Billy Blazes just burst out of your office. His personality, knowledge, and awareness of issues he'd face as your future salesman left you jazzed, full of enthusiasm. His record seems impeccable.

His references and former employers, listed on your application, sit on your desk. So do you actually need to call those folks?

You'd better.

According to the Society for Human Resource Management's 2005 Reference Checking Survey, 73% of survey respondents say reference checking is effective in identifying poor performers. And 96% of those surveyed conduct background or reference checks, half in-house and the rest via a professional screener (see National Association of Professional Background Screeners,

Hiring is risky. It isn't simply that your prospect could be incompetent. Far worse, imagine he or she were hired and then became a major liability to you and your company. Same goes for subcontractors (see “Check Out Those Subs”).

In Legal, Effective References: How to Give and Get Them, author/consultant Wendy Bliss writes of negligent hiring lawsuits against employers who hired people with violent backgrounds or who subsequently injured or even killed others. Her book details how employers were found guilty of negligence because they didn't adequately inquire into an employee's background.

Sound extreme? Well, cases like that drive home the point that checking references should be integral to every hire. References obtained legally and effectively can yield a gold mine of information. “Past behavior is the best predictor of future performance,” Bliss says. “The richest information about job performance and conduct can be obtained on a reference check.”

Start With a Plan Bliss and other experts recommend that you have a written reference check policy. The policy should include an employment application, a release to be signed by the applicant that absolves you and references of liability, and a standardized reference response form.

The application should require a signature and should note that providing false information is grounds for rejection or termination, Bliss says.

The consent form authorizes your company to contact professional and personal references of your choosing and to conduct other investigations to determine an applicant's suitability.

The Fair Credit Reporting Act requires employers using third-party screeners to obtain written consent from candidates, says Bruce Berg of the Berg Consulting Group, a consultant to the screening industry. But it's advisable, he says, to obtain consent even if you do your own checks.

Which questions you ask, how you ask them, and the order you ask them in should be detailed on your reference check form. Employers must be careful not to seek too much information. Bliss says questions about age, race, psychological limitations, sexual orientation, EEOC or workers' comp filings, and arrest records all scream “lawsuit.”

Experts agree, however, that in-house managers tasked with checking references often don't set their sights high enough. They assume it's not worth the effort because they'll get brushed off by HR “gatekeepers.”

But by establishing rapport, asking the right questions, listening intently, and then probing further, you'll obtain real insight from the reference about your candidate's past performance.

The first step is to get former supervisors on the phone and then follow a set line of questioning. Bliss recommends “climbing the ladder” of inquiries, asking basics (salary, titles, dates of employment), then employment history (duties, list of those familiar with the candidate's work), then suitability for employment (personality traits, work habits, job performance), and lastly, critical information (violent behavior, misconduct, eligibility for rehiring, reasons for leaving).