A (Dirty) Little Secret About Reference Checks Part 2

May 8, 2024
6 Minutes
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In part one of this series I discussed why reference checks rarely help small-scale SaaS businesses with high-stakes executive hiring but rather how they are crucial to executive success once on the job.

It’s a (dirty) little secret that reference checks have often times become perfunctory CYA exercises — tedious for everyone involved.

Reference calls don’t need to be a duty to be endured. Rather, they can become a valuable super-power with just a bit of re-framing and execution.

This approach begins with: “We plan to hire this person. How can we best set them up for success? What can we do / what should we know to ensure they are in the best possible position to crush the role that we plan to entrust to them?” We already discussed the “WHY” and “HOW” in part one – now let’s look at the “WHAT” and “WHAT ELSE”:

WHAT… specific reference check questions should I ask?

The questions that work most effectively in the approach we take aren’t radically new or inventive. Rather, they’re short and straightforward – and open ended. They include:

1. “How do you know the candidate?” Note: This can be mistaken as a mere set-up question; but a reference’s description of their work with a candidate can be quite enlightening and lead to multiple follow up questions.

2. “In the CEO role, what responsibilities will they be naturally great at doing?”

3. “In the CEO role, what responsibilities will be further outside of their comfort zone?”

4. “We believe successful CEOs benefit from having complementary thought-partners on their Leadership Teams. What is the profile of the ideal thought-partner / second-in-command for this person?”

5. “How would you advise me, as board chair, to best support this person’s success as CEO?”

6. “Being a CEO is hard; circumstances will unquestionably be challenging. But people don’t get to this role without being resilient and being good at hiding when they’re having a bad time. What should I be looking for that will tell me when they are having a bad day or becoming run-down / frustrated / underwater? Importantly, how should I and others intervene in a way that fully supports and in no way disempowers them in these situations?”

7. “If you were to work with them again, what would you cover at the outset in order to establish the most productive working relationship possible?” Please note, this is NOT the boring old question: “Would you work with this person again?” References will always say yes to that; and we won’t have learned anything new. This alternative question asks what that person would do differently vis-à-vis the candidate if offered a total do-over. I want the benefit of that informed do-over - but I want it in our very first go-around with the prospective CEO.

8. “What else have I not asked that I should have? What else do you think it’s important for me to know to help the CEO optimally execute on this opportunity?”

You can see how these questions will easily fill a 45-minute video call.

WHAT ELSE…is crucial to know?

There are a few final, but important, points that bear mentioning:

Know before you go: If you are no longer using reference checks to actively decide whether to hire someone, then it’s critical to properly vet candidates in other ways. It is your responsibility — not the references’(!) — to get to the necessary level of comfort with the finalist. In our case, we have designed a comprehensive process for doing so. In no way can this be compromised or underemphasized; and these posts certainly don’t argue for shortcutting that.

Frame, frame, frame: For this whole approach to work, two things need to be made abundantly clear at the outset of a reference call: (1) WE HAVE ALREADY DECIDED TO HIRE THIS PERSON (the implied message being: your job is not to convince me do so…it is to help me make them successful). I usually try to make a joke of this point: “We are excited about making X person the CEO of one of our portfolio companies, and unless you tell me they cheat at cards, we are already planning to do so.”

(2) The reference needs to have a well-informed picture of what we are looking for in a CEO. I tend to spend the first ~5 minutes of every reference call pre-emptively setting the stage by explaining our investment strategy, our history, and the specific characteristics we seek in our leaders.

Don’t delegate: Some companies relegate responsibility for reference calls to HR or even an administrative function. We don’t do that. As board chair, I do all our CEO reference calls. And, in turn, portfolio company CEOs do references for their Leadership Team members.

Consistency Matters: It is not important to ask every one of the questions listed above for each candidate. But it is crucial to ask every reference for a candidate the exact same set of questions. Only in this way can you begin to observe helpful patterns in the various responses to the consistent set of questions.

Sharing is caring: Diligently write up the notes from these calls - and share them. Share them with other BoD members; it really helps the board know how to engage constructively with the CEO from the outset. I even recommend sharing the notes (redacted if necessary) with the company execs whom the CEO will be leading. My experience is that these notes get the executives excited to work with their new boss. And they certainly help everyone gel quickly.

And, finally - the best reference call is a great recruiting call: Over time, I’ve learned that the same people whom we are excited to hire as CEO often have impressive and ambitious former colleagues as references. On many occasions, reference calls eventually morphed into pre-recruiting calls for other roles or companies in our portfolio. A number of these have even resulted in our eventually hiring those references into important leadership roles. Opportunity lurks everywhere if you are willing to see it.


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