References and pricing

References and pricing

Departments - Ask the Experts

This month, Ask The Experts gives tips on employee references and creating a pricing strategy.

December 28, 2011

ASK THE EXPERTS is presented in partnership with PLANET’s Trailblazers On Call program. Trailblazers are industry leaders who volunteer their time and expertise to give back to the industry.

Q. We receive occasional requests for references on former employees. Our policy states that we will only confirm or deny the information requested. Generally, that includes employment dates, titles and compensation. We don't reveal what the cause of termination was, but we do state whether the ex-employee is eligible for rehire. Every company I talk to has the same policy. But how do we get accurate information on job candidates?

What a great question. There was a time when every company gave references on all employees. But, some time back, a report of an employer getting sued for defamation of character because of a reference scared the entire nation into silence. Today, most attorneys, consultants and HR professionals advise their clients to do as you are doing, and only confirm or deny certain information. As a result, we're all passing around and receiving a lot of bad employees.

Although I have seen a few cases of malicious, personal character assassination by an employer with a vendetta, I have never seen a successful case against a company for giving an honest employment reference. What I am seeing, however, are cases of employers being charged with negligent hiring for employing someone with a background of violence, sexual harassment or drug abuse. Why aren't companies providing accurate information on reference requests? It's because they haven't documented the information.

If you are terminating an employee, document the reason. If you are later asked for a reference, be sure that request is accompanied with a reference release signed by the ex-employee. If it isn't, email or fax them a copy of yours for signature. Then respond with the truth. If the employee was terminated for drug abuse or excessive absenteeism, say so.

If it was because of a cutback or general layoff, say that. If the employee quit, let the potential new employer know. If he was a great employee, sing his praises. Before you hire your next manager, wouldn't you like to know if she accomplished all the things she told you about? Be honest and pass on that significant information to the next employer. Provide them with the same information you want when you are about to offer someone a position with your company.

Here's a sample reference release form to be signed by the job candidate.


Bill Cook, PLANET HR Consultant

Q. How does my company create a pricing strategy?

Creating a pricing strategy is based on your individual circumstance. Not every business has the same overhead structure or desired profit margin. First, you need to develop a plan for the future. Whether your business generates $50,000 or $5 million in sales revenue, you need a plan to guide you to the goal.

Review your business operations and company goals, developing a plan like any other business plan – using what you have from the past year and adding the new elements.

Once you've developed your plan, you need to make sure all the elements of the plan are included in your pricing strategy: wages, benefits such as vacations, sick time and health insurance, overtime estimates, government taxes, paperwork hours, meetings, education hours, travel time expenses and direct labor. Building your pricing strategy is key to sales for next season.

Not knowing what the plan looks like can and will create a number of problems, such as under bidding projects for next season. Creating a plan is the most important job you have as an owner/manager.

Richard Wilbert, SiteSource Business Coaching


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