Neutral reference policies are developed by employers use to avoid getting themselves in trouble. There certainly are benefits to establishing such policies. However, there are drawbacks as well. If your company has a neutral reference policy in place, perhaps HR has had some experience with the following:
Offering neutral references limits the amount of information an employer can learn about a potential hire. If that person’s previous employer would have otherwise had nothing but good to say about him or her, a neutral reference can actually hurt. Not disclosing a former employee’s good qualities and positive work record could prevent a new employer from making the hire.
Employers ask for references because they want to know about a potential hire’s past history. The most persistent among them know how to get around neutral reference policies. For example, a hiring manager might call a former employer after hours and leave a message. The message instructs someone at HR to return the call — but only if the potential hire was a good employee. No return call is necessary if he or she was a bad employee. The practice may not be illegal, but its ethically questionable.
Finally, nearly every employer asks for references. If your company does, but then turns around and maintains a neutral reference policy, you are defeating the purpose for asking for references. It doesn’t make sense to thwart another employer’s opportunity to find out about a potential hire when your company wants the same opportunity to learn as much as possible about job applicants.
Neutral reference policies are appropriate in some cases and inappropriate in others. Ultimately, each company has to decide what’s best for its reputation and needs.