Checking references is usually done at or near the end of the interview process. Too often it is not done well or thoroughly enough. When you have reached the stage in which you are close to making a decision on a candidate, ask them to supply several references, one of which should be their previous employer.
Ask the referee factual questions about the candidate's previous or existing job, e.g. job held, length of service, timekeeping, attendance, main duties and responsibilities, attitude towards work and the company and, a key question, would they re-employ the candidate? If you are contacting the applicant's current employer, you should first ask the applicant if it would be acceptable to do so.
If a reply is not received within 10 to 14 days, or if there is some urgency, telephone the referee. The time and cost is minimal but could prevent a costly mistake. People are often far more candid in their comments during a telephone discussion than if asked to commit their views in writing.
Note that as references include personal information, you'll also need to consider data protection law – you'll normally be justified in providing or seeking a reference, but ensure you store and process it fairly.
It may be time consuming, but thorough checking is the only way to be sure of the person you are employing. Even if the references are glowing, you must take the trouble to see if they are real - it has been known for applicants to fake references and qualifications.
When you telephone referees, make it clear that you are speaking in complete confidence, and as a fellow employer, you would appreciate their honesty. You must check that the written reference, (if you have one), matches what the referee tells you. It is useful to have prepared a list of questions or points that you want to discuss.
A straightforward list would contain the following questions:
If you find that the referee becomes less forthcoming on certain points, you should press them if you feel they are holding any information back.