Reference Checks


This piece is essentially a follow-up of an article I wrote about being careful whom you hire to do background checks.  Employers should be careful about any company from whom they buy either goods or services.

The interesting thing about how that can be done is that it’s essentially the same process we would use to go about checking references on an individual being considered for employment.  The first step, obviously, is to ask a prospective provider of goods or services to provide a list of five or six companies they currently do business with or companies they did business with during the last three to five years, along with a contact person and appropriate contact information.

On a somewhat lighter note, if the company hasn’t been in business long enough to provide the name of a client company they have done business with for three years  – because they weren’t in business three years ago – that might be something of a red flag.  That’s not to suggest that a new company doesn’t offer outstanding goods or services.  They may very well be off to a great start.  The point to keep in mind is that something like 80 percent of all new business start-ups fail within the first seven years!  So, there is something to be said for doing business with more established companies who have a little more substantial track record!

Once the list of companies has been provided, then the exercise becomes a matter of asking appropriate questions.  The best way to begin is by just being honest.  Start by saying something like, “We are thinking about using the XYZ Company to supply widgets to our organization.  They gave your company as a reference, and I was wondering if I could ask you a few questions about them?”  Assuming the answer is “yes,” ask questions like, “Did they live up to your expectations in terms of quality, delivering widgets on time, and pricing?”  The point is to ask essentially the same sorts of questions of a prospective provider of goods and services that you would ask about a job applicant.

The best part about doing some reference checking of companies you contemplate doing business with is not only can you make sure the company is reputable, but also you don’t have to comply with any of the federally mandated rules and regulations, if you use a third-party provider as outlined by the Fair Credit Reporting Act!