Recruitment Risk Index: Australian Industry Perspective

Learn about the risks faced by Australian recruiters today

Xref, the cloud-based candidate referencing platform, was launched in 2011 by experienced HR and recruitment professionals. It was developed to address a key industry issue: the inefficiency, inconsistency and vulnerability of the traditional phone-based reference checking process. With hundreds of reference checks passing through the platform every day, Xref is confident the solution it offers clients helps to tackle reference checking pain points and helps clients understand their industry, market, their talent pool, and the solutions available to them. 

Reference checking is, like many HR processes, an essential and often daily task for HR professionals. However, it is also largely disliked by the industry. Done well, it can provide insightful, measurable and reportable information on a candidate, and help organisations make data-driven hiring decisions, manage and retain talent more successfully and act as a benchmark for future recruitment drives. Poor referencing wastes time and resources, leads to unsuitable hires, puts organisations at risk of hiring fraudulent individuals, and breaches data and discrimination 

We commissioned research, to examine the HR industry’s attitude towards the hiring process – with a focus on reference checking - surveying more than 100 Australian HR managers and recruiters who undertake reference checking as part of their role. 

The Research was able to narrow down the findings to three key points:

  • There is widespread inefficiency and an under-utilisation of good reference checking - Considering most candidates apply for multiple roles at one time, it’s critical that organisations are implementing the most efficient processes to on-board the best talent, quickly. This research found that 41 per cent of respondents had reported losing candidates due to delays specifically during the reference checking period. 
  • This is causing process fatigue and frustration for all involved - Beyond the time taken to come to a decision, HR managers and recruiters also revealed their discontent with the way candidates approach the referencing task, with 81 percent saying they expect candidates to have referees ready prior to their application for a job. Only 33 percent of respondents said candidates always do this. 
  • The apparent risk of the traditional process currently outweighs perceived value - The Xref Recruitment Risk Index told us that, as well as the threat of fraudulent candidates slipping through the net, poor referencing practices were also putting Australian organisations at risk of breaching data privacy and candidate discrimination legislations. The research showed that 29 per cent of referees had been asked discriminatory questions about a candidate, and this new research goes even further to demonstrate the risk posed by the inherently human nature of traditional reference checking methods. 

The report provides a wake-up call to Australian organisations, with findings such as:

  • 41% of hiring managers say they have lost candidates due to delays with reference checks
  • 77% of referees have received an inconvenient and unplanned phone call to provide a reference
  • 73% feel there are risks associated with being a referee on a phone-based reference check

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