Small businesses often make reference checks an afterthought. A quick phone call, a few polite questions, a tick in the box — and onto the contract.
But here’s the problem: bad hires cost small teams more than big ones. And reference checks, done well, are one of your last lines of defence.
This article walks you through how to build a structured, compliant, and insightful reference checking framework — even if you don’t have an internal HR team.
Why Reference Checks Still Matter (Even in 2025)
In an age of psychometric testing, LinkedIn recommendations, and video interviews, some argue reference checks are outdated.
But here’s the truth:
- They uncover behavioural red flags that don’t show up on CVs
- They verify past responsibilities, outcomes, and cultural fit
- They give insight into how someone really performed — beyond the interview polish
Especially for small businesses, where every hire matters, reference checks are risk mitigation — plain and simple.
Step 1: Decide Who Owns the Process
Small businesses often juggle recruitment between founders, managers, or admin staff. But reference checking needs consistency and discretion.
Best practice:
- Assign it to the person who didn’t lead the interview
- Ensure they’re trained to ask the right questions and probe for depth
- Use a structured form or digital tool to ensure consistency
If you’re using a recruitment partner like Ingenious People, ask them to conduct references and provide transcripts or summaries.
Step 2: Get Candidate Consent — The Right Way
Under the Privacy Act 1988, you must get a candidate’s explicit consent before contacting referees.
Don’t just ask verbally — use a written consent form or email that confirms:
- The names and contact details of referees
- The type of information being sought
- That the information will be handled confidentially
- That referees may be asked questions about performance, conduct, and other relevant issues
Also: never contact referees not listed by the candidate unless you have permission — it’s a major trust breach and legal risk.
Step 3: Build a Consistent Reference Check Template
Use a template to ensure fairness and comparability. Here’s a basic structure to start with:
✅ General Details:
- Referee’s name, title, company
- Relationship to candidate (manager, peer, client)
- Dates of working relationship
✅ Job Performance:
- What were the candidate’s key responsibilities?
- How would you rate their performance overall?
- Can you give an example of a project or challenge they handled well?
✅ Soft Skills & Behaviour:
- How did they get along with colleagues and managers?
- What was their communication style like?
- Were there any concerns about attitude, punctuality, or professionalism?
✅ Reliability & Fit:
- Would you rehire them?
- How did they respond to feedback or pressure?
- What kind of work environment did they thrive in?
✅ Final Thoughts:
- Any advice for their future employer?
- Is there anything else we should know?
You can digitise this using platforms like Typeform, Google Forms, or reference-checking software like Referoo or Xref.
Step 4: Ask Open Questions — and Listen for What’s Not Said
Referees are often cautious — especially in Australia, where defamation risks make some managers stick to the basics.
Tips for getting more value:
- Ask situational questions: “Can you tell me about a time they faced a challenge?”
- Use follow-ups: “What do you mean by that?” or “Can you give an example?”
- Listen for pauses, hedging, or overly generic answers — they often signal red flags
- Compare answers across multiple referees for patterns
Remember: no reference is perfect — but patterns matter.
Step 5: Store Feedback Securely and Use It Objectively
Store reference notes:
- In a secure, access-controlled file (e.g. inside your HRIS or shared HR folder)
- Separated from onboarding docs or personnel files
- For no longer than necessary (generally 12–24 months)
Importantly, use the data to inform — not justify your hiring decision. If concerns come up, don’t default to “they’re out.” Instead, explore:
- Can these behaviours be coached?
- Are they dealbreakers in this role?
- Should we ask one more referee?
Use reference feedback as one input — not the only input.
Bonus: When (and Why) to Use External Support
If you’re:
- Hiring for a high-stakes role
- Wanting neutral, third-party validation
- Concerned about bias or lack of time
- Or unsure about legal compliance
…then outsourcing reference checks can make sense.
Providers like Ingenious People conduct structured, unbiased reference checks across Australia — with:
- Fast turnaround times
- Transcribed and scored reports
- Benchmarking against top candidates
- Compliance with Australian privacy laws
This is especially valuable for small businesses without in-house HR capacity.
Final Word
Reference checks aren’t just red tape — they’re insight. They help you avoid costly hiring mistakes, understand how someone actually operates in a team, and onboard with better context.
But they only work when:
- You have a clear framework
- You ask the right questions
- You treat the data with respect
For small businesses, building this structure isn’t hard — and the return on investment is huge.
Because every hire in a small team isn’t just an employee — they’re a culture-shaper, a brand ambassador, and a potential liability.
Build your reference process to reflect that.