Adding to DanB's points, it is always a good idea to describe your job to the referee and ask him/her if, in their opinion, the candidate will be able to handle the job. You are talking to someone who has worked with the candidate so should know their weaknesses. I have found this can elicit some interesting feedback you may not have got otherwise.
The key to reference checking is listening, in particular listening to what the referee may NOT be saying. As being too negative or too positive can get a referee into strife, listening and reading between the lines can often make or break the check.
Finally, a good rule of thumb is, during the interview with the candidate, ask them if it is OK to speak to their nominated referees but also check the referee information provided is up to date - onus should be on the candidate to find for you the latest telephone number for a referee. Candidates may not want their current employer called (in case they don't get the job), but if there are no other suitable referees to call, this can be a problem - one company I was with a while ago, on one occasion insisted on calling the current employer anyhow - fortunately the guy got the job!
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