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2.1. Labor market (here maybe I supposed name the whole chapter as a Labor market and the 2.1. something like Internal labor market vs External labor market, or maybe Types of labor market?)
Paul Banfield & Kay (2008, p.71) assert that labor markets are very important, due to they represent the source of an organization's supply of labor and can be virtual or physical. They divided labor market in external labor markets and internal labor markets. The first ones can be considered of geographical areas within which potential employees are economically active, which means that people are employed, unemployed or seeking for a work. Moreover they said that these markets can be local regional, national or international in size, which will depend of the amount of shortage and specialization of the skills and experience required. Also another author Donald Currie (2006, p.82) states that the size and location of the area, from where the company needs to recruit people, "it is determined first and foremost by the nature of the job in terms of its level in the organization, its technical complexity and degree of specialism, the qualifications, competences and experience required." Depending on the type of work and the degree of flexibility that an organization allows, potential employees can be found almost everywhere. What in result only the local or regional labor markets represents the only realistic source of new and replacement labor for many manufacturing businesses and "lower level" service industries.
The internal labor market focuses attention on the existing workforce in an organization and the extent to which this represents a complementary or alternative source of labor supply (Banfield & Kay 2008, p.71). In addition Donald Currie (2006, p.81) points out that this market should be the first place to look for an employee when the vacancy or a new position arises. What in result will depend of the extent to which an organization offers employees defined career developments plans and of the rules and procedures leading internal movements and transfers. Many organizations have already a policy of looking first within a company for applicants or prefer to recruit from within if at all possible, but of course everything will depend of the managerial philosophy towards the organization recruitment strategy.
Recruiting internally rather than externally is very conclusive and has been debated in many books recently. Banfield & Kay (2008, p.73) consider that one of the difficult aspects is "the increasing importance of contingent or flexible working arrangements." Nowadays organizations face the need to recruit more often as there is a growing number of temporary, casual, fixed contract and agency workers, and the ability to rely on internal labor market may be limited by policy considerations. What is more they said that organizations are searching the external labor market if they want to recruit people on higher positions, when the lower level jobs are filled in through the company existing staff, who have already the skills, experience and potential to develop into the new job. While it has been said about external and internal labor markets it needs to be explained how companies can access these markets and what methods they are using for it, what is explained in next part of this chapter.
2.2. Sources and methods of recruitment
The choice of the recruitment method should be in relation to the particular vacancy as well as the type of the labor market. As was mentioned previously the labor market is divided in internal labor market and external one. Before the recruitment process starts, the company needs to answer a question where to find suitable applicants and whether to handle this process internally or externally. Eugene McKenna & Nic Beech (2002, p.145) stated that in some situations the personnel department or human resources function has the resources and capability to build up a recruitment campaign. However this is possible when the job is rather routine and there is plenty of supply. Furthermore they note that if internal function is not good enough, in terms of expertise and confidence to provide the service, then trust should be placed on an external provider. What is more the external recruitment can exist together with internal one, which means advertising vacancies internally, although encouraging internal candidates to apply.
Internal recruiting is when a company recruits from its current workforce. These refer to persons already employed for the organization. Promoting persons from lower levels may fill up vacancies at higher levels. Promotion means shifting of an employee to higher post caring greater salary, status and responsibility. In most instances, the jobs are posted on notice boards, though some carry listings in the company newspapers, employee referrals, where existing employees can develop good prospects for their families and friends by acquainting them with the advantages of a job with the company.
Torrington (2005) points out that in smaller companies vacancies are often filled internally; one reason for this is the cost of internal recruitment is much less as there is no need for money to be spent on advertising, a simple message on the notice board or in an e-mail lets the staff know that there are new positions available. More savings are usually made when recruiting internally as the employee would usually settle in to the post more quickly than if someone was brought in from the outside. The second advantage is that internal candidates have a better knowledge than new starters and they already would know many of the workings of the company such as rules and regulations. They also would already have a working relationship with other members of staff and would settle in much faster (Torrington, D., 2005, p. 121).
However there are also disadvantages from only recruiting internally, one being there are only a limited amount of candidates available and it is possible that the company recruits someone who can do the job but could be missing out on finding the best person for the job (Torrington, D., 2005, p. 124). Figure 3 shows the advantages and disadvantages of internal recruitment.
Employees may be promoted beyond their level of competence.
Employee infighting for promotions can affect morale.
Inbreeding can stifle creativity and innovation.
System can become bureaucratic.
Excellent training and programs are necessary.
Organisation has more knowledge of the candidate's strengths and weaknesses.
Candidate already knows the organization.
Employee morale and motivation are enhanced.
Organization's return on investment in training and development is increased.
Can generate a succession of promotions.
Organization needs to hire only entry-level candidates.
Table 4. Internal sources. Source: Raymond J. Stone, Managing Human Resources 2008, p.204.
If an employer has decided that it is necessary to employ externally then it is important that the company uses a cost effective means of recruitment. There is a number of ways a company can recruit externally, where some ways are more suitable than others depending on the type of job needed to be filled (Torrington, D. 2005, p.125)
External recruitment refers to recruitment of employees from outside the organization. External sources provide wide choice of the required number of the employees having the desired qualification. Stone (2008, p.205) asserts that Human Resources departments can use various ways to locate and attract external candidates considering more than only one source. The most popular sources are: employment centers, such as careers service or job centers or unemployment offices; agencies; recruiting consultants; executive search firms; educational institutions; professional organizations; advertising through various media like radio, television and internet; employee referrals; unsolicited applications and word of mouth. The same author states that if the company wants to choose the most suitable approach then the Human Resources manager "must know which recruitment channel is likely to be most successful in targeting a particular labor group." Considering broad literature, some authors defined that newspaper advertisements and employment agencies are the worst sources, which company can use, while employee referrals or informal recruiting are the best ones. That is why every organization needs to find its own effective way of most suitable recruitment channel in terms of cost, candidate quality and ultimate performance. External sources of recruitment, the same as the internal ones, have some advantages and disadvantages, which are shown below (Table 5).
Attracting and selecting a new employee is more difficult.
New employee adjustment and orientations take longer.
Morale may suffer among existing employees who have been passed over.
An employee may be selected whose performance is below the standard required or whose personality does not match with the organization's culture.
The pool of talent is bigger.
New insights, skills and know-how can be introduced into the organization.
It is often cheaper and easier to hire employees from outside the organization.
Outside employees are not members of existing cliques.
Table 5. External sources. Source: Raymond J. Stone, Managing Human Resources 2008, p. 204.
According to Roberts (2005, p.84), whichever model of the labor market is chosen, it is important to put up that market in mind when deciding on the approach to it. Organization needs to make important decisions about which source is going to use, which cost-effective recruitment method and at what cost.
I AM NOT SURE ABOUT LAST 2 SENTENCESâ€¦.NEED TO THINK ABOUT IT MOREâ€¦.I NEED TO PUT HERE SOMETHING ELSE TO SUM UP THIS WHAT I WROTE, MAYBE LATER SOMETHING WILL COME UP Š
2.3. Legal context of recruitment and selection
Discrimination is the essence of recruitment, organizations trying to segregate and choose the most appropriate people from the unsuitable ones and sometimes this process can be not fair enough. It is important that recruitment and selection processes adopted by an organization are fair, that is why "while organizations have a freedom of choice in the type of people they want to recruit, legislation plays a significant role in the recruitment and selection process" (Beardwell, Holden & Claydon 2004, p.194). There are many people in society which law seeks to protect as they are facing unjust disadvantages and prejudices. Legislation attempts to ensure people about their equal rights and proper consideration in applying for a job (Roberts 2005, p.181). Employers need to make sure that any of the recruitment and selection stages do not allow either direct or indirect discrimination to occur on the grounds of race, religion or belief, sex, sexual orientation, disability and age. Thus, only information regarding an applicant should be required and the processes need to be objective as possible (Banfield & Kay, 2008). In the UK two Acts are specifically designed to prevent discrimination in employment in the basis of sex or race. The first one is Sex Discrimination Act 1975, which is disallowing direct or indirect discrimination in employment in regards to sex or marital status. And the second one is the Race Relations Act 1976, which is disallowing discrimination "against the person in the field of employment on the grounds of their race, color and nationality, including ethnic or national origin" (Ibidem).
Both these Acts are against direct or indirect discrimination, where direct one happens when the person is treated worse than another one in terms of their sex, marital status or race. Indirect discrimination happens when a particular condition actually treats everyone equally but has an unequal effect on a particular group. According to these Acts, for instance employers cannot require all their employees to work full time as they are going to discriminate against part-time employees, where many of them are women, which have caring responsibility for children and they cannot work as many hours. Moreover employers cannot discriminate potential employees in terms of sex, which means promoting or recruiting only women or men, what is more they cannot discriminate pregnant women or women with children.
Another Act which is important as well in terms of recruitment and selection, is called Disability Discrimination Act 1995, which makes illegal to discriminate against disabled people, but as the Bratton & Gold (2003, p.224) state "unless discrimination can be justified by the circumstances of the particular case." This means that companies should make reasonable arrangements which will help them to overcome the practical effects on disability in terms of changing the recruitment and selection practice if needed. For instance make a bigger print on the application forms, modifying test materials or implement flexible working hours.
In addition to the above Acts, the Age discrimination should be considered as well. Although there is no present legislation which will be about discrimination on grounds of age, there is a code of practice, which intends to endorse age diversity in employment. According to Beardwell, Holden & Claydon (2004, p.197) code includes six parts of the employment cycle: recruitment, selection, promotion, training, redundancy and retirement. In recruitment the code "advises" employers to hire people because of their skills and abilities not because of age. It is important to say here that business will be unable to gain a lot of benefits from workforce if will not eliminate unfair discrimination in age.
Discrimination may take place not only in the recruitment decision, but also through inappropriately targeted advertising that militates against applications from certain groups, through the use of some forms of testing that may contain cultural bias, and through inadequate training and preparation of those engaged in selection (Burgess 1997, p.353). That is why employers need to understand how important is to have a fair approach and wide understanding of recruitment and selection process.
I need to include here some conclusion, which will add tomorrow.