Economics assignment on: Economic & strategic issues

1. 1.            Introduction

Under the conditions of an economic boom, demographic change and increasing complex environment of globalisation, the topic recruitment and selection of highly qualified employees’ gains more and more importance.Almost every fourth company (Capgemini HR Barometer, 2007) evaluated “recruitment of talented people” as an important strategic issue.

Recruiting wrong people in todays such globalised environment can lead an organization to increased costs and higher labour turnover. Thus, a good recruitment strategy and selection of the right tools for talent screening is essential for business survival (Erling 2010).

In this context employee retention is also very important. With a good initial recruitment and selection, employee retention starts. This should be further accompanied by the fulfilment of employees’ expectations without losing sight of organizational goals.In the first part of this report different recruitment strategies and issues will be analysed resting upon the attraction of talented international people. Furthermore, the report is evaluating various selection tools with recognition of their limitations and their potential for selecting specific criteria. The report goes on to analyse how a correct match of recruitment and selection strategies can positively influence employee retention and how this links to the achievement of organizational goals. Last but not least, the last part of the report looks at the role of hard and soft approaches in determining recruitment and selection strategies.

 2.         Recruitment Strategy and Issues

 The Recruitment Strategy is a complete mix of recruitment processes. It is also known as a document defining approaches and sources on how to attract the best talent from the job market (HRM advice, 2008). The recruitment strategy defines the following outcomes:

–       The target group

–       The way to approach the target group

–       The sources

–       The processes.

 Target groupDefining a target group has to be done on company level depending on their business activities, demands and vacancies. Recognising the differences in target groups of job candidates is one of the challenges for excellent recruitment (HR Management Guide, 2012).

 Approach

In Business Insider (2012) ten creative recruitment approaches have been identified and presented. Here is a short summary of those approaches:

1)    Having an Open House is an option to invite eligible applicants to an open group event where self-selection processes will occur since many of invited people will not come.

2)    Interacting with potential candidates in a group setting is seen as an excellent opportunity to find out about peoples characters, interests, skills and knowledge.

3)    Those with highly skilled talents whom are currently employed and are perceived as dream hires, can only be addressed with letting them know how much a company wants them. Research in social media profiles and past work history can help approach those people with tailor-made job descriptions and job conditions.

4)    Looking for people in unexpected places by sending out existing employees to interact with workers in restaurants and other places in order to offer interviews to outstanding people.

5)    To look for currently hired employees at other events than job fairs. For example if an employer is interested in an IT-Manager, he should attend an IT-focused meet up and look for potential hires there.

6)    Instead of waiting for curricula vitae from applicants, recruiters can take the search into their own hands. Several websites are offering CV’s from jobseekers.

7)    To advertise in places where people are searching exactly for these jobs and using keywords potential candidates might be searching for online.

8)    Consideration of former rejections can work wonders.

9)     To identify referrer (current employees) to spread the word. After a successful hire, non-monetary perks can be used to thank the employee for his/her help in the recruitment process.
 

Recruitment sources:

“Employee recruitment & retention of the same have been referred to as the main challenge for the employers today”. Employers need to spend as well as implement various types of techniques which would help in order to compete within the marketplace.

Nevertheless, organizations have the option of attracting and choosing their talented people for its recruitment process from two different sources: internal and external. Internal sources are already available to an organization such as internal promotions (through internal job-postings, transfers of employees and re-employment of ex-employees. When employees are recruited outside the company, it is called as external source of recruitment (Arthur 1998). The main ways of recruiting externally are job advertisements, job centres (governmental), recruitment agencies (head hunter) and personal recommendations. Both sources have their advantages and disadvantages. The following comparison should make clear what they are:

         Recruiting Internally                            Recruiting Externally

                Advantages                                                         Advantages

               Disadvantages                                                     Disadvantages

  HRCap – adapted from SHRM Learning Module “Workforce Planning and Employment” 2008

Processes

The recruitment process refers to the process of attracting, screening, selecting and providing an organization with a pool of skilled people. It is a set of activities and processes used to legally obtain a sufficient number of qualified people at the right place and time (Richardson & UNPAN, 2009). As a general rule successful recruitment begins with a creation of recruitment policies followed by an analysis of current and future needs and requirements of the organization. Then a job description with abilities, experience, responsibilities and required skills may be prepared.

Job analysis

Job analysis is the definition of the job. In other words it is the formal process of identifying the content of a job in terms of all activities needed to perform the job well (Wikipedia, 2012). Further, information about job analysis will give information to organizations in order to determine which talent fits the job best. Subsequently, a job description can be compiled.

Job descriptions

This is a list with general tasks and responsibilities of a position where skills and knowledge needed for a job position will be brought together. It often includes reporting regulations, salary range, qualifications needed, etc. and might be broadened to form a person specification. The description should not discriminate people on the basis of age, sex, religion or culture (Bratton & Gold, 2007).

Person specification

A profile of the type of employee needed to perform a special job is called person specification. It is also known as an extension of a job description. Examples are special qualities like ability to work in a team, driving permission for a truck, language skills, etc. The person should not only fit the position, but also the organization. This is very important, especially when it comes to employee retention (Business Dictionary, 2012).

 Compensation plan

In the salary plan the salary and other compensations (like mobile phone, company car and bonus) should be regulated. The compensation depends on the nature of the job and the availability of skilled people. When paid well, employees will stay motivated. If paid too much, people will just hang in their job due to good compensation instead of good job performance. Paying poorly increases redundancies (HR Guide, 2011).

 Recruitment issues in relation to international labor market“Employee recruitment & retention of the same have been referred to as the main challenge for the employers today”. Employers need to spend as well as implement various types of techniques which would help in order to compete within the marketplace.

Attracting talents from abroad contributes to the sustainability of business success. Finding adequate and required work force around the globe has become much easier than ever before. Therefore, contracting only local labour is considered as an outdated recruitment strategy. However, attracting talents from oversees remains a big challenge for HR specialists due to issues like deviating cultures, beliefs, languages, political factors, ethnic issues and low rate of labour market mobility. Language and cultural discrepancies are the biggest problems for international recruitment, followed by legislative issues (Arthur 2001).

In some parts of Yukon & Canada, most of the employers face different types of challenges with regards to employee recruitment & retention. In the Canadian aspect, demographic trends, seasonal supply, ageing within the workplace, difference amongst the generations have affected the international labour market. Other factors which might have an impact over the Canadian labour force are the expansion within the sectors, change in the economy, downturns within the industry sector, structural changes etc. Based upon one of the reports published by The Canadian Labour Force, it has been seen that over 15 years, the average rate of unemployment within Yukon has been estimated to be approximately 8.5 percent. It has been seen that, Yukon’s unemployment needs continue to be below national average. Therefore, in order to address the following opportunities different strategies have been upgraded which would help to attract more number of workers towards them.

Apart from recruitment strategy proper employee retention strategies shall be taken into consideration. This would help in order to attract as well as foster an environment which encourages the employees to serve for the organization they are already working for. 

It must be stated that, the re retention strategies shall be such which would help in order to retain the workforce. Once the right kind of people would be recruited, fair retention practices shall be provided which would help in order to support the staff members. A strategic approach shall be focused upon which would to adopt effective methods. Implementation of the same will help the employees working within the organization create flexible work arrangements, practice safe & health environment, etc. It shall be taken into consideration that, if fair recruitment process is not adopted, it can lead to the production of various unqualified job applicants or may be prone to turnover when hired. With the use of different types of technology, proper recruitment can be taken into place.

With technology progress internet recruitment has become a key medium for recruitment especially when recruiting graduates. Since 1998 companies are reinforced using this recruitment channel as a tool for personnel marketing and selection (Searle, 2006).

3.         Selection tools, their limitations and potential in the international contexts:

The various selection tools would be use in order to recruit the right kind of person for the right kind of job description at the right time. Some of the traditional methods which would be used in order to select the right candidates have been discussed in this section of the report (Mullins 2005, pp. 802-804). One of the simplest ways with which selection of the candidates is done would be on the basis of their Resume (CV’s) followed by the interview sessions. Generally, the tools which have been used in order to choose the right candidate would be scrutinizing the application forms, personality & intelligences tests such as Psychometric Tests, IQ Level, etc followed by various rounds of interviews involving different levels of management.

Resume & Cover Letters: Resume or the CV’s or the Cover Letters would be referred to as one of the key concerns within the entire selection process. It has been seen that, most of the Indian as well as International companies call a particular candidate depending upon the type of resume he/she possess.  Resume would play one of the key roles which will brief regarding the candidate. The first round associated with the selection process is done by scrutinizing the CV’s of the candidates.

The limitation as well as the potential associated with Resume & Cover letters has been discussed in this section of the report. They are as under:

Limitations

Þ    to filter out good CVs is very challenging

Þ    recruiters may be seduced by subtle elements

Þ    often includes irrelevant information

 Potential

Þ    fast selecting tool, therefore cut in recruitment costs

Þ    provide employer with a clear picture of the candidates’ personalities, skills and other attributes

Þ    CVs can be viewed anytime and anywhere

Application forms: In some of the cases, application forms are being used in lieu of the resume or CV’s. The application forms would serve as the means of employment for many companies in order to hire employees. Application forms would be referred to as a piece of paper which have been used by many of the international companies to have answers regarded some of the basic questions such as age, sex, criminal convictions, health requirements, etc.

The limitations as well as the potential associated with application forms have been discussed in this section of the report. They are as under:

Limitations

Þ    no human touch and more paper work

Þ    there is no space for additional information like in CV

Þ    long forms may put off some candidates

Potential

Þ    standardised format makes it easier to scan the required information and skills

Þ    The way a candidate is approaching questions will give the employer some ideas about the person, writing skills, intellect, etc.

Þ    Specific questions can pre-interview candidates and provide a quick decision for employer

Interviews: Many international companies use face to face interviews as one of the methods to recruit as well as select people for the organization. In this selection tool, either a single interviewer or a panel of interviewers would participate in order to select the right kind of person for the right type of a job description at the right time. This tool would act as one of the most crucial aspect which would help in order to know more regarding the personality or the character of the person.   

The limitations as well as the future potentials associated with interviews letters have been discussed in this section of the report. They are as under:

Limitations

Þ    very time consuming and can be costly

Þ    interviewer bias, subjectivity

Þ    is not used for larger number of people

Potential

Þ    investigating in depth; collection of detailed perceptions, opinions

Þ    usually achieves a higher response rate

Þ    interviewees are not influenced by others in the group

Personality and intelligence tests: The personality as well as the intelligence test would help the organizations in order to know more about the behaviour of the employees. Though these tests are not beneficial in real terms, but most of the international organizations use this selection tool in order to have a complete grasp over the potential of the candidates as well as the basic traits of the candidates.

The limitations as well as the future potential associated with personality & intelligence tests have been discussed in this section of the report. They are as under:

 Limitations

Þ    misinterpretation of results

Þ    no measurement and recognition of creative ability

Þ    are biased against ethnic minorities

 Potential

Þ    Revelation of unsuspected talents

Þ    Standardised ways of comparing people’s performances

Þ    Provide a profile of strengths and weaknesses.

According to Phillips (1992) there is little difference between the employees qualities required to perform domestic or international work, but the development of successful international business worker demands a higher level of qualities and skills. To adapt employees internationally, many adaptation challenges need to be managed. Multinational organizations are therefore imposing tough selection criteria to select the best talent. Some of the examples for the selection criteria are:

Þ    previous overseas work

Þ    foreign language abilities

Þ    ability to integrate with different cultures, people and types of organizations

Þ    Previous work experience with other cultures.

4.   Employee retention and organizational goals                            

 Based upon on Drake International it has been seen that, organizations believe in the context that “Employee Retention means to reduce recruitment & increase in the rate of retention”. International organizations shall aim to achieve vertical integration between their recruitment, selection and retention strategies and also the culture and business strategies (Armstrong 2006). Retention begins with effective recruitment strategies and good selection of candidates. Employee retention, especially of the most desirable employees, is a key challenge. As if that were not enough, good HR system needs to supplement the organizational goals in order to be successful in the international arena. Vertical integration is a good strategy for increasing employees’ retention since it is creating a relationship with the employee. The top down approach gives HR managers the opportunity to look after the staff, to train and motivate them with aligning the activities to organizational goals with the main focus on developing skills required to perform the job.

One of the international examples to illustrate the employee retention & organizational goals has been discussed in this part of the report. The chosen example is “Starbucks”. In order to attract as well as retain the employees at Starbucks the following strategies have been followed. They are as under:

 Þ    Training

Training is representing the key for vertical integration. Starbucks, for example, invests more in people training than in advertising and promotion. Employees therefore belong to the best trained and motivated workers. To compare with many other retails companies Starbucks also trains all employees including part time employees with special training programmes such as coffee making skills and diversity training (Starbucks Case Study ECBM, 2010).

Þ    Rewards

Again Starbucks is known for paying above average wages. Also the company’s benefits programme is one of the most attractive programmes in the retails industry. They are also offering benefits also for part time employees, which is outstanding. It also covers a work-life balance programme, health insurance coverage, stock options as well as other benefits. Overall, Starbucks employees feel valued and important. Sharing the fruits of success with all employees leads to a high level of motivation and commitment, resulting in a high performance culture, which is directly linked to the financial success of the organization (Starbucks Case Study ECBM, 2010).

 5.   Role of hard and soft approaches  

 There are various approaches which would help in the management of HR within a particular business. There are mainly two approaches to HRM. They are as under:

Þ    Hard Human Resource Management (HRM)

Þ    Soft Human Resource Management (HRM)

In most of the cases, it shall be taken into consideration that both the approaches i.e. Soft & Hard Human Resource Management (HRM) should be comprised within an organization. These two approaches would help the HR manager within the enterprise to perform in the most effective as well as efficient manner.

In the international context, the Soft & Hard HRM has been considered to be one of the crucial elements. The HR manager within the international perspective shall keep a track record of these two elements.

Þ    Soft Human Resource Management (HRM): In the international aspect, soft human resource management have been referred to as a resource within the business which would provide sustainable competitive advantage to the same. The employees in the international perspective are treated as individuals & their needs are taken into consideration accordingly. The main focus of HRM within the international perspectives has been to concentrate upon the various needs, roles or the employees. Some of the key features associated with Soft HRM are to focus upon the strategies for long term planning of the workplace. It also takes into consideration the competitive pay structure for the employees along with performance related rewards. This aspect would help in order to attract as well as retain more employees. It also encourages delegation of work along with certain levels of responsibility associated with it. In this approach a democratic style of leadership is being focused upon.

Þ    Hard Human Resource Management (HRM): In the international context, hard HR management would be to treat the employees as a link between the various business resources. A strong link shall be built between all the business resources. In this approach to HRM, the main focus would be to focus upon the needs of the employees in the most effective as well as efficient manner. In this HRM approach, minimal communication is practiced between the top & low levels of management. In this approach an autocratic style of leadership is being focused upon.

The evaluation of the Soft & Hard Human Resource Management (HRM) can be seen in regards to the impact over recruitment & selection strategies defined by the same. Both the approaches will help in order to practice effective as well as efficient operations within the organization.

6.    Summary

Within the ever changing global world as well as the complex labour market the implementation of right recruitment and selection strategies is very important for winning, utilising and retaining talented people. In the most difficult times, it has been seen that operationally, economically, and competitively – finding and keeping the best talent would start with a search in extraordinary places for good people, selecting them with high care as well as addressing the retention challenge with attractive and best suitable methods for both employer and employees.

An in depth analysis of the job tasks, responsibilities, etc. will act quite helpful in describing the job description. Selection of the right recruitment source and then the implementation of the correct selection tool will bring the right people for the job. Wrong tools could create poor results. Hard approach is seen as exploitive and not very beneficial for attraction and retention of employees. Soft approach however, focuses on the “human” in HRM (Legge 1995) and is more attractive for employees regarding training, development, recognition, etc.

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