Should You Include a Reference Letter in Your Job Application?

Summary

WSJ Your Money Briefing
Episode Title: Should You Include a Reference Letter in Your Job Application?
Date: May 6, 2021
Host: J.R. Whalen
Guest: Krithika Varagur, “At Work” Columnist, The Wall Street Journal

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Episode Overview

This episode explores the declining role of reference letters and traditional references in job applications. As personal and technological vetting methods have evolved, Krithika Varagur shares insights from her reporting on why references matter less than they used to, what’s replacing them, and how job seekers—and recommenders—should navigate this changing landscape.

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Key Discussion Points and Insights

1. Declining Importance of Traditional References

• Fewer companies are conducting reference checks compared to previous years.
• “About 60% of companies surveyed last year by the background check company HireRight said they've performed checks on prospective hires, and that's down 10% from three years earlier.” (B, 02:00)
• Main reasons for the decline:
  • References often lack value because applicants choose recommenders likely to give only positive feedback.
  • The rise of “social proofing”—employers turn to online presence and automated tools instead.
  • “There’s a perception that there’s less of a value add.” (C, 02:17)

2. Technology and Social Media: New Vetting Tools

• Employers increasingly use social media and automated background checks to verify candidates.
• “Anything on the Internet that is associated with your name is fair game for an employer to look up.” (C, 03:09)
• Social media cleanup is now common wisdom for job seekers.

Notable HR Trends:

• Some hiring managers limit themselves to LinkedIn, seeing other social platforms as overly personal and not helpful.
• “She restricts herself to LinkedIn searches only because that’s like, very clearly a professional social media network... looking at someone’s Facebook, Twitter, Instagram is just, like, not helpful and is a little bit too personal.” (C, 03:50)
• But, applicants should still “be on the safe side.”

3. The Nuanced Value of References

• Letters and calls can provide insights about team fit and personality—if used well.
• More detailed reference questions (e.g., about specific situations) yield more useful information.
• “The more specific you get, the more information you can get about how a person might actually be like in the office.” (C, 04:48)
• Companies might also lean on interview questions and job-related assignments to gauge fit.

4. The Pandemic’s Impact

• Virtual hiring increases the need for thorough checks, especially sight-unseen.
• “The pandemic means a lot of hiring is still happening fully, virtually. So there's a much greater burden of proof on a candidate that you only see through a screen...” (C, 05:30)
• Smaller companies may do more due diligence—for them, a negative reference (not a positive one) is the real red flag.
• “I don't see a positive reference as a good thing, but I would see a negative reference as a really important red flag.” (startup CEO, paraphrased by C, 05:50)

5. The Recommender’s Risk and Organizational Policies

• Companies often restrict reference content to basic employment verification, fearing litigation.
• “They will only confirm employment and will not give qualitative references because they are worried about the kind of litigation aspect of this.” (C, 06:28)
• “We’ve seen this kind of backlash to giving substantive feedback... linking your reputation to this person, the threat of litigation or pushback.” (C, 06:41)
• Leads to a rise in "no comment" policies.

6. Variations By Industry and Company Size

• Startups and small companies still value references more because their teams are tight-knit.
• Technical and creative roles increasingly rely on assignments (coding assessments, writing/editing tests, cooking trials) as proof of ability.
• “In technical fields where you might have a coding assignment... at Apple... he didn't have any references at all, but he did do a take-home coding assignment that took about six hours.” (C, 07:22)
• These skills assessments are expanding beyond just STEM jobs.

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Notable Quotes & Memorable Moments

• Krithika Varagur:
  • “There's a perception that there's less of a value add.” (02:17)
  • “Anything on the Internet that is associated with your name is fair game for an employer to look up.” (03:09)
  • “She restricts herself to LinkedIn searches only... looking at someone’s Facebook, Twitter, Instagram is just... not helpful and is a little bit too personal.” (03:50)
  • “The more specific you get, the more information you can get about how a person might actually be like in the office.” (04:48)
  • “I don't see a positive reference as a good thing, but I would see a negative reference as a really important red flag.” (reported from startup CEO, 05:50)
  • “They will only confirm employment and will not give qualitative references because they are worried about the kind of litigation aspect of this.” (06:28)
  • “In technical fields... a coding assignment... was by far the most important criteria for getting hired.” (07:22)

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Timestamps for Key Segments

• Decline in Reference Checks: 02:00–02:55
• Rise of Social Proof and Automated Vetting: 03:06–03:40
• Pros and Cons for Social Media Screening: 03:47–04:24
• References vs. Interview and Assignment Testing: 04:39–05:20
• Pandemic Impact on Reference Needs: 05:29–06:16
• Risks for Recommenders and ‘No Comment’ Policies: 06:26–07:09
• Industry Differences in Reference Use: 07:16–08:27

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Conclusion

The role of references in job applications is shrinking due to both practical and legal realities, with technology, skills assessments, and social media filling the gap. While references can still matter in certain contexts—especially for small teams or in red-flag scenarios—for many fields, substantive job tasks and digital footprints matter more. Both jobseekers and recommenders should be aware of these trends and adapt their strategies accordingly.

Transcript

[A]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. [e-mail] Washingtonwise.

[B]

Here's your money briefing for Thursday, May 6th. I'm J.R. whalen from the Wall Street Journal. When applying for a job, there are a lot of details to get in order. Updating your resume, writing a cover letter. But what about a list of references? A letter or two from past employers used to be standard, but fewer people these days think it's necessary.

[C]

You get a sense that no one's gonna give a bad reference. Like if you got fired from a job, you probably wouldn't give that boss as a reference. So there's a perception that there's less of a value add.

[B]

Krithika Varagar writes the At Work column for the Wall Street Journal. She's been looking into the decline of references and talking to people who come down on sides of the argument. We'll talk to her about it after the break.

[A]

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[B]

When applying for a job, how important is a letter of recommendation? Not as much as it used to be according to a lot of hiring managers. So why this change in attitude and what kind of vetting is being done in its place? Krithika Varagar wrote about this in her At Work column for the WSJ and and she's here to talk about it. Krithika, thanks for taking the time to chat.

[C]

Thank you so much for having me.

[B]

So about 60% of companies surveyed last year by the background check company HireRight said they've performed checks on prospective hires and that's down 10% from three years earlier. So why are fewer hiring managers placing importance on checking applicants references?

[C]

First of all, there's a sense that they can be a little bit redundant because references are usually still people that applicants provide themselves. So you get a sense that no one's gonna give a bad reference. Like if you got fired from a job, you probably wouldn't give that boss as a reference. So there's a perception that there's less of a value add. And there's a lot of other kinds of social proofing now too, like social media and the Internet. So in terms of corroborating things from your resume, there are other ways to do that than calling up your supervisors. So for both of those reasons, the centrality of the personal job reference has been displaced a little bit.

[B]

You know, one argument in favor of references is that they can help a hiring manager get a fuller picture of a candidate. If that's now being done in other ways, what should job applicants watch out for?

[C]

So it's pretty standard practice now to look at an applicant's social media profile. So anyone on the job market at this point, it's common wisdom to clean up your social media, even if it's not part of the application. Anything on the Internet that is associated with your name is fair game for an employer to look up. And there are also a variety of automated background checking softwares now, so they can kind of take the phone call and so on out of the equation. So basically, with the rise of the Internet, there are a lot of other ways to check out whether applicant's resume is legit or not.

[B]

Oh, boy. Seems like whenever we talk about seeking jobs, it always comes back to watch out what you put on social media.

[C]

I think that's right. But curiously enough, some people are trying to take a step back from the kind of like, stalker aspect of social media. So one HR person I talked to said that she restricts herself to LinkedIn searches only because that's like, very clearly a professional social media network. And she has come to believe that, like, looking at someone's Facebook, Twitter, Instagram is just, like, not helpful and is a little bit too personal. So I think we're starting to see folks take a little bit of a step back from that kind of deep stock. But I think, I mean, for job applicants, it's better to be on the safe side. But it was just an interesting kind of trend I noticed when I was talking to people for this.

[B]

But isn't there more to a person's candidacy beyond just what kind of work they've done? You know, there's how well they're going to mesh with a group or fit in with a department. And so couldn't a letter from a reference or maybe even a phone call to a referrer and help make things more personal?

[C]

Yeah, it sure can. I mean, it depends on how you use a reference. If it's a really perfunctory kind of strengths and weaknesses question, I Think you can expect the call to be a little bit less informative, but, you know, one of the startup executives I talked to said she tries to ask references to recreate personal scenarios where they worked with the candidate to talk about a problem they solved. And, you know, the more specific you get, the more information you can get about how a person might actually be like in the office. And another way to do that, of course, is to just make your interview questions and not the references reflect company culture more directly.

[B]

We've talked on the show a lot about ways the pandemic has changed the process of finding a job. Is that the case for references to. Has the pandemic changed things?

[C]

If anything, it has. You know, the pandemic means a lot of hiring is still happening fully, virtually. So there's a much greater burden of proof on a candidate that you only see through a screen, who you never are going to meet in person. There are so many parts of their background that you might want to check out due to the virtual process. So if anything, the pandemic has made it more necessary, especially for smaller companies, to do due diligence. One of the startup CEOs I talked to had a good perspective on this where he said, I don't see a positive reference as a good thing, but I would see a negative reference as a really important red flag. So for him, it's more, more of like a useful boundary than like a useful new source of information about the candidate. So I thought that was a good way to think about it.

[B]

And now what about the perspective of the person making the recommendation? You're kind of sticking your neck out when you recommend someone, so there's gotta be some risk if they don't work out.

[C]

Yeah, I think that a lot of companies actually have kind of especially larger companies have policies now where they will only confirm employment and will not give qualitative references because they are worried about the kind of litigation aspect of this. So, you know, especially some of the reader feedback I got from people doing hiring and stuff, they were like, we would love to get better references, but we've seen this kind of backlash to giving substantive feedback because of what you're talking about, you know, linking your reputation to this person, the threat of litigation or pushback or, you know, just any kind of interpersonal problems. So it definitely is a factor and we are seeing a rise in kind of no comment policies in a lot of places for that reason.

[B]

Are there hiring managers in particular types of businesses that you've spoken with that value job references more than Others, I

[C]

think at smaller companies and startups, it seemed to me like people valued references more just because they're a smaller team. They're not subcontracting a lot of HR stuff, and they want to make sure every next employee is a really good addition because they're bootstrapping and so on. I would say it's less popular or important in technical fields where you might have a coding assignment or multiple coding assignments to prove that you can do the job at big tech companies. For example, at Apple, where one of the people I talked to for the story work, now, he didn't have any references at all, but he did do a take home coding assignment that took about six hours. And that was by far the most important criteria for getting hired. So, you know, in some of these STEM fields, that can be more useful than calling up someone for a qualitative reference. But the test is not restricted to stem. Of course, there's writing tests, editing tests. You know, you can really test any part of any job. You could even test a line cook on the job, for example. So the rise of kind of substantive interview assignments has also displaced references in some ways.

[B]

All right, that's WSJ at work columnist Krithika Varagar. Krithika, thanks for coming on the show.

[C]

Thank you so much for having me again.

[B]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[A]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise.