Formal And Informal Methods To Recruit New Employees Management Essay

Recruitment and selection are two different processes, Recruitment in general can refer as, acquiring job applications. Where selection is choosing the application form the recruitment process and offering the employment. Brewster et al (2008) suggest ‘five specific task need to be undertaken by the Multi Nation Companies (MNC) and other foreign companies when entering to a new county prior to the commencement of recruitment and selection process’. (1)Set up the legal entities to transfer from the employees from one country to other country. (2)Decide the best mix of local recruitment condition. (3)Examine how local jobs should be used and build social local net work and access the funding possibility form government and other sources. (4)Working with the implications and ramifications of general regulation and law (5).Understand the legal frame work in both host and foreign countries.

Informal methods of recruitment and selection always have been into debate among HR experts and consultants across the globe because it is against the standard HR principles and practice. But still it exist because it gives lot of benefits to the employers.Kirman et al (1989) and Robertson (1997) suggest that informal recruitment methods generate better selection in the professional and qualified jobs as well when compare to formal methods. Word-of-Mouth (WOM) recruitment is commonly used and followed informal method across the globe with irrespective the sector and technology but the percentage vary from country to country. WOM is a reference to passing or communicate the information from person to person. WOM recruitment is ‘getting the references from the current employee, personal contacts and other sources’. Thanks to the advances technology, it will help to pass the information faster via email, telephone, and text messaging.


Informal recruitment method is a cost effective method for companies ‘(Corcoran et al. 1980; Granovetter 1995; Maim 1974; Marsden and Campbell 1990; Pissarides 1984; Rees 1966; Rees and Schultz 1970) argues that low financial cost is the primary reason that firms use informal method when compare to formal methods.

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Informal recruiting methods reduce the firms advertisement expenses, other search related expenses. It requires only minimal effort and will save of lot of time. Informal selection and recruitment provide more benefits to the recruiting firms because they can find better applicants it will maximize job match. Some firms provide bonus to their employee for good referrals, so employees will try to find the best profile to get bonus, it will help the organization to acquire the best talent and will benefit the employees to utilize the bonus scheme. ‘(Grieco 1987) argues that an employee recruited into a job by friends or family and other closer reference will perform well and follow the organization rules to maintain the social relationship’. Informal methods reduce the screening cost and increase the candidate quality. Recommendation and referrals from the trusted sources becomes best quality applicant. For small companies it will reduce the back ground check cost and other administration related expenses.


As a nature to it close reference groups. It is very limited with respect to the number of applicant. The vacancy position is not known to the public so obviously it will reduce the scope for the innovation idea to the organisation from outside. Each department within the firms can raid for the best candidate, it will leads to conflict between department and some time it will act against company integrity. Large firms can’t rely on informal methods, as the need more number of employees. In newly started firms recruiting through informal methods such word of mouth or references is a difficult task, especially for foreign subsidisers it is more complicated process.

Recruitment provides a firm with bulk of applicants who would like to work for them. Selection is the process where the firm decides which of these applicants is suitable for them based on the matching process; it will provide the offer of employment to the applicant. A match occurs when an applicant accepts an offer of employment from the organisation. Interviews, the monitoring and targeting of disadvantaged groups, Psychometrics testing, assessment centres are the common selection methods widely used across the countries.

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Recruitment agency advantages

Recruitment agency is acting like service providers, who supply firms with recruits to put through their selection procedure. The recently created foreign subsidiaries while recruiting new employees normally don’t have much expertise in the local market condition and the countries culture and other social aspects. Requirement agency with their specialization skills, provide professional and high profile candidates very quickly, it will reduce the requirement burden for the Organisation and will reduce the cost and on the other hand with the same time and cost, they can concentrate on their business goals rather than requirement process in which they are very new to the local market or countries

Recruitment agencies can provide the different type of application for the firms to choose the best profile for their vacancy post. As the firm is selecting from wide range of applications and candidate will bring new ideas to the organisation. It leads to the innovation and increase the productivity level. Temporary employers and workers options is possible with help of requirement agency, it will help to reduce tax and other burden of the organisation. Some recruitment agencies are doing for specific industry and sector like (Finance, Information Technology, and Oil Industry) .So agencies can send the applicants quickly to organisation to fill the vacancy faster Based on the feedback and performance of the temporary employees, firms can offer permanent position.


Recruitment through agency is very expensive process, for high skill profiles, firms have to pay 30 per cent of the candidate annual salary. Moreover temporary workers may leave the job at any point of time, and will join in the competitor organisation. This will lead to huge looses to the firms. Recruitment agencies mostly favours the employers, as they are getting commission from them so the job seeker who already registered with agency concerns are not addressed and they will not get any benefits from the agency. Recruitment agencies do the screening process poorly and send inappropriate profiles for the interviews; it will waste lot of time and effort for the organization.

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When a new employee is selected for the new managerial post from the external sources like recruitment agency may affect existing employee morale and will create some negative impact as well. Normally it will take more time for the new employee to learn about the organisation culture and technology


Every organisation has the own organisation culture based on their vision and mission. Long term strategic plans are defined accordingly. Human capital is the biggest asset for any organisation, to run the business successfully. Due to the competitive globalization world firms are doing the business across the country and continent as well. While doing the cross border and cross national business for the first time, understanding the culture and local market condition of the country is more important for the firms HRM team. Recruitment and selection of the new employee for the newly started operation in the foreign country should be done carefully with the help of local HR expertise and consultants. Based on the firms size, requirement ,nature of work and etc they can decide what type of recruitment plan will be suitable for them ,whether the informal methods or through the recruitment agency. Each method has advantages and disadvantages.Reserach on the recruitment methods shows that small firms can opt for cost effective informal methods and larger firms will go for requirement agency for recruiting and selection for the new employees. But this percentage varies from country to country and type of the industry as well.

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