RUnderestimating the Value of Reference Checks Will Cost You — Big Timeeference checking is an important hiring practice. At the minimum, reference checks involve a conversation — traditionally, by phone — between a potential employer and someone who knows and hopefully has worked with the job applicant. The healthcare industry cannot afford the minimum; it must go above and beyond the norm for reference checks. Employers must perform comprehensive reference checks, and follow up on every new employee’s past performance to avoid costly hiring mistakes.

Still, reference checking alone is a good start, but it’s often labor intensive and is generally unproductive. Because healthcare organizations are continually adding jobs, there is often more need than there is talent. Pressure to fill positions quickly can create unfortunate side effects. While omitting reference checks altogether is not the solution, moving recruiters away from making phone calls for reference checks is an excellent first step in the move towards more productive hiring practices that are likely to result in high-quality healthcare hires.

Consider the following negative effects that poor hiring decisions could have on your organization:

  • Short-term costs: The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of an employee’s first-year potential earnings. In other words, a single bad hire with an annual income of $50,000 could potentially equal $15,000 loss for the employer. Bad hires can damage an organization’s effectiveness directly through dishonesty or poor performance.
  • Long-term costs: First, there are the costs of recruiting and hiring a replacement once an employee has either been terminated or has simply moved on. Additionally, there are staffing, resources, and other costs associated with fixing whatever issues the problem employee may have caused or allowed to happen. High turnover can negatively affect patient care, satisfaction, and clinical outcomes. It is estimated that it costs the average hospital $300,000 per year for every percentage point increase in nurse turnover. Reference checking can help keep the costs of turnover down by ensuring organizations recruit and retain employees who align well with organizational values and culture, and those who are more likely to stay long-term.
  • Employee Morale: There are multiple indirect costs associated with poor hiring as well.  Just because an employee is not competent to perform his or her job does not mean that the work doesn’t get done. Typically, these jobs will be completed by other employees who must perform extra work in addition to their own full-time responsibilities. If this negligence of duty is an ongoing pattern of behavior, then resentment can build within departments at any level. Ultimately, this will reduce employee motivation to adequately perform in either role. Loyal employees may become disillusioned and less committed to the organization when they perceive that a colleague or peer has been hired due to false or exaggerated claims about training, education, criminal history, or experience. As costly as it may be to remove an employee, it can be disastrous to lose competent and trustworthy employees who have been long committed to providing quality patient care and satisfaction.
  • Reputation: Reference checks are beneficial far beyond the initial hiring process. Patients must be able to trust the facility from which they will receive assessments and treatment, and culture is critical to a facility’s capability to hire the best staff. The wrong hiring decisions erode your employment brand and overall culture while possibly diminishing the quality of care provided to patients. Doing the work before you hire clinical and other patient-facing staff helps you protect your reputation in the community while creating staffing foundations to support a mission of providing great patient experiences.

Increasing the depth of reference checking through an automated reference checking solution has a number of benefits that affect the overall quality of healthcare organizations, the people they employ, and the patients they serve. Attempting to get a detailed and accurate reference from former employers or supervisors is not only time-consuming but lacks the depth required to make good hiring decisions.

Pre-hire behavioral assessments are important for helping healthcare organizations avoid costly hiring mistakes and reducing turnover. Better quality candidates mean better overall job performance — two critical factors in helping an organization reach its goals for providing high-quality patient experience.



Are you interested in learning more about automated reference checks? 

Download our white paper to learn how five leading healthcare organizations have improved their recruitment processes with automated reference checking and the benefits experienced by HR, hiring managers, and candidates alike.

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About The Editorial Staff

The Editorial Staff is a team of writers with a passion for helping healthcare organizations manage their biggest and most important investment: their employees.