Grist: The Sad End of the Bad Reference

Résumés, like ads in the personals column, are marketing documents intended to sell at best, deceive at worst.

Resumes, like ads in the personals column, are marketing documents intended to sell at best, deceive at worst. "Led multifunction group in developing $5-million new market opportunity" is no different from "Love Proust, moonlight walks, and the laughter of small children."

Prospective employers have two crowbars they can use to pry behind resume distortions: the interview and the reference check. Interviews are notoriously tricky. "But he interviewed well" is a lament I have heard countless times -- often from myself. And I'm far from the only one who has been flimflammed by articulate, accomplished candidates who turned out to be psychotic, fascist, or just plain useless even before the ink was dry on their personnel forms.

Once upon a time, the reference check offered reliable protection against serial exaggerators and smooth talkers. Sure, you could pad your list of references with favorable friends and amicable associates, but a savvy cross-examiner could always ferret out some truths. And besides, one reference check usually would lead to a network of others, a desk-to-desk search that yielded some measure of objectivity. A single bad reference didn't mean much -- who among us hasn't incinerated a bridge somewhere along the way? -- but a pattern of "hard to work with" was telling.

It's a great informal system. Trouble is, it barely exists anymore. Like a lot of other attractive things -- really hot coffee, open-air observation decks -- it's been killed by litigation. Or, more accurately, the fear of it.

While the risk of getting sued for defamation because of a bad reference is real, the greater risk is that a defamation charge could be wrapped into a wrongful-termination claim. Those lawsuits are commonplace, so rather than taking a chance, employers are taking the just-say-no route. And here's an acrid irony: even if you want to give a positive recommendation, you can be too gushing and be sued for something called negligent misrepresentation. No good deed goes unpunished.

A Ph.D. candidate in economics could make his or her reputation by quantifying the economic damage that the end of the bad reference has wrought. But clearly, it's vast. It's well established that the costs of training -- and retraining -- are big. Reference reluctance can result in catastrophes at the clerical, middle-management, or even CEO level. Sam Waksal, he of ImClone shame, reportedly had a history of subethical behavior. He was able to bury it and move on because no one said much about it.

Ironically, at a time when getting an objective assessment has become more difficult, the consequences of hiring the wrong person have begun to have legal ramifications of their own. Have you heard of "negligent hiring"? It's what happens when you don't conduct enough due diligence on a hire and your investors sue you.

The brilliant ecosystem at eBay, whose rating system is a kind of post-Enlightenment model of self-government, shows the direction that employment references ought to take. An old-economy solution could help us get there: reference insurance. So consider this a public request to AIG and its peers to make it happen. The policies would be cheap -- it's one of those cases where the perceived risk is far greater than reality -- and the benefits would be huge. Good people would have their praises rightfully sung; bad people would be revealed by a different chorus.

And who knows? The return of the bad reference might actually encourage some to work harder and better, knowing that their actions are just a phone call away from being revealed to their next boss ... or the next. Right now, you can pretty much hide anything.

Contributor Adam Hanft is president of Hanft Byrne Raboy, a Manhattan-based advertising and marketing firm.

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