The New Rules of the Reference Game

By Anne Stuart

When it comes to job recommendations for upper-level finance and accounting professionals, things aren’t as simple as they used to be.

Richard Block, an adjunct professor of management accounting at Babson College in Wellesley, Mass., and a veteran finance executive, describes the traditional reference-gathering process this way: “You asked the candidate for references—usually three of them. You called those references. They usually said nice things about the person, which is what you expected. You made a checkmark on your list of things to do, and you had some sense of security that you’d done the obligatory reference check.”

Thanks to the massive accounting scandals that rocked the corporate world in recent years, that’s no longer enough.

“There’s a lot more on the line post-Sarbanes-Oxley,” says Block, referring to the stringent corporate financial-reporting requirements established by the federal Sarbanes-Oxley Act of 2002. “These days, that means that a far more robust effort should be made” in vetting any financial managers even remotely affiliated with efforts involving regulatory compliance, says Block, the ex-CFO of Avicon Group Inc. and former top finance executive for Digital Equipment Corp. and Intel Corp.

In fact, Block and other experts emphasize, both employers and individual finance and accounting professionals face growing levels of risk today. As a result, they say, both sides must exercise greater caution and due diligence than ever before.

Following is expert advice for helping hiring managers make smarter, safer hiring decisions:

Request more references. Companies should request at least five to six references, Block says, calling the higher-than-traditional tally is particularly important for executive- and management-level positions. Of course, speaking with more references takes more time, but given the potentially high costs of hiring the wrong person, it’s typically well worth the investment. Talking to more references will almost certainly provide a clearer, more comprehensive portrait of a candidate—which typically benefits both sides. In addition, by checking several references, employers can get a true picture of a candidate, including weaknesses, which are also very important factors in the hiring decision.

Go deep. Certainly, candidates should provide references who can talk knowledgeably about their accounting and management skills—but today, it’s equally critical to talk to people who can attest to important personal characteristics as well. Make sure the candidate supplies references who can speak about integrity and ethics.  People may not have explicitly focused on those areas in the past, but they are absolutely front and center today.  

In addition, Block says, be prepared for full disclosure. He recommends having any candidate for a top, or especially sensitive, finance or accounting position sign a statement allowing an outside company to conduct an extensive background check. Meanwhile, keep in mind that even the best investigators make mistakes. Block recalls that in one of his past jobs, a top official at his company underwent a background check as part of a financing agreement. “They found someone with the same name in the same state being sued for failing to pay property taxes on a vacation home,” Block says. Happily, the transgression turned out to involve a case of mistaken identity, but it remains a valuable example of the kind of problem that might surface and require explanation.

Be specific.  Liz Lynch, a finance professional who heads the Center for Networking Excellence in New York City, turns the tables on candidates, asking for background on the references they provide. “I ask why that person is relevant to them, what projects I should ask about,” she explains. Talking to a candidate’s past supervisors and co-workers about specific projects can provide a valuable reality check into whether candidates are inflating or embellishing the roles they played in those past key initiatives, she says.

When References are Reluctant

Because of concerns about lawsuits, some companies and professionals are reluctant to do more than verify a candidate’s past job title and dates of employment. But experts say that asking the right questions in the right way can prompt wary references to open up. If you come up against a reticent reference, try the following:

•       Use numbers. Identify the most important qualifications for the job, then ask the reference to rate the candidate on a scale—say, 1 to 5, or 1 to 10—in each area. Many supervisors (especially in accounting and finance) will be much more comfortable with a numerical assessment than a verbal one. And you’ll still learn a lot from how those numbers add up.

•       Seek anecdotes. Outline typical scenarios that an accounting or finance pro might face in the job in question. Then ask the reference to describe how the person performed in similar situations. People often feel safer sharing specific factual examples than talking about broader traits, strengths and weaknesses.

•      Ask the Big Question: That is, “Given the chance, would you re-hire this person?” The way the reference answers—or doesn’t answer—may provide the missing piece of the employment puzzle.

•       Say “Just between us…”: “If all else fails, ask people if they’ll talk to you off the record,” says Lynne Sarikas, director of the MBA Career Center at Northeastern University in Boston. “Encouraging people to talk off the record sometimes opens them up.”