Even today in an age where pretty well everything is automated and we’re all supposedly participating in the ‘gig economy’, the candidate reference is a key part of getting a job. It’s the third-party viewpoint that says you can trust this person, based on direct, human experience of skills, personality and character. But one company is trying to tie together the need for speed with the governance protection afforded by references. Xref is a smallish Australian company founded by two Brits that automates the process of checking candidate references.
It’s a cloud service that has taken Xref all the way to a listing on the Australian ASX exchange and a valuation as I write this of AUS$27.2m (US$20.8m)… and the genesis of the firm was based on direct experience. While working in London at a well-known recruiter, a candidate was placed and, in the rush to get the transaction done, the recruiting executive didn’t check for a reference, resulting in predictable disappointment. That incident was the germ of an idea over post-work drinks for Lee-Martin Seymour and his colleague at the time Tim Griffiths. Later, they co-founded what became Xref.
It happens all the time, says Seymour, now Xref CEO.
“Client likes candidate, candidate likes client… the only thing stopping the guy at the recruiter making £20K is this reference question.”
Dodgy references take many forms, from embellishments that gild the lily to full-on fraud, Seymour says, and an inefficient referencing process can lead to problems from lost time to employer dissatisfaction, accusations of fraud, and the threats of privacy breaches and discrimination allegations.
Seymour and Griffths’ concept was developed in 2009: about the time when powerful HR/HCM cloud services such as Workday were taking shape but Seymour says that broader series are no replacement for the core need to nail down candidate references. Xref provides integrations with those services via an open API, however.
It can take days to check references so an automated service can both save time and minimise risk, the founders say. Xref is effectively a portal that lets referees provide documented references on potential new hires, thereby avoiding the hassle of phone calls and the nasty surprises outlined above. It also provides reporting analytics and feedback from referees to create a service that improves over time, adding insights based on the data harvested.
An outside-in view
To gain an expert, close-up view I swapped emails with Charlie Milne, global head of talent strategy at hotels booking cloud platform provider SiteMinder.
Xref addresses three challenges, Milne believes:
“It saves time by simplifying our process, enables speed to market giving us a competitive advantage and all whilst mitigating risk. Talent Acquisition comprises multiple administrative activities which require limited skill but are a requirement to ensure a thorough professional process and ensure the right outcome for our organisation. One such activity is referencing candidates.
“This approach also results in reduced risk by identifying, centralising and documenting risk-related behaviours with less room for human error or oversight. Their system also enables referees more flexibility to respond at a time that suits them via desktop or mobile, meaning we can move to offer faster, with the right candidates, and feel confident in our decisions.
“As a Talent Acquisition leader I tend to be focused on efficiency and the competitive advantage in speed to market but the risk to SiteMinder of hiring a fraudulent employee through utilising a sub-standard referencing approach far outweighs the return on investment through time savings.
“I have also been impressed by the improvement in turnaround times to reference completion and I did not anticipate this would be so significant. Fifty-five per cent of our reference checks are now completed outside of standard working hours, which has enabled us to speed up the process considerably. SiteMinder's turnaround timeframe for references currently averages 19 hours from user request to completion, which is a 250 per cent improvement. Prior to Xref, this process took a minimum of 48 hours to complete.”
Partly through Xref’s help, SiteMinder currently operates with offer acceptance rates of 98 per cent, Milne adds, and the firm reckons that it saves about $25 per hire.
Going the other way
Xref’s story is unusual in that it was no VC-backed race to get to an exit. Instead, Seymour created a company called Talentforce, recruiting people with Salesforce.com development experience while Xref ran as a part-time background, bootstrapped operation where concepts were tested.
“We had a development team in Kiev and we had to sweat equity while I did what I knew how to do: recruit,” Seymour recalls. “We tested with users and often went away with our tails between our legs.”
But relationships got Xref a foot in the door at companies such as Fuji Xerox and Westpac, and the company was able to “land and expand” in classic cloud fashion, proving the concept, selling in small numbers and then enjoying viral growth via increased wallet share and new customers. The nature of Australian business culture didn’t hurt either.
“In Australia the ecosystem is quite tight,” Seymour says, pointing to the notion of mateship, here friends help friends on the basis of a mutual trust bond. “Australia doesn’t generally like tall poppies: you see fewer chains and more boutiques at the end of the road. If you do what you say you will do, they’ll stay with you forever.”
Progress had an old-fashioned cadence and Xref had been running for five years before the founders hired a member of staff. The co-founders only finally went full-time in 2009 with three months’ worth of salaries in the bank as a fall-back and about $AUS500,000 in annual recurring revenue. This was after the company had three staff and the founders had asked themselves the semi-rhetorical question posed by all nervous entrepreneurs: “Are we doing this or not?” They thought about whether the company should relocate to Silicon Valley but liked the life in Oz.
After “a couple of bottles of Malbec, everything becomes clear”, Seymour says, and the founders also captured lots of thoughts on video to act as aides-memoires as to their thinking at any given time.
Today Xref has 50 staff and about AUS$1.7m in turnover. It went public in February 2016 through a reverse takeover in pursuit of global growth. But Seymour says its core culture won’t change and adds proudly that Xref has never lost a client.
Xref’s is a quirky growth story that is a fair distance away from the Silicon Valley ‘built to flip’ model but it’s proof that there are still many processes that can benefit from cloud automation, providing there is a strong service ethos attached.
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