The Role Of Recruitment And Selection Strategies In Supporting Employee Retention Within A Complex International Labour Market

Liverpool John Moores University

The Role of Recruitment and Selection Strategies in Supporting Employee Retention within a Complex International Labour Market

Submitted By: Tom Jacob

Course Name: Module Name: Module Code: Submission Date: Submitted to:

Master of Business Administration Managing Resourcing Strategy MGTPDM006 May 2009 Ron Bray Page 1 of 11

Contents Introduction Recruitment Strategies and Issues

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Recruitment Process Recruitment Sources Recruitment Issues

Selection Tools and their Limitations

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Application Forms Interview Psychometric Tests Curriculum Vitae

Employee Retention & Organisational Goals

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Training Leadership Pay

Role Of Hard and Soft Approach

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Hard Approach (Michigan) Soft Approach (Harvard)

Conclusion Reference

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Introduction In the increasingly complex environment of globalization, technological advancements & ‘war for talent’, employers are finding that they have to invest more time, energy and resources to staff attraction and retention than ever before. Over the years, the growth of managerial and research jobs have outpaced the growth of available talent. ‘Recruitment, retention and turnover survey 2008’ reported a 17.3% employee turnover rate for the UK (CIPD 2009), with levels going up to 20.4% in some organizations. The survey also noted that only 20% of employees have been in their current job for more than five years. With recruitment becoming increasingly costly & time consuming and demand for skilled people going up, high turnover rates will negatively impact an organisation’s performance. Employee retention starts with good recruitment and selection strategies. The ability to select and recruit the right fit for, not only the job, but also the group and the organization is critical when it comes to employee retention. This is particularly important in today’s global labour market where cultural, ethnic, and religious diversity is a reality. The first part of this report evaluates recruitment strategies and issues when it comes to attracting talent in an international dimension. The report then assesses different selection tools with recognition of their limitations and their potential for selecting specific criteria. The report goes on to analyze how right recruitment and selection strategies can help achieve the organisational goals by supporting employee retention. The last part of this report looks at the role of hard and soft approaches in determining organisations’ recruitment and selection strategies.

Recruitment Strategies and Issues Recruitment strategy is defined as a comprehensive mix of recruitment processes & sources, defining targets, and approaching these targets with a view to hire (HRM Advice 2009). It defines clear actions and steps to be taken by an organization so that it can be the employer of choice for its target audience and has to be based on an organizational scan and market research. A recruitment strategy will define the following:   

Target group How to approach the target group Recruitment sources & processes

(hrmadvice.com 2009) Page 3 of 11

Recruitment Process A recruitment process will provide an organisation with a pool of qualified job candidates from which judicious selection can be made to fill vacancies. Successful recruitment begins with proper employment planning and forecasting. Through proper HR planning, an organization can prepare for job openings by analysing future needs and current staff levels. (Richardson & UNPAN 2009). Successful recruitment begins with formulation of recruitment policy followed by a HR gap analysis within the organization. These processes, if completed properly, will lead to the Job Analysis.

Job Analysis A job analysis will document the job requirements, the work that needs to be performed and the time it should be performed in. More than just describing the work that needs to be done, it will develop compensation plans, selection & promotion criteria, future training assessment and performance appraisals of the job (Gael 1984). Job analysis methods include observation, examination of reports & incident investigations, feedback from colloquies and/or managers and surveys. In today’s global market, it should also look the locational flexibility demanded by the job. This is especially true in the case of jobs like ‘development managers’ in Tesco, who are expected to move from country to country (tesco 2009), developing its’ stores.

Job Description This is a legally binding, written document -a result of job analysis- which will provide the employee or candidates an idea of what he/she is expected to do. This will detail the skills & experience needed and responsibilities of the job. It will also specify who the person will report to. This is also used for EEOC purposes and other recordkeeping. In our day and age, job descriptions should also provide information on health & safety issues, right to work issues (like visa needed), and the companies’ non-discrimination policies.

Person Specification This specifies what skills, experience, education and training are needed to do the job. Examples are industry specific qualifications like CIMA or experience in a supervisory position for five years. Some jobs may also need employees to be security screened or checked against specific databases. Examples are people working with children and these who work in defence industry. This is a very important step because the person should not only fit for the job, but also for the team and the organization. Qualities like ability to work in a team and/or fit in with the organizational culture are very important when it comes to employee retention. Care should be taken to make sure that the person specification doesn’t discriminate on the basis of sex, age, culture or religion. Companies should ensure equity and adherence to equal opportunity and other laws. Page 4 of 11

Compensation Plan Pay and/or other compensations (like bonus and special facilities like car) will always depend on the nature of the job and the availability of skilled personal. But it is essential that it is competitive and motivational. If not paid well, the company will risk losing employees. Paying too much is also risky as seen by the recent events in banking sector (BBC 2009). This might also create a tendency to hang on to the job rather than excel in it.

Method of Recruitment Companies can outsource (using specialised agencies) or use the in-house HR department to recruit. The decision will usually depend on the nature and volume of the job. While an agency can save time and have a ready register of jobseekers with special expertise, they might also act in their self interest.

Recruitment Sources A company can recruit internally -promotion, transfers and referrals- or externally. Both sources have their own benefits and disadvantages. Raymond Noe (2000) note that a mixture of both should be used to fill the vacancies in the company as this will ensure that new blood can bring in new ideas while the old guard can provide necessary stability.

Internal Recruitment In this case, the job vacancy is filled internally by one of the existing staff members. It can either be a promotion or relocation or a referral. In Internal Recruitment, the job is not advertised externally.      

Advantages Builds on skills & expertise of existing staff Ensures return on any investment in training Motivates existing staff Quicker and cheaper Fits the organizational culture Avoid redundancies

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Disadvantages Not big enough pool of applicants Will create a different vacancy to fill Less resistant to change Chance for favouritism & discrimination Risk losing out on better external personal

Methods of Recruitment: Job Posting, Referrals & Internal Exams Most companies use the bulletin boards, company newsletters and office memorandums to advertise job openings. ASDA’s official policy is to advertise its job internally for a minimum of two weeks (ASDA 2009). In large organizations (especially semi private) with large pool of staff like Indian Railways (upscexam 2009), an internal examination is used as away to shortlist candidates from potentially large number of internal applications. Referrals are usually word-of-mouth advertisements that are a low-cost-per-hire way of recruiting.

External Recruitment When personal are recruited from outside the organization, it is known as external recruitment. Companies which are growing quickly and that operate in industries with high Page 5 of 11

turnover will usually recruit externally. It is also noted that companies with stalled growth might also try to recruit externally to regenerate growth      

Advantages Big pool of candidates Can acquire new skills and competencies Think out of the box Install a sense of competition in staff Fresh ideas & new way of doing things Can regenerate growth

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Disadvantages Long process of recruitment Costly Unproven compared to existing staff New employee may not fit the culture Might demoralise the existing staff

Methods of Recruitment: Outsourcing, Recruitment agencies, Consultancies, Advertising, Campus selection & Open day Employment agencies can be used to outsource the recruitment process. They will send the shortlist of competent candidates from which the ideal one selected. They are usually used when the position is low level and volume is high. Consultancies provide much more specialised ‘upmarket’ services with a personal touch. They are also called head-hunters. Outsourcing is used to divert noncore activates so that the company a can focus in its specialised field. This is usually cheap and can deliver better results. An obvious example is the 3 Mobile UK who has outsourced its customer service to India. Campus selection has always been popular with companies as they provided fresh ideas on the cheap. The obvious disadvantage is the lack of experience. Tata Consultancy Services is one of the biggest recruiters of freshers from Indian universities. The most common and expensive method, advertising will bring in a large number of applications. If the vacancy is a low level one, companies usually tend to conduct an open day.

Recruitment Issues in relation to International Labour Market When it comes to attracting the best talents internationally, many of the traditional methods stop short of delivering. Issues like language, culture, beliefs, political factors and ethnic issues will create headaches for any HR department who operate globally. Aligning the company culture with the local culture will be a big hindrance when recruiting globally. Nestlé found out that its hand on approach created problems at its Perrier sites in France while it struggled to implement its own quality control checks in China (Guardian 2008). The local laws and accounting practices will also be problematic when measuring employee performance. It was evident when Hindustan Motors/Mitsubishi’s restructuring plans were challenged in the Indian Supreme Court. Relocation issues with relation of political factors will also create problems for a global company. Obama administration has restricted companies from sourcing cheap labour from Asian countries (Bloomberg 2009). Shell (2009) is finding it hard to recruit high level engineers to Columbia due to the lack of security. Also worth a mention is that right to work problems faced by the new EU member citizens in UK (BBC 2009). The same goes for the students in UK who are not allowed to work more than 20 hours. Page 6 of 11

Selection Tools and their Limitations Choosing the right screening tool is very important. Selecting a tool will depend on the job which is in question. It will also depend on the goals and objectives of the organization (Tanke, 2000). Often, two or more tools are used in conjunction. Commonly used tools are application forms, assessment, intelligence tests, psychometric tests, personality tests, résumé and work sampling.

Application Forms Application forms are very popular with 93% of UK companies using it (Shackleton and Newell, 1991). Park (1999) notes that online application forms eases data capture and standardization. He also cites that employer can get information relevant to the job rather than what the applicant chooses to say. Care should be taken when designing an application form as it can be legally challenged in court.

Limitations   

Lacks the human touch Long forms may put off some candidates. Are self reports, so open to faking

Interview This is where the applicant is personally accessed by one or more people. It can reveal the applicant’s cognitive, oral & social skills and person-organisation fit (Harris 1999). Interviews are divided in to Unstructured, Semi-structured and Structured.

Limitations   

Interviewer bias Subjectivity Difficult to implement in large volumes.

Psychometric Tests These tests are used to measure psychological aspects of the candidate. Attainments, Aptitude & Intelligence tests are used to evaluate a person’s personality, ability and motivation. The main problem with this type of tests is that it cannot differentiate individuals.

Limitations   

Misinterpretation of results Factors like environment, gender and age can affect the candidates Absence of rules and regulations. Page 7 of 11

Curriculum Vitae A summary of the personal history, CV is the most commonly used selection tool. It is best used to short listing. As it is written by the candidates themselves, the claims should be taken with a pinch of salt.

Limitations   

May include irrelevant information Filtering out good CVs is a problem Recruiters may be seduced by subtle elements of the CV

Employee Retention & Organisational Goals Developing an effective HR system that can supplement the organisational goals is critical for the functioning and success of a firm in the competitive business arena. Vertical Integration, a traditional view of things, takes the top down approach. In this approach, HR department is given a supporting role of looking after staffing and training of personnel. Importance is given to the organizational objectives and HR is seen as the tools to achieve these goals. The main focus is on developing competencies and skills required to realize the organizational goals. So, these goals are first set, and are transferred down as departmental goals. The HR will fit in with the organization, and will relate to the organizational culture. In this approach, the organization keeps a tight control over the work force. Examples are Wal-Mart and ASDA.

When it comes to recruitment and selection, main concerns are matching the selection strategy with the overall strategy, monitoring the internal personal flow to match the emerging business strategies and matching key personal to business strategies

Training Developing skills and competencies required for the organization is a key in the vertical integration. It is noted that it is not an individual development, but the emphasis is on the skills required by the company. Workers are encouraged to learn “how things are done our Page 8 of 11

way”. An obvious example is the automotive industry where the workers are expected to integrate themselves in to the way the company works. In ASDA, most of the training given to the employees is to increase productivity.

Leadership In a traditional setup, the work force will look up to the leadership for motivation. Tight control and deadlines are kept to maximise the productivity of the workforce. Managers and supervisors use a hands-on approach. There are precise reporting procedures to be followed in this setup.

Pay In a traditional setup, the biggest motivational factor is the pay check. An example is the Software sector. Microsoft, a follower of the hard approach, pays industry leading salaries to their workers.

Role of Hard and Soft Approach

Hard Approach (Michigan) Fombrun, Tichy &Devanna (1984) developed a theory which states that Human Recourse should be considered very much like equipment or raw materials. The aim is obtain HR cheaply, use it sparingly, and to develop and exploit it as much as possible. Here HR strategies will be a tight fit to the organizational strategy. The emphasis is on finding the best person for the job. This method is very practical and effective, especially in the present business climate. This approach likens humans to robots who will sing to a particular tune all day long. When it comes to selection strategy in a hard approach, the idea is to get a person who can do the job most efficiently. This is mostly attained by recruiting a person with vast experience in the job. Training and developing the employees are linked to the Page 9 of 11

organizational strategy. Hard approach usually alienates the work force, which will have a negative effect on employee retention. A low motivation level in the workforce is another result of hard approach. ASDA supermarket follows a resource based HR system where every employee has his/her rigid duties to follow. The competitiveness of the industry forces ASDA to drain every bit of productivity out of its workforce to gain competitive advantage.

Soft Approach (Harvard) Often compared to the Theory Y approach, this system takes the view that Human Resource can be a source of sustained competitive advantage. Soft Approach hypotheses that employees work best when they have an emotional stake in the organization. The most important difference between hard approaches comes from the fact that control comes through commitment of the employee. Soft approach considers HR as a vital function of an organization. It focuses on team work and job satisfaction. The Harvard system can find parallels in the Japanese management styles which give importance to people. Soft approach can be seen in Google where the employees are asked to use 20% of their working time to their own pet products. It is then no surprise that Google is one of the companies with lowest turnover rate. Google succeed in creating an emotional bondage with the employees It is clear that a soft approach can retain staff much better than hard approach. But a hard approach is more attractive at times like recession.

Conclusion In the increasingly complex labour market, right recruitment and selection strategies will help companies win and retain talented staff. An increasingly mobile workforce coupled with the global opportunities is making employee retention difficult. Proper job analysis will lead to a good job description which can attract the right man for the job. Sourcing is also important and will depend on the nature and the volume of the vacancy. The selection tool used is also critical as the wrong tool can create wrong results. A soft approach to the work force is beneficial to the company as it creates emotional bonding which will act as a barrier when it comes to changing jobs.

Reference    

Gael, S. (1984), Job analysis: a guide to assessing work activities, Michigan: Jossey-Bass Noe, R.A. (2000), Human resource management: gaining a competitive advantage, London: McGraw-Hill Harris, M.M. (1999), ‘What is being measured?’ in Eder, R.W. & Harris, M.M. The Employment Interview Handbook, Sage, pp.143-57 Shackleton, V., Newell, S. (1991), ‘Management selection: A comparative study survey of methods used in top British and French companies’, Journal of Occupational and Organizational Psychology, vol.64, pp.23-36 Page 10 of 11

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Park H.R. (1999), Graduates in the eyes of employers, London: The Guardian McCourt, W. & Eldridge, D (2003), Global human resource management: managing people in developing and transitional countries, New York: Edward Elgar Publishing Tanke, M.L. (2000) Human resources management for the hospitality industry, London: Cengage Learning. Fombrun, C.J., Tichy, N.M., & Devanna, M.A. (1984), Strategic human resource management, New York : Wiley http://hrmadvice.com/hrmadvice/hr-processes/recruitment-and-selection/recruitmentstrategy.html http://www.bbc.co.uk/ http://www.asda.co.uk/corp/home.html http://www.bloomberg.com/?b=0&Intro=intro3 http://www.shell.co.uk/ http://www.tesco.com/ http://www.cipd.co.uk/subjects/hrpract/turnover/empturnretent.htm http://www.guardian.co.uk/business/2008/jan/16/europe http://www.upscexam.com/railways_examinations/

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