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The following chapter critically reviews relevant literature on the nature of recruitment and selection. This is based on the understanding that there is a key difference between recruitment and selection. The key differences highlighted in the literature are therefore discussed firstly. Reasons why organisations recruit staff are then considered, focusing on why the banking sector has a particular interest. Factors impacting on recruitment and selection are analysed. Recruitment and selection methods are then evaluated. At the end of this chapter, a brief conclusion of the above is concluding whether there are any best practices available for organisations to ensure a good recruitment and selection process.
Differences between recruitment and selection
In the literature differences between recruitment and selection are identified, though they are the components of one system. For example Taylor (2008) highlights that recruitment is used to attract well qualified applicants. Similarly Pilbeam and Corbridge (2002) state recruitment aims to attract suitably qualified candidates for particular positions. It is the phase directly before selection. Moreover Stredwick (2006) describes recruitment policy as an organisation's performance manner, including rules and regulations to be followed.
On the contrary, Taylor (2008) indicates that in selection, employer picks out the best and rejects the others from recruitment pool, also known as negative activity. Similarly Edenborough (2005) states selection as a combination of different processes which lead towards the choices of suitable candidates over others.
From the above, it can be synthesised that recruitment is basically an attraction of the candidates for the available post, however in selection employer chooses the best available candidate for the post.
Nature of recruitment
In nature of recruitment, the reasons why organisations recruit staff are discussed.
Firstly, an organisation recruits because of an increase in the business volume, which requires more skilful staff to meet the needs and demands of customer. According to the Heraty et al. (1997), that organisations are altered their structures that are built on functions and jobs, to empower individuals with diverse backgrounds, are replacing conventional specialised workers.
Secondly, an organisation recruits because it needs a replacement for a leaver or entirely new vacancy occours. Sometimes recruitment is just because of the short of knowledge and pair of hands in an organisation. The empty space is necessary to be filled and it is purely a functional matter.
Thirdly, staff turnover is the reason of recruitment in an organisation. Employee turnover is the rate at which an employer gains and loses employees. In other words, it means that how long employees be likely to stay in the organisation. Employee turnover is calculated for individual companies and for their industry as a whole. If an organisation acheives high turnover relative to its competitors, shows that its employees have a shorter average tenure than other organisations. The productivity of an organisation suffers, if there is high turnover because of high number of begainer employees.
If the resourcing process of an organisation is not validate to employee right people for the right posts then there is a tendency of people leaving the organisation more often than competitors. It puts very bad impact on business operations because the number of important positions are oftenly empty which delays the completion of operations as well as the new employee takes some time to adjust and thus creates some more problems for organisation. Also organisation invests a huge amount of cost in recrutment process and because of the wrong resourcing policy or wrong selection tool organisation losse it all. It creates the unconsistancy amongst the staff and customers behaviour as well and ultimately effects profit of the organisation.
Nothing can be more frustrating to a small business owner or manager than the constant aggravation of employee turnover. High or low employee turnover can be detrimental for organisations. Employee turnover can vary as a result of the industry and location of organisation. For instance, the food service industry typically experiences turnover of 100-300%. The stress of employee turnover is much greater on smaller businesses than larger corporations. There is a valid formula designed for calculation of employee turnover used by many banks all over the world.
Total employee turnover cost = Costs of hiring new employees + Costs of training new employees
Factors impacting on recruitment and selection
There are some following factors impacting on the recruitment & selection for an organisation's decision making.
The salary packages offered by the organisations to its employees are sometimes resulting in the staff expectations, which create difficulties for organisations. Sometimes the location of an organisation is also contributes to the difficulties in attracting skilled and experience applicants. Conversely, Gribben (1999), state that organisations are cutting back on recruitment despite growing confidence of economy.
Demographic factors are the most important factors affecting on the recruitment. These factors state (Linda, 2001) that in future the number of older people is increasing and younger people is decreasing. If so, there will be shortage of young skilled workers in future and organisations have to recruit multi-skilled employees and work hard to retain their employees.
Linda (2001), states that the appropriate candidate availability can be influenced because of the social blend of the labour group, which probably limit the types of skills required. Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. Also, trade unions play important role in recruitment. This restricts management freedom to select those individuals who it believes would be the best performers.
However, the recruiters need to be able to understand the process, skills and able to take a systematic approach for the successful process.
The business scenario and job vacancy shows how the employer performs the whole recruitment process, from submitting a recruitment request, to advertising the vacancy and selecting personnel, to closing the recruitment cycle.Â It consists of three business participants; the candidate, the employer and the external service provider. The candidate is the internal or externalÂ person who is actively or passively looking for a new position.Â The employer takes both the role of the hiring manager and the recruiter. The hiring manager is the one who has an open position to fill. The recruiter is an HR department employee who helps the hiring manager toÂ find suitable candidates and select and employ the right persons. The employer submits a recruitment request for the positions to be filled. For this recruitment request the employer looks the available talents and thenÂ specifies the recruitment plan, for example which target group should be given first choice, where to advertise, and so on. The most appropriate candidates receive an offer from employer and if the candidates accept the offer, the employer closes the recruitment cycle and prepares for their hiring.
There are mainly two types of recruitment methods which a manager can recruit; internal and external recruitment.
Before going for external resources i.e. advertising, agencies or consultants, it is important to review of an internal recruitment for candidates are made. Internal recruitment is when the business looks to fill the vacancy from within its existing workforce.
Most of the private sector employers, as a matter of course, attempt to fill vacancies internally before they consider looking for people outside the organization (Newell 2005; CIPD 2007). According to Fuller and Huber (1998), internal recruitment consists of four methods i.e. promotions from within, lateral transfers, job rotation and rehiring former employees. Similarly, in internal recruitment promotion and transfer of existing personnel or through referrals, by current staff members, of friends and family members. Where internal recruitment is the chosen method, job openings can be advertised by job posting, which is a strategy of placing notices on manual and electronic bulletin boards, in company newsletters and through office memoranda. Referrals are usually word-of-mouth advertisements that are a low-cost-per-hire way of recruiting. In each of these methods the current or former staff of the organisations is made aware of the opportunities available to develop their career with some new role.
The vacancies can be advertised using notice boards, newsletters, intranet system etc... which is very much cost effective and a big advantage for the employers to retain their experienced employees by providing them these career developing opportunities. Other advantages according to Taylor (2008), includes that the employers don't have to spend huge investment on staff training, the time taken to fill the vacancy is usually much quicker and also enhancing motivation & commitment among existing staff. In other words when the existing employees know that they get promotion by doing excelent work or completing the task well and less time than others, which give them motivation to do satisfactory work for organisation, if they need promotion.
Internal recruitment is like an old way that tends to carry out the tasks and work in existing ways of thinking. There are also some strong arguments put forward by some researchers & writers against the internal recruitment.
Heneman (2000) states that traditional approach of internal recruitment starts with the assumption that the individual from the organisation can be promoted upwards and is capable of fulfilling the required person's post. The managers hence are more attentive to analyse the work of the available working staff suitable for the vacancy and employees start competing each other for the promotion. Because of the internal competition between employees for promotion there are some problems i.e. employee's attitude, which can be harmful for the organisation's atmosphere and goals. This type of recruitment is useful for smaller organisations but not for bigger ones or MNCs. Because small firms have very limited resources regarding to thier finances so firms hesitate to spend a big amount of finance on external recruitment and traning of employees, even at the cost of putting inappropriate or less experianced person for vacant place. New experience is also need of a time for any organisation in today's competitive world. Similarly Hirish (2000) highlights that sometimes the promoted person is less capable of handling all the situations required by the post i.e. rehabilitate the failed internal candidates so as to avoid the bad performances, unnecessary resignations and collapse in office relationship. In other words the promoted person usually don't have interpersonal qualities to motivate theose employees who are having some problems as well as keep an eye on their needs & thoughts or not a perfect choice for the required post.
Internal recruitment does not always produce the number or quality of personnel needed i.e. the organisation needs to recruit from external sources, either by encouraging walk-in applicants; advertising vacancies in newspapers, magazines and journals, and the visual and/or audio media; using employment agencies to "head hunt"; advertising on-line via the Internet; or through job fairs and the use of college recruitment.
External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business. It is the process of attracting and selecting employees from outside the organization. It depends entirely on the numbers and level of the vacancies. Process of identifying and hiring best qualified candidates, from outside of an organisation, for a job vacancy, in a most timely and cost effective manner. There are numerous different approaches used to attract the external employees, in which some of them are more conservative than the others. According to Taylor (2008) banks use following methods of advertisement of the job posts for external employees; printed media, external agencies, education liaison and other methods i.e. personal reccomendations, telephonic interviews, internet etc... When managers deciding, which method to use for recruitment, they also have to consider other method's benefits & back draws. Recruiters always think about every option available for them and then deciding the best one for organisation. The line managers of any organisation is the most responsible person regarding to recruitment and selection because they are solely responsible for decision making at the initial stages of process, whether or not the applicant fulfil the requirement for the required post (Heraty & Morley, 1998).
Â There are some different ways or methods through which line managers and HR department work combinely to recruit employees.
In print media national newspapers, local newspapers, trade & professional journals and magazines are suitable for attracting the candidates. Advertisements are the most common form of external recruitment. They can be found in many places (local and national newspapers, notice boards, recruitment fairs) and McKenna & Beech (2002) emphasies that this should include some important information relating to the available vacancy (job title, pay package, location, job description, how to apply-either by CV or application form). Because by doing this, only those candidates will apply for the job who are capable of fulfilling the requirements of the organisation and resisting those who are not appropriate. Where a business chooses to advertise will depend on the cost of advertising and the coverage needed (i.e. how far away people will consider applying for the job. The choice of publication depend upon target audiance and Paddison (1990), explains that by doing appropriate advertisement an organisation can also acheive the diversity objectives as well.
In external agencies, job centres are the most important recruitment methods. Job centres are paid for by the government and are responsible for helping the unemployed find jobs or get training. They also provide a service for businesses needing to advertise a vacancy and are generally free to use. This is a good for business because by doing this organisation attracts a big pool of applicants, who fulfil all the requirements of vacant post and organisation has a good choice to pick a right and suitable person. It is also a cost effective way of sourcing candiadtes for interview.
Public service agencies enjoy greater exposure to scrutiny than most private sector organisations; therefore, openness and transparency in recruitment and selection practices are crucial. The discussion that follows will identify some of the options available for attracting applicants to the public service job market and discuss strategies for managing the process. The external service provider is an external agent who supports the overall recruitment strategies, the use of various media channels,Â the assessments of candidates and pre- employment checks.
Another way of recruitment is "Recruitment agency". These agencies provides employers with details of suitable candidates for a vacancy and can sometimes be referred to as 'head-hunters'. They work for a fee and often specialise in particular employment areas e.g. nursing, financial services, teacher recruitment.
When organisation wishes to fill a vacancy of senior post or a highly specialist person required then the organisations have very small choices because of huge expected qualification. For this purpose, managers use "Executive search agencies". These agencies charge very high cost for their services.
External agencies are very benificial and cost effective way of recruitment for organisations especially for the banks but it is very lengthy and time taking process, which can take more time than usual. And sometimes by resourcing through agencies, organisations are not able to find such a candidate who is perfect for the vacancy.
Another form of recruitment which is available for employee recruitment is widely used known as education liaison. In this method, managers recruiting people directly from the educational institutions. The most attractive recruitment is of graduate recruitment. The Careers advisers in schools and colleges, and university appointment boards, may be able to provide suitable candidates. According to McKenna & Beech (2002), some of the organisations traditionally taken the employees from education institutions have operated many processes to recruit the young people, who are in their final-year or just completed their studies.
Many organisations also recruit young educated employees through open days, recruitment fairs, careers fairs and careers conventions.
This type of resourcing is normally prove to be very benificial for banks/organisations because they attract those candidates who are familiar with the new ways and techniques of business field and also enthusiastic to develop their carrers.
There are some others methods too available to mangers for resourcing. One of them is"Personal recommendation". It is often referred to as 'word of mouth' and can be a recommendation from a colleague at work. A full assessment of the candidate is still needed however but potentially it saves on advertising cost. The current employees who is already working for the firm recommends someone they know. This takes place at all levels of business. A director may recommend that a friend should be appointed to the board of directors. In such kind of recruitment diversity of the organisation effected because the candidate reffered through 'word of mouth' is very similar to the employee who reffered him/her, which can be a negative impact on the culture of the organisation.
In most of the cases the first major contact between a candidate and an employer is CV or application form. But some organisations use an alternative in the shape of 'telephone hotline'. The organisations publicise their contact numbers for the candidates to discuss the vacancies availability and requirements. This method is normally used for quick response.
According to the McKenna & Beech (2002), the use of 'Internet' is as a means of recruitment has been mounting now a day. Applicants all over the world use internet to gain the information about the companies, their vacancies and processes of application. This method provide candidates a system of self screening through which they can find out that whether they are suitable for the required position. For instance, 'Cisco System' and 'Dell' are the big examples of recruiting employees exclusively on internet.
Some other recruitment methods are television, radio, cinemas, government training schemes, waiting lists, trade union referral suppliers etc...
There is a larger pool of skilled people from which the organisation chooses the best suitable for their vacancy. The new employees bring in new ideas for the development of an organisation. Sometimes the new employee has a wider range of experience which is quite worthwhile for any organisation.
Sometimes few methods are ruled out in external recruitment because of the time constraint. The methods of recruitment in such a haste are very few i.e. employment agencies, job centres, personal contacts and local newspaper advertisement. And because of less time to spend on the process, probably the method chosen by the recruiters is not the best suited for the post. Another main issue in external recruitment is the huge volume of applications received by recruiters and the ability to deal with applications & screening them effectively e.g. advertisement in newspaper for senior accounts manager or opening a new branch etc...
Recruitment proceeds selection of the candidate. It is considered to be a very crucial stage in which candidates matched to the requirements of the job are selected. There are number of methods and techniques for doing this process i.e. face-to-face interviews, self-test questionnaires, biodata, assessment centres, selection tests etcâ€¦ This is the stage where successful candidates get an offer of employment. It is often thought that the selection process is very simple in which wanted against offered is matched and then selecting the best fit for it. Overall, it all boils down to choosing the right candidate for the right position and at the right time. Organisations would not want it the other way around. Employee selection applying these high-tech solutions reduces the cost and time spent in recruiting and selecting qualified candidates. According to the Pilbeam & Cobridge (2002), there are some different ways of employee selection used by organisations i.e. interview, psychometric testing, work sampling, assessment centres, biodata, graphology and online questionnaire.
There is the explanation of some of the selection methods use by the organisations.
The most popular selection technique is the interview either by face-to-face or in front of the interview panel. According to Lewis (1985), although the validity of interview is considered very low but it is still popular for selection. Interview provides the basis of two way exchange of information which is very useful to determine that the candidate is an appropriate person for the organisation and its culture. Shackleton and Newell (1991), highlights the point that every organisation use a interview sample at least once in the selection process. There are mainly two types of interview, structured and unstructured. According to McDaniel et al. (1994), structured interviews are more valid for selection purpose than unstructured one. This can be useful for two way exchange of ideas and information. It helps to improve the quality of decision but (Heffcutt and Arthur, 1994) it is not improving the validity. In unstructured or triditional interviews candidates asked different type of questions from which interviewer gets information about applicant in an unsystematic manner and draw the conclusion in his mind whether or not offer the job to applicant. Which may lead the poor selection. There are some very common problems with unstructured interview explains below. The first and the foremost problem is the undue influence or bais behaviour of the interviewer. Interviewer sometimes given the positive or negative response to candidate from his CV/application form or on the basis of similar qualities, background, career, personality or attitude, in other way decision is just on the basis of personal likeness or dislikeness. Sometimes the interviewer is not a fully trained person for conduct an interview and lead to a wrong decision of selection of employee. Poor questioning is also a big problem of these interviews because interviewer ask questions designed for the initial impression of candidates and make a decision way to early about applicants. These problems play a big part while selection process. If the organisation not overcome these problems before the interview process then it lead towards discrimination with applicants or the wrong selection of an employee.
When an organisation want to access the abilities and altitude of applicant's competence, a work-based test can be used. In this test candidates have to come with the different and logical ideas as a solution of a problem presented infront of the. They required to undertake some typical tasks associated with the job, which shows the quality of their work and on these basis applicants are assessed. For example applicants could be given with the series of theoretical situations and want them to respond at the mean time. This is very similar to the situational interview. Another example is the individual performance of an applicant in a group work, where two or more applicants discuss a specific assignment and then their performance in the discussion is accessed. Work-based tests are very valuable because these tests provides the actual competence and ability of an applicant. In Pakistan, the useage of work-based test is quite low for selection of an employee but it is extensively used (Lockyer, 1996) in United Kingdom.
When candidates apply for the job, normally they fill an application form or submit a CV or both. From these application forms and CVs managers find a key biographical information about the candidates i.e. age, education, interests, personal history and employment history. In selection particular things of a candidate's biographical profile receives higher score then others because these features are most appropriate and required ones for the vacancy. Shackleton and Newell (1991), indicate that only 20% of the organisations used biodata as a selection tool to some extent and only 4% for all vacancies, which is increasing now a day but still very hard (Wilkinson, 1997) to find any evidence of a broader spread of biodata. Sometimes employers have difficulty in choosing the right person for the vacant post in their organisation. Employee selection promises to be a difficult task especially if the current recruitment systems fall below industry standards and fail to meet the company's recruitment objective. One specific aspect in employee selection is data inquiry. HR system users usually require a list of all the possible candidates for a position in ranking order. Ranking employee selection is achieved using software solutions that efficiently go through application data by matching candidate resumes and other pertinent application documents with the job requirement. An automated system generally ensures an accurate and fast result for various types of employee selection inquiry. According to the Brown and Campion (1994), there are some advantages and usefulness of biodata as a selection tool. It is very useful to screen the large number of applications in response of an advertisement. It is very systematic approach which helps to improve the selection decisions. If referances considered as a selection tool then it is very useful as it provides honesty and moral integrity of applicant which is vital consideration. The big disadvantage of biographical test is the large amount of time required for this exercise. Another potential draw back is biasism against certain groups or communities. Another draw back is of referances as a selection device because applicant nominates refrees and the choosen persons are very unlikely to provide any negative assesment. According to Hunter & Hunter (1984), generally the strength and consistency of referances are pretty poor but still remains accepted in UK.
This is the third of three selection techniques know as 'classic trio' and the other two are interviews and application forms explained above. Normally organisations asked to shortlist candidates to provide them at least two referances which considered to be an important contribution to selection. This is one of the last tools used for selection of a candidate. Referances are taken for two major purposes, one is to provide confirmation that the information provided by applicant is right and the other is person's character referance. According to the IRS (2002a), approximately 70% of the referances are taken following the decision of selection has been made.
This review of the literature highlights a range of issues and perspectives for the approach to recruitment and selection of employees which has implications for the Pakistani banking sector. There is not a specific & perfect recruitment and selection process available for banks for resourcing of employees. It depends upon the size and culture of the bank that what kind of resourcing policy performs. There are several good ways identified for resourcing of employees. For example the best methods of recruitment in small banks is internal recruitment i.e. promotion of an employee and for big organisation it is it is external recruitment i.e print media, as it has less problems to deal with. And for Selection, interviews are the most common and widely tool used by banks.
There are some important findings/issues highlighted from the above literature review. The specific areas through primary research are followings.
Rational for the type of recruitment & resourcing policies used.
The role of stakeholders (HR managers & line managers) in recruitment and selection.
Identification of key issues experianced.
The next chapter outlines and explains the research design adopted to investigate these implications from the perspectives of HR managers with responsibility for recruitment and selection.