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This white paper is part of a series which explores different aspects of building high performance management teams within venture capital and private equity portfolio companies. This paper deals specifically with reference checking and its use as a tool when assessing potential candidates. We set out below our view of a number of questions that clients sometimes raise about reference checking. If you plan to take references yourself then be aware of the legal duty of care you owe to the candidate. If you plan to use an executive search firm then this paper also sets out our view of best practice.
Is it best to take references from the people suggested by the candidate or use the board members’ network and talk to a greater variety of referees?
We recommend selecting around six people who have recently worked closely with the candidate as a member of his/her board or management team. This should be done following a review of the candidate’s CV and would mainly include former line managers and related board members as well as some peers and subordinates in what we call a 360 degree reference check. We recommend requesting specific named referees, for example, “the Finance Director the candidate worked with in 2005 when at IBM” from the candidate. We do not recommend accepting a person nominated by the candidate unless you have independently concluded that this person meets the above criteria. The selection should also reflect the range of recent employers the candidate has worked for. The candidate should then be asked to contact the referees in order to facilitate the process. The designated person should then conduct a structured telephone interview with each referee with a brief to probe achievement against agreed core competencies. Care should be taken to construct appropriate questions and a sub set should then be selected to pose to each referee.