Small businesses fail to check staff references

While small businesses are relying heavily on word of mouth and personal recommendations to fill vacancies, almost half are failing to check candidates’ references, according to Bank of Scotland Business Banking.

The Bank’s survey of small businesses across the UK found that while almost three-fifths (57%) rely on word of mouth and personal recommendations to fill a vacancy, almost as many (53%) would fail to check references before they hired someone. Older bosses are evidently most guilty of failing to carry out reference checks with just 46% of owner-managers aged over 55 doing so, compared to 60% of bosses aged under 35.

While word of mouth is the key method of selecting candidates to fill a vacancy, local press advertising (52%) closely follows it. One in ten (10%) small businesses use recruitment consultants or ‘head-hunters’ rising to one in five (19%) for those employing over ten people.

Passing a basic interview is invariably all that remains between a candidate and the job they apply for according to 62% of small businesses. ‘Trial periods’ are used by half (49%) of businesses.

Just over half (52%) of small business bosses who have hired someone in the past five years have ‘regrets’ over someone they’ve recruited. Whilst almost two-fifths of bosses (39%) regret hiring one or two people in every ten they recruit, an unlucky 7% of bosses regret hiring over half the people they employ.

For almost a quarter (23%) of small businesses, this regret has culminated in the firing of a recruit in the last five years. Indeed, over half (51%) of small businesses employing over ten people have had to resort to this ultimate sanction. ‘Incompetence’ is the top reason (46%) given by respondents for dismissing a new recruit followed by ‘gross misconduct’ (17%) and theft (16%).

Kevin Gillett, Head of Bank of Scotland Business Banking, said: "Word of mouth and personal recommendations appear to carry a great deal of weight in today’s tight labour market. However, with more than half of small businesses with over ten staff having had to dismiss a new recruit, largely because of that person’s incompetence, reference checks should be the last part of the hiring process left to chance."