Understanding Reference Checks vs. Background Checks

A reference check and background check are used as part of the employee screening process and are equally crucial in comprehensive hiring policies.


The two are pretty different, though, and provide employers with unique information about a potential employee. Knowing the difference between a background check and reference check processes will allow you to ensure that your pre-employment policies are thorough and that your organization’s workers are a good fit. 


It’s also essential to understand how the two complement one another, as both checks work together to give you a complete picture of a potential employee. 


What is a Reference Check?

A reference check is a way for employers to answer any questions they may have about a prospective employee’s fitness for a position by contacting professional references


The purpose of a reference check is to gather information about a prospective employee’s previous employment, educational history, anecdotal performance data, even their personality and work ethic. References are provided by the prospective employee but typically include former bosses, colleagues and professional mentors, depending on where that employee is in their career.


You may also see reference checks referred to as background check references. Essentially, a reference check will better inform a comprehensive background check as organizations verify a prospective employee’s qualifications for the position in question.


When to Run Reference Checks

Reference checks should be pursued in the early stages of the hiring process, well before any red flags arise in an employee’s application. Time is valuable, and getting too far in the process with an employee only to discover they are not a good fit, after all, is a waste of time and resources.


As far as running the checks themselves, hiring managers can perform reference checks in various ways. The traditional method is calling or emailing former employers, colleagues, and anyone else you feel would be essential to communicate with a prospective employee. 


Many organizations today enlist the help of screening services that make the process less time-consuming. Those service providers can provide employers with aggregated data from those reference checks, including red flags and any information that may benefit from follow-up.

Prospective employees interview with a hiring manager.

What is a Background Check?

A background check is a screening process that gathers data on a prospective employee using available databases. Depending on the position, that may include identity checks, credit history reports, criminal histories and employment verification.


Often a background check is used to verify information already provided to an employer as part of the application process. Sometimes, a background check may result in data that applicants did not disclose, resulting in a situation where an organization decides that an employee is not a good fit for that company.


The purpose of a background check is then to both verify and seek new information on an employee. Objectives can also vary somewhat based on the duties an employee will be expected to perform or the kind of job offered. Federal employees should expect much stricter background screenings, for example, mainly if working with sensitive information. 


When to Run Background Checks

Background checks are often run after a prospective employee is given a provisional offer, pending the results of that screening. Red flags that may come up on a background check, such as application discrepancies and criminal records not previously disclosed, may result in additional background screenings, if not a rescinded offer. Multiple background checks are not uncommon when the position offered involves security clearances or access to sensitive data.


Some background checks are also performed annually or at regular intervals identified by the organization. These ongoing background checks are more common when federal regulatory agencies are involved. 


Many organizations work with outside agencies to support them in comprehensive background checks. These experts make it their mission to verify or uncover information that would otherwise put an organization at risk for liabilities down the line. Background check companies will also be up-to-date on any changes to screening policies at both the federal and state level, ensuring that procedures are compliant and ethical under the law. 


They may even recommend additional services during onboarding processes, such as social media checks, drug screenings, and motor vehicle record screenings if job duties involve operating a vehicle. The best service providers will tailor those screenings to your needs as an organization.


Conduct a Comprehensive Screening Process

Both reference checks and background checks are part of a comprehensive screening process that better inform employee hiring decisions. Checking references allows employers to dive deeper into aspects of a background screening process or ask questions that may not be clear from traditional background checks.


A full-service company like DataCheck can help you make sure that you are not missing any steps in your employee onboarding process. We know the importance of following up on professional references and supporting companies in creating thorough screening processes that instill confidence in hiring procedures. 


We can help create a customized screening process for you that will meet your organization’s needs and help your company run safely and efficiently.