The ROI of an online reference checking system: What to expect

The case for online reference checking

“Traditionally, reference checking has been a manual task that requires considerable time and resources.

“TA professionals spend hours reaching out to previous employers and colleagues of candidates, often playing phone tag and waiting for responses. This process is not only lengthy but also prone to biases, inconsistencies and inaccuracies, which can ultimately affect the quality of hiring and see you miss out on talent in a fast-moving landscape,” Neil explains.

“Referoo eases the burden on teams by significantly reducing the manual effort and the turnaround time, as well as ensuring consistency, compliance and protection against fraudulent references.”

The return on investment

Implementation of a system like Referoo is an investment, and like all investments, there’s an expected ROI. Here's what you can expect.

Time and cost savings, freeing up resources to deliver on strategic TA goals

Automated reference checking drastically reduces the time HR staff need to spend on each candidate. Rose points out that “what used to take hours can now be done in minutes.” This efficiency can cut down on the cost of recruiting significantly and allow HR teams to allocate their time to more strategic tasks.

“In-home care provider, KinCare, saw their reference turnaround time go from over two days to just seven hours, reducing their time to hire significantly, which is critical in a competitive healthcare environment.”

Rose adds that time savings can be multiplied by doing both reference and background checking through Referoo.

“For example, retail group Petstock saw their turnaround time go from 6–8 weeks to 3–4 days by doing police checks through Referoo.”

In addition, Rose highlights that it’s not just about reducing time-to-hire, it’s about ensuring TA professionals have the time and energy to focus on sourcing and screening top talent.

“This newfound time allows our professionals to engage in deeper candidate engagement, develop and refine recruitment strategies, and proactively build a talent pipeline for future needs. Such strategic tasks are vital as they contribute not only to immediate hiring goals but also to long-term organisational growth."

Better risk mitigation and compliance

Automated reference checking reduces the risk of hiring unsuitable candidates by providing high-quality references and thorough background checks.

“This can save the organisation from a range of potential issues, from poor performance to compliance risks,” adds Rose. “And there’s also a financial component, with Robert Half research highlighting that a bad hire can cost an organisation up to 21% of the employee's salary.”

Rose also says the importance of fraud detection cannot be underestimated in today’s landscape.

“In an increasingly digital world, identity verification and fraud detection are critical. When doing manual reference checks, this is incredibly difficult. Do you really know who is on the other end of the call?

“We’ve invested heavily in tools and features to mitigate this risk, including leading identity verification and IP matching that tells you when a candidate and a referee are completing the process from the same location.”

While Rose acknowledges that there can be valid reasons for this, flagging it allows the organisation to look closer and ensure it’s all above board.

“We’ve had clients catch references coming out of a candidate’s home, for example, indicating that they are being done by the candidate themselves or a family member or housemate. In today’s world where most people are contacted on mobile rather than the traditional desk phone, fraudulent references can be easy to miss in traditional processes.”

Improved quality of hire

By using structured and uniform questions, the technology ensures that the gathered data is objective, reducing the risk of unconscious biases or inconsistencies. This can result in better hiring decisions which, as Rose notes, “Can lead to increased employee retention and reduced turnover costs.”

He also adds that relying on notes from a phone call can result in missing a piece of the puzzle.

“Comparing Referoo reference reports enables you to identify patterns across multiple references or in the same reference. Often, referees don’t like to make negative statements about a candidate, but their choice of words can be very telling.”

Integration with your other technologies

“Integration across your HR technologies is critical for speed, efficiency, compliance, security, visibility and data integrity,” Rose says.

“Referoo’s connectivity ensures data flow effortlessly between platforms, enhancing the ability to make informed decisions, keeping information safe and significantly reducing the risk of data mishandling or human error.

“It's not just about efficiency; it's about creating a comprehensive view of the candidate journey, which is crucial for refining your hiring strategies," Rose adds.

Referoo has a host of integration partners and is constantly adding more, organically and in response to specific client needs. Rose points to the platform’s integration with Cornerstone as an example.

“When Kiwibank approached us about their reference checking, it quickly became clear that integration with Cornerstone was going to be pivotal to the organisation’s efficiency, so we made it happen.”

Fast adoption across your team

Referoo was designed for fast user adoption from the beginning, with the team recognising that ROI can only be realised when users are on board.

“When we built Referoo, we reflected on our own experiences of technology implementation as team members,” Rose recalls. “We knew it was important for the implementation to be seamless for both our client stakeholders and the end user. It needed to be simple to use and possible to learn within minutes if we were going to make sure our clients saw fast, high adoption rates to really get value from their investment.”

Rose concludes by stating that hiring the right people ultimately leads to stronger teams, better performance, and accelerated business growth.

“The ROI here is exponential, as it’s not just about savings, but also about fuelling your organisation’s future with the right people.”