Human Resources as an important asset for companies

The human resources are the most important assets of an organization. The success or failure of an organization is largely dependent on the caliber of the people working therein. Without positive and creative contributions from people, organizations cannot progress and prosper. In order to achieve the goals or the activities of an organization,

therefore, they need to recruit people with requisite skills, qualifications and experience.

While doing so, they have to keep the present as well as the future requirements of the

organization in mind.

Recruitment and selection, as a part of effective Human Resource Management is the key to achieving a competitive advantage for an organization. Nowadays, one of the most important concerns for all the business is that of people. The emphasis is on having the right people in the right place at the right time (Lanz, 1988). Seeking new employees is an essential element for each employer, not only in organisations where particular emphasis is placed on the company’s human resources policy. Each employer wants to hire the most appropriate candidate for the job who not only has the right qualifications but whose personality will blend in well with the company’s structure. The choice of the right people to form a team in organization is one of the most important factors leading to its success. Hence, to achieve this, a company has to pay a huge attention on the recruitment and selection process. Effective recruitment and selection procedures are vital in attracting and retaining high quality staff so every company should take them deeply into consideration. Moreover, human errors are much more expensive in comparison to such assets as land and capital, and often result in serious irreversible consequences.

Here I need to add what are the goals of this dissertation I think…….and what I’ve included in a first chapter, second……

RECRUITMENT AND SELECTION

Definitions of recruitment and selection

Conducting business activities and competition between companies in developing international markets show, that Human Resource Management is the source of permanent competitiveness in contemporary business. This domain is not a single, simplified function, but a group of plans, systems, tools, processes and services. Each of these elements provides huge possibilities for profit, provided that one can use effective solutions in exploiting them. As the field of Human Resource Management has strongly changed in recent years, organizations were obligated to become more dynamics and complex. John Storey (2001, p.6) says that “It is human capability and commitment, which in the find analysis distinguish successful organization from the rest.” This sentence is essential to understand the fundamental tensions and ambiguities associated with Human Resource Management. People are non-material assets of a company and due to their importance have a strategic function. For that reason, recruitment and selection process should be permanent implicated and developed in company structures.

According to Pilbeam & Corbridge (2006) recruitment and selection process is based on action between ”applicant and job”, which is dependent on stating a need by an organization, using the most appropriate recruitment and selection techniques and on ”reviewing, evaluating and modifying the recruitment and selection system in the light of experience”.

Bratton & Gold (2003) defined recruitment like a “process of generating a pool of capable people to apply for employment to an organization”. Furthermore recruitment is a process of attracting individuals on a timely basis, in sufficient numbers and with appropriate qualifications, developing their interest in an organization and encouraging them to apply for jobs within it (Mondy & Noe, 1993; Crawford, 2004). During this process, efforts are made to inform the applicants fully about the selection criteria of the required competencies that will lead to effective performance, as well as career opportunities the organization can provide the employee. Whether or not a particular job vacancy will be filled by someone from within, or outside, the organization depends on the organization’s human resource policies, the requirements of the job to be filled, the talent to be found and, often, the organizational politics surrounding the decision (Nankervis et al., 2002). Beardwell (1994, p.192) also indicates that the process of recruitment has two important purposes. Firstly, recruitment should focus on both attraction and retention of the interest of applicants suitable for a given job. Secondly, it should create a positive image of the organization in the eyes of people who come in contact with it. Newell and Shackleton (2000, p.113) define recruitment as the “process of attracting people who might make a contribution to the particular organization”. The importance of the recruitment function is clear when one realizes that by hiring the most competent applicants the firm’s performance can be significantly enhanced. In the course of this stage, it is the employer who must encourage the best candidates to apply for a position in the company.

Selection is the process of selecting candidates “who have relevant qualifications to fill jobs in” a company (Mathis, R., 1991, p. 209). For the employer it is a stage during which decisions are made on who is the most appropriate of all the job applicants. The key point of selection is how to make fair and relevant assessment, which indicates strengths and weaknesses of applicant (Boxall P., Purcell J., 2003, p.141). Conversely, the quotation by Townley (1999, p.97) defines the notion of selection in that “(…) by definition, it involves a process of discrimination, and the opportunity for managers to emphasize employee “acceptability” or the “good bloke syndrome”, rather than suitability residing in task-based criteria.” It is a much diversified process: it may be short and simply boil down to reviewing and closely reading job application documents, and hiring a person. Or it may be a longer process also including a job interview and other techniques aimed at finding the best people.

Pilbeam & Cordbridge (2006) assert that good recruitment and selection is important element of the HR strategy, its forecasting requirements and a key to getting the appropriate people to attain a business goals. Moreover, recruitment and selection is a necessary element of people resourcing strategy, due to communicated policies, procedures and practices can considerably play a part in effective organizational performance, “(…) to good employee relations and to a positive public image” (Pilbeam & Corbridge, 2002). Both the activities are directed towards obtaining suitably qualified employees. Recruitment activities lay the groundwork for the selection process by providing the pool of applicants from whom the selectors may choose. Although, the two activities are closely connected, each requires a separate range of skills and expertise, and may in practice be fulfilled by different staff members. Recruitment and selection are the most important activities in an ongoing circle (shown in Fig.1.1) of an organisation as a whole.

Figure 1. Recruitment and selection in an organization (Pilbeam & Corbridge 2006, p.143)

Inappropriate selection and recruitment decisions can have a range of undesirable consequences for the organization and the recruit, including: reduced organizational effectiveness, invalidate reward and development strategies, unfair for the person applying for job and higher rates of turnover. Recruitment and selection are one of the most fundamental elements of the strategy of human resources managing. A wise choice of employees plays a key role in the functioning of an organization.

Framework: Recruitment & Selection

Recruitment and selection are works of the same system and they are so closely connected, although as Foot & Hook (cited in Rayner & Smith, 2005 p.121) suggest that ”each requires a separate range of skills and expertise, and each function may in practice be fulfilled by different staff members, or indeed the recruitment function, but not normally the selection decision, may be outsourced to an agency, so it makes sense to treat each function separately”, but Pilbeam & Corbridge (2006) note that they are not mutually exclusive functions. Hence is many approaches to recruitment and selection tend, however they distinguish that a system has inputs, which are the candidates, a processing unit, which consists of various methods and techniques and outputs, which are also effective employees or candidates, who go back to the labour market and are or eliminate by the recruiters or choose to exit from the process. As Figure 1.2 shows, the recruitment and selection process and techniques are influenced by the external factors like legal framework, economic situation, social and demographic changes, competitor activity, labour market characteristics and has some sub-systems to it which are interdependent to each other, changes in one will effects the others and also the quality of output. According to Pilbeam & Corbridge (2006) theory the systems approach gives an analytical skeleton and allow diffusion through the selection and recruitment sub – systems, which are: attraction, reduction, selection and transition. Whereas Kochan & Barocci model (cited in Beardwell, Holden & Claydon, 2004) point out that ”organizations have life cycles, and that recruitment, selection and staffing policies vary according to an organization’s perceived stage in the cycle”. While Goold and Campbell conclude that human resource strategies depend on management profile, whether is it strategic planning, financial control or strategic control (ibid.). Furthermore Anderson and Shackleton (1998, p.15) notice that recruitment and selection as a system is “(…) comprised of a series of inter-related components”. Important observation about the maxim of chronological dependency, says that it can only be as accurate as decision made in early stage to pre-screen down number of applicants. They emphasize that assessment techniques should predict and also affect on the future performance of employee. It is important here, to say that Human Resource Planning (HRP) is connection between strategic business planning and strategic Human Resource Management. This connection is the most visible in the recruitment and selection of specific numbers of employees with particular abilities, which match to company’s requirements. This view made by Paul Iles (2001, p.139) shows why employees, as the most valuable assets in company, should be align to strategic business plan. Nowadays is a lot of variations in recruitment and selection practices, reflecting an organization’s strategy and philosophy towards the management of people. That is why many organizations developed frameworks, which allowed them approve a variety of selection and recruitment techniques in order to identify and confess the right people (Bratton, J. & Gold, J., 2003, p. 223).

Figure 2. The System Approach to recruitment and selection

(Pilbeam & Corbridge, 2002), p. 115.

Process of recruitment and selection

Recruiting is an extremely complicated process consisting of many phases.

Before recruiting, the company needs to proceed with planning phase.

Each organization thus must consider a number of important steps in the planning phase. Firstly it should forecast human resource needs, than specifies job requirements as well as identifies and uses appropriate recruitment channels (Beaumont, P., 1994, p. 57).

When planning to recruit one should also include: discussions with clients to predict future hiring needs; maintenance of a contacts’ network (candidates, employees, competitors); development and maintenance of a strong employee referral program; investment in recruiter training and development; cooperation with management to ensure adequate budget (American Management Association International, Aug 2006, p.10). The command to start the recruitment process comes from senior managers and should be based on a review of the situation to determine that recruitment actually exists. It means, that it should be made recognition of the needs for new human resource. To minimize the risk of wasted money, job analysis should be well done. For the first, job description should be written very carefully. A job description makes it possible for the recruiter to outline what duties, responsibilities and the reason behind the vacancy i.e. expansion, member of staff retires, and the position within the structure of the organization (Beardwell, I., 1994, p. 195). The first step in the development of a job description is to establish the purpose and general objectives of the post, and then to analyse the requirements of the job. This process is called job analysis, and is particularly important in circumstances where you are preparing a job description for a new or significantly changed post. Job analysis helps to clarify the duties, responsibilities and other job demands. It also helps to identify the skills, abilities and experiences that someone would need to possess to be able to perform satisfactorily in the role (UCD Staff Manual, August 2005, p. II). The process of writing a job description can be very time consuming, especially if company don’t provide any system for job analysis. This involves other co-worker from department in context to collect essential information about business nature and actual duties. To accurately recruit candidates, the second part of job analysis – personnel specification is required (Beardwell J., 1994, p.195). Person specification is amongst one of the important factor of recruitment and selection that comes after the job analysis and job description as it relates to the person doing the job. Job analysis is the first stage of the whole recruitment and selection process and everything else is built upon it. It aims at finding out what is involved in the job that is now vacant. The effects of a mistake at this point are likely ricochet throughout all subsequent stages whereas job description involves the task and the scope of the job. The person specification profile is the people characteristics required to do the job effectively. The fact that an employer draws up a person specification demonstrates an attempt to introduce some objectivity into what can otherwise be very subjective process. Rather than relying on personal judgements about the knowledge, skills and qualities the successful candidate should possess, the employer with a person specification is following much more methodical and reasoned process. The person specification can be included with the information sent to the candidates to give them more detail about the requirements. It is a good practice to design and send to candidates a form showing each requirement and how it will get assessed (Foot & Hook, 2005). Two well-established systems of person specification frameworks discussed by Beardwell and Claydon (2004, p. 205) are (Roger, 1952) seven-point plan and (Munro Fraser, 1954) similar five point plan, illustrated in Table.1.1 and 1.2. It is important to be as precise as possible about the skills, knowledge, qualifications and attributes that are required for the job and about the experience and personal characteristics that are needed. It is good practice to specify what is essential or the minimum required to perform the job, as well as what is desirable. It is also necessary to think about the context of the job and the wider organisational requirements to specify any elements of person-organisation fit that are important.

Munro Fraser (1954)

Impact on others:

physical make up, appearance, speech,

and manner

Acquired qualifications:

education, vocational training, work experience

Innate abilities:

quickness of comprehension and aptitude for learning

Motivation:

individual goals, consistency and

determination in following them up, success rate

Adjustment:

emotional stability, ability to stand up to stress

and ability to get on with people

Table 1. Person specification framework (ACAS cited in Beardwell & Claydon, 2004).

Rodger (1952)

Physical make-up:

health, appearance, bearing and speech

Attainments:

education, qualification, experience

General Intelligence:

Intellectual capacity

Special Aptitudes

mechanical, manual dexterity,

facility in use of words and figures

Disposition:

acceptability, influence over others, steadiness,

dependability, self-reliance

Circumstances:

any special demand of the job, such as ability

to work unsocial hours, travel abroad

Table 2. Person specification framework (ACAS cited in Beardwell & Claydon, 2004).

When the process of job analysis has been completed and clearly identified, the next step in recruitment process is to attract quantity of suitable applicants with desired features. Company should consider some factors, like company’s budget, level of vacancy, time and selection technique in order to choose the right way in recruitment process. Larger companies generally have a larger budget and are more able to find the best candidates for the job. Effective use of recruitment tools depends on the available budget. This due to the fact that recruiting is expensive and the more selection techniques used the higher the cost to the company, but in doing this the company has a better chance of finding the best candidate. The cost of recruitment and selection is not the only cost the company has to include in its calculation searching new candidates. The other costs the organization should take into consideration are costs of training selected candidates to undertake contributing role to the organization as well as the costs of recruiting and selecting the „wrong” person (Cornelius, N., 1999, p. 29). Every company should adapt recruitment and selection costs to its policy, capabilities and vacancy and on this basis consider if to recruit internally or externally. Furthermore the level of vacancy is another one of the factors a company should consider before choosing a specific method of recruitment and selection. The decision making process is stipulated by individual needs of a company. In order to start the process of recruitment a company should have free vacancies. In fact, managers should decide if a free capacity either proves to be a job opportunity for a potential employee or whether there is an alternative option to resolve the situation. Hence, recruitment and selection processes should not be taken, when there is another opportunity, like reassigning the task to other employees or automated task, so than human resource are no longer required. We need to notice, that the higher level of vacancy provides more sophisticated methods of recruitment (Newell, S., Shackleton V. 2001, p. 25).

Another concerning question a company should frankly answer is what kind of selection technique they need to apply, i.e. the one which may facilitate effective employment. A company should frankly answer the question concerning the kind of selection technique they may need to apply, i.e. the one which may facilitate effective employment. Bratton (2003, p.227) notes that appropriate selection technique should recognize the way in which people differ and must be extended to a prediction of performance in the workplace. The twenty-first century organization of work has lost a variety of available methods which give credibility to techniques that attempt to measure peoples’ attitudes and overall personality. The literature on the subject of organization differentiates between many selection techniques. The basic methods like application form or curriculum vitae are rudimentary to employment interviews. This phase of recruitment process is called pre-screening candidates, which will help to reduce the numbers of unsuitable candidates and to apply more detailed methods of assessment. After pre-screening is time for candidate assessment. An extensive range of assessment methods is currently available to the recruiter like : biodata, assessment centre, work sample, references are very useful and reliable. Nevertheless the use of interviews is still the most popular selection method in the world. Branine (2008) founds interviews to be the main part of the selection process and that there had been awareness of the danger of subjectivity in the conduct of interviews. To avoid such danger, Gabb (1997, p. 64) argued that “companies often prefer an interview panel of two or sequential interviews with different people”. A recent comparative study of six countries found that the interview was one of the most popular selection methods. Despite, interviews being reported very often to be subjective and unreliable. It seems that the face-to-face contact with the applicant and the possibility of assessing the candidate’s social and communication skills are the main advantages of the interview, and hence the main reason for using it. While the trio of application form, interview and references is still popular, there have been further developments in incorporating those with the use of assessment centers which has been reported to be in the increase (Branine, M., 2008).

Assessment centers are described by Pilbeam & Corbridge (2006, p. 157) as “useful in penetrating behaviors relating to interpersonal relationships, leadership, influencing ability, sociability, competitiveness, self-motivation, tolerance, persuasiveness, and decisiveness”. Assessment centers have become popular venues for the selection of candidates, the identification of their potentials and the assessment of their training and development needs. The number of multinational companies from the USA has increased, more and more large companies are using a variety of tests ranging from ability to aptitude, personality and intelligence, especially those companies who receive a large number of applications and those needing more skilled employees. But as Marchington & Wilkinson (cited in Beardwell, I., Holden, L. & Claydon, T., 2004) quote “none of the techniques, irrespective of how well they are designed and administered, is capable of producing perfect selection decisions that predict with certainty who is or who is not bound to be a good performer in a particular role”. Figure 1.3 shows the accuracy of selection methods. According to Beardwell et al. (2004) the enlargement in using assessment centers and selection testing like a more accurate methods, can help to improve the effectiveness of the selection process. Though, assessment centers are believed to be the most influential selection method in organizations, but still the higher percentage of the firms considering interviews to be the most important selection method. However, doubts about accuracy push employers to approve the interview formats or “supplement the interview with the other selection methods such as tests or work simulation” (Beardwell et al., 2004). Data about accuracy of various types of selection techniques covers large differences within each technique. It needs to be considered in that point reliability and validity, but the detailed aspects of these two key criteria, which are already mentioned, are going to be explained in the following part of this dissertation.

Table1.3 The predictive accuracy of selection methods

Source: Anderson and Shackleton cited in Beardwell et al. (2004, p. 216))

Selection methods – concept of validity & reliability

Reliability and validity, as statistical concepts, are very important for selection methods. Reliability is a link to the extent to which a selection technique achieves consistency in measuring. The statistical analysis normally provides a coefficient reliability. In summary of results, the higher will be coefficient (that is, the closer it is to 1.0) the more dependable the technique (Bratton J., 2003, p.235). Figure 3 shows the validity, estimated by meta analyses, of many selection methods.

“Good selection methods must meet four basic requirements: practicality, sensitivity, reliability and validity” (Price, A., 2000, pp. 148-149). Practicality of the selection method means that it should meet the constraints of cost and time, whereas sensitivity focuses on distinguishing one candidate from another. Reliability of the method can be considered in three aspects: “test-retest reliability” – the duration should not have an impact on the score when doing the same tests; “inter-rater reliability” – the same scores should be given by different interviewers; “internal consistency” – different questions measuring the same competence should give comparable results. Equally, validity has also three aspects: “face validity” – tests are more acceptable when candidates find “relevant” questions; “construct validity” and “predictive validity” – how well the suitability of candidates for the position is predicted (Price A., 2000, p. 149). It is possible to make a credible selection decision when the required criteria are clearly marked out. If the criteria are not made clear it will be difficult to make an appropriate decision and will also be difficult to validate the selection process (Torrington, D., 2005, p.142).

According to the study of Levy-Leboyer mentioned in the Cornelius book (1999, p. 39), the validity of many selection methods is debatable and that is why they should be used with care. As the high validity the following selection methods are thought: work sample, aptitude test, assessment centre and cognitive test. Medium validity has bio data, and the low validity: references, interviews, personality tests, whereas graphology and astrology do not have any validity (Cornelius N., 1999, pp. 39-40). Moreover validity studies carried out by Taylor (1998) and referred to by Armstrong (2006) found conventional interview methods to be questionable and suggested that alternative selection methods such as biographical data, assessment centres and work tests are more accurate methods of selection. While many studies in recent years have raised concern about selection and validity, the most widely used methods remain the ‘classic trio’ application form, interview, and references (Taylor 2001).

Early research showed that unstructured interview did not have high validity, so as to improve its validity interview should be more structured. It means that all applicants are asked the same questions and the same dimensions are used to assess applicants. Structured interviews should potentially increase the quality of decisions made (Newell, S., 2001, p. 33). However, according to Heffcutt & Arthur (1994, pp. 184-190) improving the structure of interview does not increase validity. The question remains therefore, that if these methods are among the least valid, why are they still so popular? Armstrong (2006) suggests it is the “comfort factor” and that recognition needs to be given to the fact that both interviewers and interviewees like them and have grown to expect them. This is also known as mentioned before ”face validity”. He also suggests that most interviewers / organisations may not be aware of what the research suggests. When compared with other selection methods, the ‘classic trio’ is relatively low-cost and provides the opportunity to have a face to face meeting. In examining selection methods, Armstrong (2006) further suggests that too much innovation in selection methods may turn prospective candidates off. While some organisations may see this as a form of de-selection, the danger is that potentially high calibre and not just the less suitable candidates may be turned off by lengthier and more drawn out selection processes; even if they are more valid. However, Cornelius argues that using different methods of selection can increase the certainty of selecting the “right” applicant in a “fair” way (1999, p. 40)

Figure 3 is based on Schmidt and Hunter’s (1998) review and shows the validity,

estimated by meta analyses, of many selection methods.

Source: Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection methods in personnel

psychology: practical and theoretical implications of 85 years of research .Findings. Psychological

Bulletin, 124, 262-274.