Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / How One Bad Reference Check Cost a Company 500k
Transcript
- Lucas: There's a moment in every bad hire story where, looking back, you can point to a single question nobody asked. Luna: And it's usually something that felt too awkward to bring up in the moment. Lucas: Exactly. Today I want to walk through a case that landed on my desk a few years ago. A Series B startup — about eighty people, growing fast — hired a VP of Sales from a well-known SaaS company. The guy had a perfect resume: ten years of quota-carrying experience, three promotions, glowing LinkedIn recommendations. Lucas: The CEO told me the reference check was textbook. They called his former boss, who confirmed dates and title and said, quote, 'He's a solid performer.' That was it. Luna: That feels thin. But it's also what most companies do — they treat the reference check like a formality. Lucas: Exactly. So this VP starts, and for the first sixty days everything looks fine. He's polished in meetings, builds a pipeline, talks a big game about his previous team's performance. Then month three hits, and the numbers start to wobble. Lucas: By month five the board is asking questions. His forecast was off by forty percent, and when they dug into his previous role they discovered something: the revenue number he claimed on his resume was accurate, but he'd included deals that closed six months after he left the company. Luna: So he took credit for pipe that he had nothing to do with closing. Lucas: Correct. And the former manager, when called back, admitted he knew about that — but said he didn't want to 'badmouth' someone in a reference call. Luna: That's the problem with relying on former managers. They're terrified of litigation. So they give you the bare minimum and call it a day. Lucas: Exactly. And this company lost about seven months of salary, recruiting fees, and the opportunity cost of a stalled sales cycle. Rough estimate: half a million dollars. Luna: Half a million from one phone call that could have gone differently. Lucas: So let's break down what that call should have looked like. First, the CEO asked the wrong person. He called the candidate's direct manager. But the manager had a vested interest in the candidate's success — he wanted to preserve their relationship. Luna: You want someone who doesn't have skin in the game. Lucas: Right. The diagnostic reference — the one that actually predicts performance — comes from a peer, a subordinate, or someone who worked with the candidate cross-functionally. They're less worried about burning a bridge because they don't control the candidate's future. Luna: But even then, people still hedge. There's a fear of being sued for defamation or giving a bad reference. Lucas: That's true, but there's a structural fix. Instead of asking 'Was he a good employee?' — which invites a yes or no non-answer — you ask specific, behavior-based questions about the competencies the role requires. Lucas: For a VP of Sales, you might ask: 'In the last two years, can you give me an example of a quarter where his team missed the number, and how he responded?' That's harder to dodge. Luna: And if the reference says 'I don't recall' or 'He was fine,' that's a red flag in itself. Lucas: Huge red flag. In this case, if the CEO had asked any version of 'How did he handle a quarter where revenue fell short?' the manager would have had to either lie or reveal the truth. He chose the path of least resistance by giving a vague positive. Luna: So you're saying the problem wasn't that the reference was bad — it was that the questions were bad. Lucas: Exactly. Most companies treat the reference check as a compliance step, not a diagnostic interview. They check the box and move on. But if you treat it with the same rigor as a behavioral interview, you catch stuff like this. Luna: I want to push back a little. Even with good questions, some references will just refuse to answer. They'll say 'I can only confirm dates and titles.' Lucas: That happens, especially in larger companies with strict HR policies. But when you hit that wall, you ask for a second reference. And you make it clear upfront that you're looking for a 'peer or a direct report,' not a manager. Lucas: I also think companies should do what the best recruiters do: they call the references the candidate doesn't list. They find a mutual connection on LinkedIn and ask for an off-the-record conversation. Luna: That's a different level of effort. Most hiring managers won't do that. Lucas: No, they won't. But for senior roles — roles that can cost half a million when they go wrong — it's worth the extra thirty minutes. Luna: You mentioned a specific number earlier: the reference check should take at least twenty minutes. Why twenty? Lucas: Because a good reference call isn't three questions. It's more like ten to twelve, each one probing a different dimension. You want to understand not just what the candidate achieved, but how they achieved it. Did they build a team from scratch? Did they inherit a functioning machine? Did they take credit for work their team did? Lucas: If the call is done in under fifteen minutes, you didn't ask enough follow-ups. The average compliance reference takes seven minutes. That's a waste of everyone's time. Luna: So what's the one question you would have asked in that VP of Sales reference check that would have caught the exaggeration? Lucas: I would have asked the former manager: 'Of the revenue number he claimed credit for, what percentage was closed before his last day?' Simple, direct, and it forces the manager to either answer honestly or squirm. If he squirms, you dig deeper. Luna: And in this case, the manager would have had to say 'about half' or 'most of it was post-departure.' Lucas: Exactly. And the CEO would have had enough information to ask the candidate to clarify, or to move on to another candidate. Luna: It's almost too simple. But people don't ask because they're afraid of seeming aggressive or distrustful. Lucas: And that's the cost of politeness, right? Half a million dollars. I think the lesson here is that reference checks are only as good as the questions you prepare beforehand. If you go in without a script, you'll get pleasantries. Lucas: And by the way, this isn't just about catching lies. It's about verifying strengths. A good reference should confirm the candidate's actual superpowers, not just their LinkedIn summary. Luna: You know, speaking of the value of a good conversation — I think that's actually why listeners stick with this show. Because we get into the specifics that most business content skips over. We don't just say 'do better reference checks' — we talk about the twenty-minute rule and the peer versus manager distinction. Lucas: Yeah, and that kind of specificity takes time to research and produce. It's why we keep the show ad-free — we'd rather give you something useful than interrupt it with commercials. Luna: And if today's episode moved your thinking forward even a little, the way to keep this going is listener support. You can find us at buy me a coffee dot com slash fexingo. Lucas: It's a small way to say 'this matters to me,' and it genuinely helps us keep the episodes focused on what's useful rather than what's sponsor-friendly. So, thank you to anyone who's ever chipped in. Luna: Alright, back to the mechanics. Lucas, you mentioned pre-written questions tied to competencies. Can you give us a framework for how to build those? Lucas: Sure. Start by listing the top three to five competencies the role requires. For a VP of Sales, maybe 'hiring and building a team,' 'forecasting accuracy,' and 'cross-functional influence.' Then for each competency, write two questions that ask for specific examples. Lucas: For forecasting accuracy, you might ask: 'In the last year, how many quarters did his team hit the forecast within five percent?' And then: 'When they missed, what was his typical reaction — did he adjust the process or just push harder?' Luna: That second question is the one that reveals character. Lucas: Exactly. And you ask these questions to at least two references — one manager and one peer. If the stories contradict, you have a problem. Luna: What about references who are obviously scripted? I've called people who sound like they're reading from a prepared statement. Lucas: That's a sign they've been coached by the candidate. In that case, I pivot to questions that require unprompted detail. Like 'Tell me about a time the candidate made a mistake that affected the team.' If they can't give a real example, they're probably hiding something. Luna: So the takeaway is: treat the reference check like a forensic interview, not a courtesy call. Lucas: Exactly. And the cost of doing it right is an extra twenty minutes per candidate. The cost of doing it wrong is half a million dollars and a seven-month detour. Luna: I'd say that's a pretty good return on investment. Lucas: Yeah. And the next time someone tells you they 'did a reference check' and it took seven minutes, you know exactly what to ask. Luna: Alright, I'm going to take a hard look at my own hiring process after this one. Lucas: Good. And if you do, let us know what you find. We might do a follow-up with listener stories. Luna: I'd love to hear about a reference check that saved someone from a bad hire. Lucas: Me too. Until next time.