LABOR MARKETS

There actually is not one, but several labor markets that are the external sources from which employers attract employees. These markets occur because different conditions characterize different geographical areas, industries, occupations, and professions at any given time. For example, the demand for over-theroad truck drivers is very strong at this writing (a tight labor market). Yet with downsizing and mergers in the banking industry, there is a surplus of middlelevel banking managers (a loose market).

There are many ways to identify labor markets, including by geographical area, type of skill, and educational level. Some labor market segments might include managerial, clerical, professional and technical, and blue collar. Classified differently, some markets are local, others regional, others national; and there are international labor markets as well. For instance, an interesting labor market segment opened up with the demise of the Soviet Union. A number of excellent Soviet scientists became available due to the absence of job opportunities in their own countries. Several research organizations, including Sun Microsystems, have recruited them for jobs. Many of these recruits have continued to live in their home countries and are linked electronically to their employers in the United States.

Recruiting locally for a job market that is really national likely will result in disappointing applicant rates. For example, attempting to recruit a senior accounting faculty member in a small town is not likely to be successful. Conversely, it may not be necessary to recruit nationally for workers in unskilled positions on the assembly line. The job qualifications needed and the distribution of the labor supply determine which labor markets are relevant.

Changes in a labor market may force changes in recruiting efforts. If a new major employer locates in a regional labor market, then other employers may see a decline in their numbers of applicants. For instance, when three riverboat casinos, employing a total of 3,000 workers, opened in Council Bluffs, Iowa, many employers in the area noticed a dramatic decrease in the number of applicants for job openings outside of the casino industry. Also, some employers, particularly smaller manufacturing firms, had to raise their wages to prevent turnover of existing workers. Similar occurrences have followed the opening of large automobile manufacturing plants in South Carolina, Tennessee, Kentucky, and Alabama.

To understand the components of labor markets in which recruiting takes place, three different concepts must be considered. Those three groups are labor force population, applicant population, and applicant pool.

The labor force population includes all individuals who are available for selection if all possible recruitment strategies are used. This vast array of possible applicants may be reached in very different ways. Different recruiting methods— for example, newspaper ads versus college recruiting—will reach different segments of the labor force population.

The applicant population is a subset of the labor force population that is available for selection using a particular recruiting approach. For example, an organization might limit its recruiting for management trainees to MBA graduates from major universities. This recruiting method will result in a very different group of applicants from those who would have applied had the employer chosen to advertise openings for management trainees on a local radio station.

At least four recruiting decisions affect the nature of the applicant population:

1. Recruiting method: advertising medium chosen and considering use of employment agencies
2. Recruiting message: what is said about the job and how it is said
3. Applicant qualifications required: education level and amount of experience necessary
4. Administrative procedures: time of year recruiting is done, the follow-ups with applicants, and use of previous applicant files

The applicant pool consists of all persons who are actually evaluated for selection. Many factors can affect the size of the applicant pool. For example, the organization mentioned previously is likely to interview only a small percentage of the MBA graduates at major universities, because not all graduates will want to be interviewed. The applicant pool at this step will depend on the reputation of the organization and industry as a place to work, the screening efforts of the organization, and the information available to the applicant population. Assuming a suitable candidate can be found, the final selection is made from the applicant pool.

The supply and demand of workers in the labor force population has a substantial impact on the staffing strategies of organizations. Internal labor markets also influence recruiting because many employers choose to promote from within whenever possible, but hire externally for entry-level jobs. A discussion of these and other strategic decisions to be made in recruiting follows.