I'm absolutely amazed that there isn't a single mention of referencing in here. It's by far the most important thing we do in our hiring cycle. Here's what we do, which is a little different: 1/ We'll spend in the order of 5-6 hours with a mid-to-senior hire before we recruit them. We pick one topic from their CV (the project they're proudest of or happiest with), and dive into it in huge detail: everything from the…
Because most people worth a dime interviewing for you are actively working for a different company. By asking and calling references you're "flushing them out". This does not mean I disagree with you. We had someone working for us, we're connected on LinkedIn. That person since then switched multiple jobs and I know for a hard fact that he'd never get a job if the company just called people working with him. No way.
I totally used to think that too, but whenever I've asked people about our process they say - "sure when you're making an offer, make it contingent on references and do a bunch of them."
I never revoke an offer unless we find out something truly bad at reference stage. Everyone has their foibles, and it's just useful to have more information about how to work with them.