exceptionally high cost per hire, it doesn’t come as a surprise that organizations try every trick in the book to mitigate the expense of hiring. To this end, recruitment reference checks have proven to be one of the most promising ways to ensure that a prospective employee is an ideal fit for the organization. 

 Reference Checks are the Perfect Recruiting Tool for Reducing Cost per Hire

A reference check is a process that is used by Human Resources and Talent Acquisition professionals to obtain additional information about a candidate by way of contacting their previous employers, colleagues, direct reports, managers, and professors. More often than not, a reference check is conducted only when a job applicant has reached the final round of hiring, and the employer wants further assurance before making the final call before extending an offer. 

Here are the four ways in which reference checks can truly mitigate the cost per hire: 

• Reference checks enable recruiters to verify whether the information provided by the applicant is true or not. In case of any discrepancies found in the accuracy of the information, the recruiter can pull the plug on the hire, thereby saving the company’s valuable time and resources.

• Reference checks help the recruiter verify if the applicant has any criminal background, and therefore empowers the recruiter to make a well-informed decision based on the organization’s tolerance policy. This timely knowledge can help avert unnecessary costs incurred towards hiring the wrong candidate, only to redo it all to find a better-suited person for the job. 

• Reference checks prove to be ideal for identifying any persistent patterns of behavior exhibited by a candidate during their stint with the past employer(s). If the candidate has been guilty of showing any behavior patterns that don’t sit well with the organization, the recruiter may rule against hiring them. 

• While the candidate may have listed a varied skillset on their resume, the only way to make sure of its accuracy is to cross-check the same with their previous employer or educator. Not only does this simple check give a clear picture to the recruiter, but also helps them predict the candidate’s success over the course of time, in their new role.

While recruitment reference checks prove to be the ideal way of cutting down on the cost per hire, there are certain other measures that also help bring down this expense. These include – asking for referrals from current employees and trusted business associates, building talent pools consisting of pre-qualified candidates, and cross-checking connections on social media sites for a more accurate overview. All of these combined can help recruiters in hiring only the most apt candidates for filling up a job position. In addition to increasing the chances of employee retention, these steps also ensure that the new employee brings in a higher value to the organization, in terms of both talent and profitability! 

Of course, you can almost always rely on Crosschq Recruit – candidate referral network for the same, and bring down your cost per hire impressively!  

Recruitment Reference Checks FAQs

• What are some of the questions I should ask the previous employer of a prospective candidate?

Here are some questions, the answers to which will help you gain a better understanding of the candidate, and the value that they can bring to the organization:

• Can you verify the candidate's employment and job title?
• Why did the candidate leave the job?
• Can you describe the candidate's job responsibilities?
• What is your relationship with the candidate?
• What were some of the most significant achievements of the candidate during their time at your organization?
• Is there anything specific that we should know before hiring the candidate? 

• Should I check the references for all final applicants? 

As a rule of thumb, you should obtain and check a minimum of 2-3 references for each candidate. In order for this to work efficiently, ensure that you ask the same questions to each reference. You must also maintain a detailed record of all the communication with each reference. 

• Should I obtain written consent from the applicant before checking their references? 

Legally, you are not bound to obtain such authorization. However, our experts at Crosschq strongly recommend that you ask for the applicant’s consent before moving forward. This will help avoid any issues in the future in case of any claims relating to defamation and invasion of privacy amongst others.

To learn more about how Crosschq can reduce your costs per hire with digital reference checks, schedule a free demo.