Human Capital Outlook

Reference checks & leadership hirings – The validity & predictability of outcomes

Recently, a shocking development came to my notice- that of a sad story of a highly admired, greatly respected woman whose work had been honored for over a decade, a mouth speak for her community- The Dean of MIT admissions- Marilee Jones.

Marilee recently admitted that she had fabricated her own educational credentials, and resigned after nearly three decades at M.I.T. It is learnt that she did not even have an undergraduate degree!

The great work she did will be forgotten, and easily so because of having to lie on the resume about her lack of degree. Where ever she goes, what ever she does, people are going to associate her with the lie & not the least with her accomplishments she achieved for over a quarter of a century. But that is a different story altogether.

Would she have been hired into the position had she not lied? Most definitely not. Without the degree, would they have thought she had the ability for the job- No. Her ability will be questioned, hers is now considered a "scandal" - because of believing she had to lie to get to where she was today.

This issue has a direct significance in a top management hiring for any organization. Consider the hypothetical possibility of Ms. Jones looking for a job outside of MIT. The fact that she was at an institution of such a high repute for several years would in many circumstances be taken as a hallmark of her credibility. The corollary to this is when the most interesting & critical step in a leadership hiring process takes place & is most often than not ignored.
increasingly, Indian companies in the knowledge intensive sectors, regardless of their size of business are displaying a visible trend towards pre-employment screening as a necessary hiring practice to avoid hiring undesirable candidates & thereby making costly mistakes. Companies see this as a best practice.

However, this is not true for their senior hirings including the top leadership mandates, most of them which are filled-in through search agencies.  Unfortunately, the latter part of the AIR process (Application- Interview- Referencing) has been reduced to be a highly simple affair.

Inaccurate Results
In fact, for senior level hirings, it is not uncommon for reference checks to be completed by the search agency which has a conflict of interest & thereby a hidden agenda which clouds objectivity. The hiring manager, with little subject-matter expertise, invariable uses a generic set of questions which have been simulated since bygones (!). They offer little in the form of insight into a candidate\`s actual past job-related performance.

Invariably, the reference check process has a ‘human bias’- the search agency or the hiring manager conducting reference checks "prompt" references for positive comments through the language they use.  Reference checking has become an end in its own self- if and when the wonderful candidate chosen (backed by no negative references) turns into the devil and is not productive, one can show that due diligence was done which did not reveal any such negatives !

Here’s an incident which inspired me to write this piece. A client has just hired a Chief of Operations through a search agency which has done nothing short of a shabby job as far as reference check is concerned & their representation of his reference & evaluation is nebulous to say the least. It was later found that the person in question has in one of his previous organizations tendered his resignation on a particular date & his relieving letter from that organization is also for the same date! A deep investigation revealed that the person had ‘violated a specific policy causing danger of enormous proportions to the organization’. The company for good reasons did not wish to divulge what the issue really was, just mentioned that it was a serious issue.

Most instances of leadership hirings involve candidates who are known in the industry, they’ve been around for a significant period, moving from one company to the other. Unfortunately, assumptions starts here. That the person who is well known also would be credible, he would also be well regarded, there would also not be any integrity issues etc. It is assumed that if there were, then any of the previous companies would have found out & the person would not have been in employment. And hence a simple background check with a few references provided by the candidate are spoken to or at the maximum, a search agency quotes & reports those independent referee s who had good things to talk about the person while deliberately not passing on the ones who raised a red flag.

In the example above, the client was a well reasoned, mature leader who sought timely intervention & by his own efforts prevented any damage to his organization by hiring the concerned person.

Corporate America has taken up the process of reference checks for leadership hirings to a high level of process maturity & boardrooms are even deliberating the causal relationships between inferences from the reference checking process & say content valid simulations to predict employee productivity & predictability. While the validity & relevance of such an analyses for organizations in India is debatable, it is however important that Indian organizations attempt to achieve process maturity as far as reference check as a process is concerned.- they could simply start by evaluating the accuracy of reference checks in predicting performance outcomes.

It is unfortunate to note that only a selective few organizations in the country have implemented processes for validating their reference-checking approach. Still for them, correcting the process based on the validation is a far thought!

This is not a healthy situation where hirings at the senior management ranks have on one hand become more laser-focused in terms of profiling, fitment & pursing incremental efficiency in transactions, on the other, continue to ignore effectiveness.