eh, I think that following references rarely results in an accurate picture, especially following up on references that the applicant gives you.
Have you ever given a bad reference? I've given lots of references, and I've checked lots of references. I've never given a negative reference, and I've never gotten a negative reference when I checked someone else.
This is for two reasons. 1. when the applicant lists references, s/he is going to list people who think positively of him or her, and 2. if some random guy calls up and asks for a reference for someone who used to work for you, you have a relationship with your ex-employee. You have no relationship with this new company. You have nothing to gain (and possibly significant liabilities) from handing out a negative reference.
If you do some research and cold-call their previous employers/clients, you'll usually find out if the relationship was a negative experience for them. If you get a couple of these, and they've come to that conclusion independently, then you have your answer.
that solves the first problem (the applicant only choosing to give you the contact info of people who are likely to give them positive marks) but it doesn't help with the second issue.
I don't see any case where it's in the best interest of anyone to say negative things about a past employee. And I don't think you can count all "company policy is that we simply confirm they worked here" messages as negative, because sometimes that really is company policy.
When asked for a reference, have you ever said anything negative about a past employee or co-worker? Have you ever heard anything negative about someone you were considering hiring after cold calling a previous employer?
I haven't, but I know quite a few people who have checked references and gotten a negative response - in one case derisive laughter followed by an incredulous "Really? They put me as a reference?". Obviously it depends on whether it's a big shop where you'll get HR stonewalled, or a smaller place where you'll have the owner or a coworker.
(the only indicator that really matters)