Phone calls to faxes to emails.. what’s next for employment referencing?
Every mortgage lender, letting company, and B2C fintech is troubled by issues with access to employment data. The all-important, verified employment information has historically been siloed in inaccessible legacy platforms. While this is an issue felt across various use cases, no market understands this more than in background checking. Outsourced screening providers and HR teams alike have long lacked a common way to share employment data easily, securely, and with employee consent.
Employment referencing started with a letter, an envelope, and a rubber stamp; an important life-long document that constituted authentic proof of employment. Soon, however, employers clocked on to the risk of doctored documents and took it upon themselves to call an employee’s previous employer to verify employment information straight from the source (i.e. ex-employers). Finally, given relatively recent GDPR responsibilities, HR centralisation and efficiency gains, employers then opted for email over phone calls.
Not much has happened since then.
The problem with the CPE Model
The mass adoption of this ‘contact previous employer’ (CPE) model, every time a new employee is onboarded, has resulted in a boom in the employment referencing industry. Coupled with legislation and internal policies, a majority of the following innovation has been based firmly within the CPE box. While better than the legacy alternatives, there’s a very clear ceiling to how far innovation can go down this path.
The main problem with today’s CPE model is that it is slow, expensive, and often unresponsive. Even with modern automated platforms, employment referencing turnaround times are, at best, still in the days (if they’re returned at all). More often than not though, the CPE model returns information in a matter of weeks. The UK employment referencing industry now employs thousands of employment screening executives who chase references down from previous employers every couple of days. Despite best efforts, the CPE model is only immediately successful 1 in 2 times.
What happens when the reference isn’t returned?
To tackle the unsuccessful 50%, HR teams and screening companies often have an agreed arsenal of workarounds written into internal policies and contracts. Candidate-provided documentation and risk-based approaches are becoming commonplace after the CPE model has failed a few times for any candidate. So much so in fact that many employers have already signed off on using these methods right from the get-go in lieu of the CPE model. These are predominantly only being used for non-regulated positions that only require a standard reference. Depending on your employer’s or outsourced provider’s SLAs, policies, and requirements, anywhere between 20% and 80% of most employers’ reference requests are completed via a ‘workaround’.
What happens when the reference is returned?
Of the 50% of references returned, only 20% include subjective (qualitative) data beyond the standard (quantitative) reference. Konfir recently conducted interviews with numerous HR leaders in the UK, all of whom agreed that they “rarely provide subjective data in references” as a result of internal policies and concern around accusations of defamation. While there are of course some exceptions (after all, 20% are still providing some of this information), a majority of employers now only provide a standard reference including confirmation of employment and dates of employment.
In general, standard references without subjective information are accepted by prospective employers. Of course, there are check types that this analysis does not and cannot currently apply to – whereby legislation mandates certain regulated checks are done in a particular way or return certain information above and beyond a standard reference.
Why not employ a better alternative?
We recently wrote about how digital verifications are faster, cheaper, and more secure. At Konfir, we provide clients with a secure, consistent, and commercially-viable way for employers and screening organisations to quickly complete employment checks without the need to contact previous employers.
If your organisation struggles with the cost of employment referencing, then you’ll be able to start saving time and money immediately using Konfir.
If your organisation already employs workarounds for employment checks, then Konfir will give you a way to access the same information (and more).
If your organisation still relies exclusively on the CPE model, you probably only get back standard references. Konfir will give you a fast way to access the same information.
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