Professional reference check processes are - generally - flawed. Why?

First, we let candidates control who we talk to...and it's rare for a candidate to volunteer someone who's not going to rave about them.

Second - and related to the first reason - is that references rarely change the outcome of our hiring decisions. When I've informally checked with my peers and colleagues at other companies, and asked, "How often, out of 100 candidates, does a reference change your decision from a Yes/Hire to a No/No-Hire?". Generally, the response was 2-5 times out of 100! Very few people I asked could think of more than 1 real example from the past year. In other words - references almost never change the outcome.

Third, almost every company in the US has a no reference policy which prohibits their employees from serving as references for past employees. (This, however, has never stopped a good recruiter from getting a reference when one is needed. Very few companies are aware of their employee's activities, and don't have a way to enforce this policy.)

So, what's my philosophy on references?

1) References should never take you from a No-hire to a Hire. If you have major concerns, why even go to references? ("You know, I have some major concerns about Jeff after our interview. Why don't we go to references, and see what his best friends say about him. If they say good things, I'll ignore my evidence and hire him anyway." Hopefully, no one's going to say or do something like that.)

2) References should be solicited by the recruiter or interviewers, and tailored to the concern areas identified in the interview process. When I teach Hiring Managers how to interview, I often remind them to ask about the peers and people that the candidate worked with when they're asking their "Tell me about a time when..." questions. Then, if it sounds like Jeff worked really closely with a Project Manager named Julie, ask Jeff if he'd be ok if we called Julie for a reference.

3) References may help the Hiring Manager more effectively manage the new hire, so it may make sense for - ready for this! - the Hiring Manager to personally check references. I always did this myself as a Hiring Manager, as I wanted to talk mano-a-mano with someone who has managed the person I'm hiring.

How do you use references? Are they tailored to the interview concerns, or are they general? Have you let background checks replace them? Do your Hiring Managers check their own?