Back in the days, references were an essential part of the recruitment life-cycle. Once someone got scheduled with a client, you would tell the candidate to begin gathering their references ready for contact. That they would only be contacted should the candidate receive an offer and that you would allow that candidate time to make sure those references were aware they were about to be contacted by a recruiter for a brief conversation about their work experience with this particular candidate.
In the 12 years that i've been a Technical Recruiter, I've done references mostly during the early years of my career and only in one (1) singular occasion did someone provide a reference that gave me questionable responses that ultimately led the client to decide not to move forward with the candidate. How useful are these things anyway? After all, don't we ask the candidate for the names and contact info of people we can call to talk about him/her? Don't we rely on these very people to hand us the info we requested with the full knowledge that we are going to contact them to talk about him/her?
I'm of the opinion that references are a useless waste of time, even for that one in a million that turns out negative. Why? For one thing, as I mentioned already, the candidate is unlikely to hand over a bad reference. That's just common sense. Secondly, nobody worth their salt in HR is ever going to give a "negative" review of someone that used to work for their company. In today's "PC" culture, the worst you get is validation of the start and termination dates, job title, and maybe salary. Does that tell you anything useful? Lastly, even if there is one bad reference, who cares? I know HR people are going to cringe with what I'm about to say but seriously, are YOU that perfect that nobody has anything bad to say about you? Haven't you ever had a bad day, week, month or maybe even a year of your life? Maybe you were going through something, depression, a divorce, financial crisis, a death in the family and maybe you didn't handle it as well as you could have? Is that all you are the mistakes you've made in that one bad season of your life?
Furthermore, isn't it likely that maybe that just wasn't the right environment and that's why you left or no longer work there? That perhaps this new culture might be indeed a better fit?
I say, judge each of us on our merits today not who we were 5 years ago. Don't we all grow and evolve? Don't we deserve to benefit from the past mistakes and prove we won't make them again? I think so.
References are a lame waste of time. Do a good job of scrubbing the person down during the interview process, putting them through the ringer, making them prove themselves and reveal their true nature and judge them on that. Besides, in today's economy, most people don't stay at their jobs more than 2 years, especially in the IT field.
I say do away with antiquated methodologies and go to more innovative metrics, testing procedures, creative interviewing techniques to get to a person's character. In the end, I think it's all about the fit within your organization today anyway.