Why Reference Checks Are Critical to Making the Right Hire

You’ve found a great candidate. Their resume looks strong, they interviewed well, and they seem like the right fit for your business. But here’s the risk: a bad hire can cost your business up to 30% of their first-year salary in wasted wages, training, lost productivity, and the expense of starting the hiring process all over again.

For a $60k role, that’s an $18,000 mistake — something most small businesses simply can’t afford.

That’s where reference checks come in. They’re one of the simplest ways to protect your business from costly hiring mistakes, yet many small businesses skip them because they take time, feel awkward, or assume the interview tells them enough.

The truth is, a 15-minute reference check can save you thousands of dollars and months of wasted time if it prevents the wrong hire. Here’s why reference checks should never be overlooked and the questions that actually give you useful answers.

1. Confirming Skills and Experience

Resumes don’t always tell the full story. A reference check helps confirm whether the candidate truly has the skills and experience they claim.

Questions to ask:

• What was their exact role and responsibilities in your team? 
• How would you rate their technical ability on a scale of 1–10? 
• Did they meet performance expectations in their role? 

Tip: Ask for specific examples, e.g. “Can you describe a project where they had to use [X skill]?”

2. Understanding Work Ethic and Attitude

Interviews are snapshots. References give you the bigger picture of how a candidate performs day-to-day.

Questions to ask:

• How reliable was the candidate in terms of attendance and punctuality? 
• How did they handle tight deadlines or stressful situations? 
• Did they require close supervision, or were they self-motivated? 

Tip: Listen for hesitations. If a referee avoids giving a clear answer, it can be a subtle red flag.

3. Reducing the Risk of a Bad Hire

A poor hire doesn’t just waste money, it affects morale, productivity, and customer service. According to the Department of Labour, a bad hire can cost a business up to 30% of the employee’s first-year earnings.

Questions to ask:

• Would you rehire this person if you had the opportunity? (The most telling question of all.) 
• Did you ever have any performance or conduct concerns with this employee? 
• How did they leave the business, and was it on good terms? 

Tip: Always ask for at least two references, ideally one manager and one colleague, for a balanced view.

4. Gaining Cultural Fit Insights

Skills can be trained, but cultural fit cannot. References help you assess how well a candidate is likely to fit into your team environment.

Questions to ask:

• How would you describe their communication style? 
• How did they get along with colleagues and managers? 
• What type of workplace culture do you think they thrive in? 

Tip: Pay attention to whether their “best-fit environment” sounds like your business or the complete opposite.

5. Building Confidence in Your Decision

Hiring can feel like a gamble, especially for small businesses where every team member counts. Reference checks provide peace of mind that you’ve done your due diligence before making the final call.

Questions to ask:

• What would you say are this candidate’s biggest strengths? 
• What areas could they improve on? 
• Is there anything else I should know before making an employment decision? 

Tip: Always finish with an open-ended question. That’s often where referees share the most valuable insights.

How Recruit Shop Helps

We know small business owners are already juggling a lot, and reference checks often fall to the bottom of the list. That’s why we offer professional reference checks as an add-on service.

For just $150 + GST, we’ll conduct two reference checks per candidate using our efficient online system. You’ll receive clear, reliable feedback to help you make faster, more confident hiring decisions.

Let us know if you’d like to purchase or add reference checks to your next campaign, and see how much more insight you’ll have to make the right hire with confidence.