PLANNING AND STRATEGIC DECISIONS ABOUT RECRUITING

The decisions that are made about recruiting help dictate not only the kinds and numbers of applicants, but also how difficult or successful recruiting efforts may be. Figure shows an overview of these recruiting decisions.

Recruiting strategy entails identifying where to recruit, who to recruit, and what the job requirements will be. One key consideration is deciding about internal vs. external searches that must be made.

Internal vs. External Recruiting

Advantages and disadvantages are associated with promoting from within the organization (internal recruitment) and hiring from outside the organization (external recruitment) to fill openings. Promotion from within generally is thought to be a positive force in rewarding good work, and some organizations use it well indeed. However, if followed exclusively, it has the major disadvantage of perpetuating old ways of operating. In addition, there are equal employment concerns with using internal recruiting if protected-class members are not already represented adequately in the organization.

Recruiting Decisions

Recruiting externally can infuse the organization with new ideas. Also, it may be cheaper to recruit professionals such as accountants or computer programmers from outside than to develop less-skilled people within the organization. But recruiting from outside the organization for any but entry-level positions presents the problem of adjustment time for the new employees. Another drawback to external recruiting is the negative impact on current employees that often results from selecting an outsider instead of promoting a current employee. Figure shows some of the major advantages and disadvantages of internal and external recruiting.

Most organizations combine the use of internal and external methods. Organizations that operate in a rapidly changing environment and competitive conditions may need to place a heavier emphasis on external sources in addition to developing internal sources. However, for those organizations existing in environments that change slowly, promotion from within may be more suitable.

Employers may choose to look globally for some external candidates. However, such external recruiting requires interaction with the federal government to obtain temporary (3-year) H-1B work visas for foreign workers. The employer must attest that the visa will not displace U.S. workers. This approach is most often used for workers in very short supply in the United States.2

 

Advantages and Disadvantages of Internal and External Sources

Flexible Staffing as Recruiting

Decisions as to who should be recruited hinge on whether to seek traditional fulltime employees or use more “flexible” approaches, which might include temporaries, independent contractors, or professional employer organizations (PEOs) and “leased” employees.

A number of employers feel that the cost of keeping a full-time regular workforce has become excessive and is getting worse because of increasing government- mandated costs. But it is not just the money that is at issue. It is also the number of governmental regulations that define the employment relationship, making many employers reluctant to hire new employees. Using flexible staffing arrangements allows an employer not only to avoid some of the cost of full-time benefits such as vacation pay and pension plans, but also to recruit in a somewhat different market. Flexible staffing makes use of recruiting sources and workers who are not traditional employees. These arrangements use temporary workers, independent contractors, and employee leasing.

TEMPORARY WORKERS 

Employers who use temporary employees can hire their own temporary staff or use agencies supplying temporary workers. Such firms supply workers on a rate-per-day or per-week basis. Originally developed to provide clerical and office workers to employers, agencies now provide workers in many other areas. Organizations that use temporary workers do not usually provide employee benefits, thus lowering their overall labor costs. But even if they do offer some benefits, employers may see advantages in using temporary workers.

The use of temporary workers may make sense for an organization if its work is subject to seasonal or other fluctuations. Hiring regular employees to meet peak employment needs would require that the employer find some tasks to keep employees busy during less active periods or resort to layoffs.

Some employers hire temporary workers as a way for individuals to move into full-time, regular employment. After 90 days or some other period as a “temp,” better-performing workers may move to regular positions when they become available.

Temporary opportunities also are opening up for professional and executivelevel jobs, such as chefs, accountants, lawyers, systems analysts, nurses, and managers. Downsizing has taken layers of management out of many firms, and companies may be hesitant to begin adding them back for projects that are temporary.

Also, the same downsizing has made available “temporary executives” with experience that would not have been available in years past. Additionally, some of these individuals may have taken early retirement but want to continue working part-time.

Temporary workers can and often do accept regular staff positions after working as temps in firms. This “try before you buy” approach is potentially beneficial both to employers and employees. However, most temporary service firms bill client companies a placement charge if a temporary worker is hired full-time within a certain time period—usually 90 days.

INDEPENDENT CONTRACTORS 

Some firms employ independent contractors to perform specific services on a contract basis. However, those contractors must be independent as determined by a 20-item test used by the U.S. Independent contractors are used in a number of areas, including building maintenace, security, and advertising/public relations. Estimates are that employers can save up to 40% by using independent contractors because benefits do not have to be provided.

PROFESSIONAL EMPLOYER ORGANIZATIONS (PEOS) AND EMPLOYEE LEASING

Employee leasing is a concept that has grown rapidly in recent years. The National Association of Professional Employer Organizations estimates that over 1.6 million individuals are employed by more than 2,200 employee leasing firms. The employee leasing process is simple: An employer signs an agreement with an em ployee leasing company, after which the existing staff is hired by the leasing firm and leased back to the company. For a fee, a small business owner or operator turns his or her staff over to the leasing company, which then writes the paychecks, pays the taxes, prepares and implements HR policies, and keeps all the required records.

All this service comes at a cost. Leasing companies often charge between 4% and 6% of employees’ monthly salaries. Thus, while leasing may save employers money on benefits and HR administration, it can also increase total payroll costs. In addition, employers may encounter some legal problems. For instance, leased workers are employees of the leasing company, but they may sue the client firm for work-related injuries if there has been negligence by the client because these injuries are not covered by workers’ compensation. One advantage for employees of leasing companies is that they may receive better benefits than they otherwise would get in many small businesses.

Reconsider the Job Requirements

In larger organizations, recruiting often begins when a manager notifies someone in the HR unit that an opening needs to be filled. Submitting a requisition to the HR unit, much like submitting a supply requisition to the purchasing department, is a common way to trigger recruiting efforts. The HR representative and the manager must review the job description and job specifications so that both have clear, up-to-date information on the job duties and specific qualifications desired of an applicant. Sometimes the HR rep and the manager may decide that those qualifications need to be altered. For example, deciding whether a job is for a computer programmer or a systems analyst would significantly affect the content of a recruiting advertisement and the screening of applicants.

The job can sometimes be changed specifically in order to alter the recruiting situation. A decision might be made to improve characteristics of vacant positions by raising salaries, increasing benefits, or redesigning the job for a different level of applicant. For example, in high-tech and accounting work, many workers say they prefer working on “projects” to the full-time processing of ongoing work. Perhaps redesigning current jobs would attract more people to the unique advantages of that work. Alternatively, perhaps the job can be changed to take into account the nature or qualifications of available applicants. Ford Motor Company indicated that its recruiters consider 100 applicants to hire 7 employees. Two-thirds of the applicants fail a test in which they are asked to add fractions. Maybe adding fractions would not be necessary if the job were redesigned, or perhaps it could be taught. Similarly, Harley-Davidson screened 9,000 applicants to hire 200 workers in Kansas City.7 In some cases a better approach may be hiring people with the aptitude to learn and teaching them what they need to know rather than hiring those who already have the KSAs needed to perform jobs immediately.

Retention

Finally, it may be that jobs can be changed to reduce turnover and increase retention of employees, which means less need for recruiting and fewer empty jobs. Nearly two-thirds of HR executives surveyed said they believed their companies needed to change their retention strategies. As the HR Perspective explains, compensation is commonly used to improve retention, along with better opportunities for promotion and transfer, recognition, training, and benefits.