Summary of "Do Job References Matter?" Episode from The Indicator from Planet Money

The Indicator from Planet Money, hosted by NPR, delves into the intricacies of the modern job market, unpacking complex economic and business concepts in an accessible manner. In the December 17, 2024 episode titled "Do Job References Matter?", hosts Darian Woods and Sally Herships explore the evolving landscape of job references, examining why employers are increasingly demanding written references and what this shift signifies for both employers and job seekers.

1. The Changing Nature of Job References

Darian Woods opens the discussion by highlighting the transformation in how job references are handled:

"If you've ever agreed to give an employee or a colleague a reference when they're applying for a job, you know the drill. You hop on the phone or Zoom, you answer a few questions. And this used to be quick, maybe a couple of minutes. But lately, if you agree to via reference, odds are it's going to take a lot longer."
[00:12]

Sally Herships corroborates this observation, noting the shift towards a more cumbersome, written process:

"And that's because now this kind of conversation that used to be a quick phone call, it's morphed into a written process. There are multiple essay questions you have to answer about the candidate, forms you have to fill out. You have to rank their skills using those little circles on a scale of 1 to 10."
[00:30]

This transition from verbal to written references marks a significant change in the hiring process, introducing additional layers of complexity and time commitment for those providing references.

2. The Burden on Reference Providers

The hosts discuss the implications of this shift on individuals who serve as references:

Sally Herships questions the rationale behind placing this burden on third parties:

"But how did the burden switch to us? We're like a third party. Shouldn't the employer who's doing the hiring be the one who is doing the work here? This is unpaid labor."
[00:54]

Darian Woods agrees, emphasizing the expectation placed on colleagues and friends to support job seekers:

"Of course. Especially for our good colleagues that we've worked with."
[00:51]

The hosts highlight a growing frustration among reference providers, who feel compelled to invest significant time and effort without compensation or direct benefit.

3. Assessing the Value of Written References

Sally Herships delves into the perceived importance of references and how industry perspectives are changing:

"References can seem so important. At least that is what I always thought until I started reporting this story, when my entire worldview of the hiring process, or more specifically of references, was shaken to its core."
[03:00]

Spencer Campbell, a talent agency operator and former recruiter, expresses skepticism about the effectiveness of written references:

"I think they're next to useless."
[03:27]

He further elaborates, stating that in his experience, references rarely influence hiring decisions:

"I was struggling to think of a single instance in my career where we uncovered something through a reference check that led to an offer not being made."
[03:34]

Darian Woods adds that this sentiment is echoed by multiple sources, suggesting a broader reevaluation of reference checks within the hiring process.

4. Reasons Employers Prefer Written References

The episode identifies two primary motivations driving employers to favor written references:

a. Legal Protection

Sally Herships explores the legal underpinnings influencing employers' preference for written references:

"We ask why employers are increasingly asking for them in writing. And we look at what that shift tells us about how the hiring process is changing."
[01:13]

Jason Solomon, a lawyer and director at the National Institute for Workers' Rights, explains that written references serve as a safeguard against potential lawsuits:

"If you are an employer in, say, the hospitality industry... and you hire someone who ends up causing harm, having documented references can demonstrate that due diligence was performed during hiring."
[04:08]

This legal precaution allows employers to defend their hiring decisions, potentially mitigating the risk of costly legal actions related to negligent hiring.

However, Sally Herships notes the downside for reference providers, who may fear legal repercussions for negative comments:

"They may agree to confirm dates of employment, but that is it."
[06:07]

Instances of defamation lawsuits, such as a firefighter in South Carolina who sued his former employer over a negative reference, underscore the chilling effect these fears can have on the willingness to provide honest feedback.

b. Efficiency and Scalability

The second reason centers on operational efficiency:

Raina Nigam, founder of the hiring platform Metier, attributes the shift to the need for scalable and efficient processes:

"It takes so long to set up and conduct and document a verbal reference, and so many emails are exchanged to actually set that up."
[07:30]

Darian Woods adds that written references streamline the hiring process, making it more cost-effective for employers:

"Hiring can already cost so much. You may have to pay a recruiter a commission... Once somebody's hired, it is way cheaper to send out an email or a form."
[07:51]

This shift allows employers to handle a larger volume of references with less administrative burden, fitting into broader trends of automation and digitization in recruitment.

5. Decline and Redefinition of References

Sally Herships discusses a paradox in the current landscape:

"Raina says she is seeing a move to written references, but also she's seeing a change, a decline in references overall."
[08:37]

Employers are simultaneously reducing reliance on traditional references due to legal fears and embracing alternative data sources. Raina Nigam points out the limitations of written references:

"References are not particularly useful. They have a selection bias. If you ask me to provide a reference, I'm likely to give somebody who's an advocate and so you are not likely to get any nuanced or very deep insight."
[08:57]

Moreover, the advent of technology provides employers with ample alternative information:

"When candidates are interviewing with recruiters, there are often AI bots that are transcribing, that are summarizing. There's analysis of video of one-way video interviews, and then there are references and recommendations on LinkedIn."
[09:04]

This abundance of data reduces the perceived necessity of traditional references, as employers can now access a multifaceted view of a candidate's abilities and suitability through various digital footprints.

6. Implications for Job Seekers and the Future of References

The shift towards written references and the decline in their overall use have significant implications:

Spencer Campbell warns that the move to written references may discourage honest feedback, potentially limiting job seekers' mobility:

"I would worry that it means that certain employees who are looking to leave their jobs aren't able to get those references, and therefore their mobility might be limited."
[07:20]

Raina Nigam suggests that with the rise of alternative data sources, the traditional reference check may become obsolete:

"There are signals everywhere and you have a lot more data and hence a lesser reliance on references to begin with."
[09:34]

Darian Woods humorously contemplates the future, implying a potential overreliance on automated systems:

"So it sounds like Darian, the bots are giving the references now. Things are changing."
[09:34]

Yet, he concedes that certain regulated industries may still necessitate traditional references due to the critical nature of the roles:

"Raina says there are exceptions where reference checks can be important and even regulated healthcare like a heart surgeon or someone who works with kids."
[09:43]

7. Conclusion

The episode concludes by reflecting on the evolving dynamics of job references within the broader context of hiring practices. While written references offer legal protections and operational efficiencies for employers, they also introduce challenges for reference providers and may diminish the depth and reliability of the information obtained. Furthermore, the proliferation of alternative data sources is reshaping the necessity and role of traditional references in the hiring process.

Sally Herships encapsulates the sentiment towards the end:

"So it sounds like Darian, the bots are giving the references now. Things are changing."
[09:34]

This evolution underscores a broader shift towards automation and data-driven decision-making in recruitment, indicating that the traditional concept of job references may be on the brink of obsolescence or transformation.

Notable Quotes with Attribution and Timestamps

• Darian Woods [00:12]: "If you've ever agreed to give an employee or a colleague a reference when they're applying for a job, you know the drill. You hop on the phone or Zoom, you answer a few questions. And this used to be quick, maybe a couple of minutes. But lately, if you agree to via reference, odds are it's going to take a lot longer."

• Sally Herships [00:30]: "And that's because now this kind of conversation that used to be a quick phone call, it's morphed into a written process. There are multiple essay questions you have to answer about the candidate, forms you have to fill out. You have to rank their skills using those little circles on a scale of 1 to 10."

• Spencer Campbell [03:27]: "I think they're next to useless."

• Darian Woods [03:32]: "Spencer has seen references up close for years."

• Sally Herships [08:37]: "Raina says she is seeing a move to written references, but also she's seeing a change, a decline in references overall."

• Raina Nigam [08:57]: "My personal opinion is references are not particularly useful. They have a selection bias. If you ask me to provide a reference, I'm likely to give somebody who's an advocate and so you are not likely to get any nuanced or very deep insight."

• Darian Woods [09:40]: "Raina says there are exceptions where reference checks can be important and even regulated healthcare like a heart surgeon or someone who works with kids."

Final Thoughts

The episode "Do Job References Matter?" offers a comprehensive examination of the shifting paradigms in job referencing. By integrating perspectives from industry experts and legal professionals, Darian Woods and Sally Herships illuminate the complexities and consequences of moving from verbal to written reference checks. As the hiring landscape continues to evolve with technological advancements and legal considerations, both employers and job seekers must navigate these changes with an understanding of their implications on the employment ecosystem.