The worst employee I ever hired was as a direct result of a reference letter written by someone I knew through the grapevine, was respected by people that I respected, but never worked with. As it turned out, both of them were phonies and terrible at their jobs.
Needless to say, the employee didn't last long and I lost total respect for the referencer. As a result, I give much less weight towards references and much more towards resume and interview.
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