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Thursday, August 17, 2017

Recruitment and Selection

Unit – III: Recruitment and Selection
Meaning  and definition of Recruitment
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. When more persons apply for job then there will be a scope for recruiting better persons. The job-seekers too on the other hand, are in search of organizations offering them employment. Recruitment is a linkage activity bringing together those with jobs and those seeking jobs.
Definitions: Flippo – “Recruitment is the process of searching prospective employees and stimulating them to apply for the jobs in the organization”
McFarland- “ The term recruitment applies to the process of attracting potential employees of the company.”
Thus recruitment may be considered as a positive action as it involves attracting the people towards organization.  The main purpose is to have a rich inventory of eligible persons from amongst whom the most suitable candidates can be selected for employment in the organization.

Sources of Recruitment:
The finding out where suitable candidates are available and informing them about the openings in the organization is the most important aspect of recruitment process. The candidates may be available inside the organization as well outsider it. Recruitment sources can be described as: internal and external sources.
A. Internal Sources: Internal source is one of the important sources of recruitment the employees already working in the organization may be more suitable for higher jobs than those recruited from outside. The present employees may help in the recruitment of new persons also internal sources are discussed as follows:

Transfers: Transfer involves shifting of persons from present jobs to other similar places. These don't involve any change in rank, responsibility and prestige. The numbers of persons don't increase with transfer but vacant posts may be attended to.
Promotions: Promotions refers to shifting of persons to positions carrying better prestige, higher responsibilities and more salaries. The higher positions falling vacant may be filled up from within the organization. A promotion doesn't increase the number of persons in the organization. A person going to get a higher position will vacate his present position. Promotion avenues motivate employees to improve their performance so that they get promotions to higher position.
Present Employees: The present employees of an enterprise may be informed about likely vacant position. The employees recommend their relations or persons intimately known to them. Management is relieved of botheration for looking out prospective candidates. The persons recommended by the employees will be suitable for the job because they know the needs & requirement of various positions. The existing employees take full responsibility for those recommended by them and try to ensure their proper behavior and performance. This method of recruiting employees is suitable for lower position only. It may create nepotism and favoritism. The workers may be employees on the basis of their recommendations and not suitability.
Merits of Internal Sources: The following are the merits of internal sources of recruitment:
a)      It creates a sense of security among employees when they are assured that they would be preferred in filling up vacancies.
b)      It improves the morale of employees, for they are assured of the fact that they would be preferred over outsiders when vacancies occur.
c)       It promotes loyalty and commitment among employees due to sense of job security and opportunities for advancement.
d)      The employer is in a better position to evaluate those presently employed than outside candidates.
e)      This is because the company maintains a record of the progress, experience and service of its employees.
f)       Time and costs of training will be low because employees remain familiar with the organisation and its policies.
g)      Relations with trade unions remain good. Labour turnover is reduced.
h)      As the persons in the employment of the company are fully aware of, and well acquainted wit, its policies and know its operating procedures, they require little training, and the chances are that they would stay longer in the employment of the organisation than a new outsider would.
i)        It encourages self-development among the employees. It encourages good individuals who are ambitious.
j)        It encourages stability from continuity of employment.
k)      It can also act as a training device for developing middle and top-level managers.

Demerits of Internal Sources: Internal sources of recruitment have certain disadvantages as follows -
a)      Recruitment of internals leads to inbreeding and discourages new blood with new ideas from entering into the organization.
b)      It is possible that internal sources ultimately dry up and hence it may be difficult to find suitable persons from within the organization.
c)       In case of certain jobs such as advertising, style, designing, basic research etc recruitment from within is not desirable.
d)      As promotion is based on seniority, the danger is that really capable hands may not be chosen. The likes and dislikes of the management may also play an important role in the selection of personnel.
e)      Since the learner does not know more than the lecturer, no innovations worth the name can be made. Therefore, on jobs which require original thinking, this practice is not followed.
f)       Generally for middle level managers internal source is rarely used, however for promoting blue collar workers to white collar jobs internal source is more desirable.
B. External Sources: Every enterprise has to use external sources for recruitment to higher positions when existing employees are not suitable. More person are needed when expansion are undertaken. External methods are discussed as follows.
Advertisement: Advertisement is the best method of recruiting persons for higher and experienced jobs. The advertisements are given in local or national press, trade or professional journals. The requirements of jobs are given in the advertisement. The prospective candidates evaluate themselves against the requirement of jobs before sending their applications. Management gets a wider range of candidates for selection. The flood of applications may create difficulties in the process.
Employment Exchanges: Employment Exchanges run by the government are also a good source of recruitment. Unemployed persons get themselves registered with these exchanges. The vacancies may be notified with the exchanges, whenever there is a need. The exchange supplies a list of candidates fulfilling required qualification. Exchanges are a suitable source of recruitment for filling unskilled, semi-skilled, skilled and operative posts.
Education Institutions: The jobs in trade and industry are becoming technical and complex. These jobs require certain amount of educational and technical qualifications. The employers maintain a close liaison with universities and technical institutions. The students are spotted during the course of their studies. Junior level, executives or managerial may be recruited in this way.
Unsolicited Applicants: Persons in search of employment may contact employers through telephone, by post or in person. Generally, employers with good reputation get unsolicited applications. If an opening is there or is likely to be there then these persons are considered for such jobs. Personnel department may maintain a record of unsolicited applications. When jobs suitable for these persons are available these persons are available these are considered for employment.
Casual Callers: Management may appoint persons who casually call on them for meeting short-term demands. This will avoid following a regular procedure of selection. These persons are appointed for short periods only. They need not be paid retrenchment or layoff allowance. This method of recruitment is economical because management does not incur a liability in pensions, insurance and fringe benefits.
Labour Contractors: It is quite common to engage contractors for the supply of labour. When workers are required for short period and are hired without going through the full procedure of selection etc.., contractors maintain regular contracts with works at their places and also bring them to the cities at their own expense. The persons hired under this system are generally unskilled workers.
Labour Unions: Labour unions are one of the sources of external recruitment. The job seekers are required to register with labour unions, & the labour unions are require to supply the names of persons for filing the vacancies. This method may encourage good co-operation between business firms and labour unions, active participation of persons in labour unions, the development of leadership qualities in workers, etc.,
Consulting Agencies: Consulting agencies are one of the important sources of recruitment, especially for big companies. Consulting agencies are specialised agencies which recruit people on behalf of their clients. They invite application for jobs specified by their clients from job seekers through advertisements, screen the application, interview the candidates and select the suitable candidate. They do these services for their clients for some Fees.
Educational Institutions: Universities, Colleges & Management institute are also one of the sources of recruitment of personnel, particularly for the posts of Scientists, Engineers & Management specialist. They have there own employment bureaus to help business organizations in recruiting the students for various jobs.
Present Employees: Present Employees are also one of the sources of recruitment of personnel. The present employees of the concern are asked by the management to recommend suitable persons for employment in the concern.
Advantages of External Recruitment: External sources of recruitment are suitable for the following reasons:
a)      It will help in bringing new ideas, better techniques and improved methods to the organisation.
b)      The cost of employees will be minimised because candidates selected in this method will be placed in the minimum pay scale.
c)       The existing employees will also broaden their personality.
d)      The entry of qualitative persons from outside will be in the interest of the organisation in the long run.
e)      The suitable candidates with skill, talent, knowledge are available from external sources.
f)       The entry of new persons with varied expansion and talent will help in human resource mix.
Disadvantages of External Sources:

a)      Orientation and training are required as the employees remain unfamiliar with the organisation.
b)      It is more expensive and time-consuming. Detailed screening is necessary as very little is known about the candidate.
c)       If new entrant fails to adjust himself to the working in the enterprise, it means yet more expenditure on looking for his replacement.
d)      Motivation, morale and loyalty of existing staff are affected, if higher level jobs are filled from external sources. It becomes a source of heart-burning and demoralisation among existing employees.
Difference between internal and external sources of recruitment
Bases of Difference
Internal Sources
External Sources
Recruitment is form within the organization.
It is the recruitment from outside employees.
It is generally based on seniority cum merit.
It is strictly based on merit and qualifications.
Time involved
It is less time consuming.
It is a time consuming exercise.
It is a cheap source of recruitment.
It is an expensive source of recruitment. It involves time, expense and resources.
No reference of the employees is needed since all his records are available with the concern.
Since enterprise does not know about person, references about previous work, conduct and character are needed.
There is a limited choice from among the present employees.
There is a wide choice from a large number of applicants.

Factor Affecting Recruitment
The factors affecting recruitment can be classified as internal and external factors.
The internal factors are:
a)      Wage and salary policies;
b)      The age composition of existing working force;
c)       Promotion and retirement policies;
d)      Turnover rates;
e)      The nature of operations involved the kind of personnel required;
f)       The level and seasonality of operations in question;
g)      Future expansion and reduction programmes;
h)      Recruiting policy of the organisation;
i)        Human resource planning strategy of the company;
j)        Size of the organisation and the number of employees employed;
k)      Cost involved in recruiting employees, and finally;

l)        Growth and expansion plans of the organisation.
The external factors are:
a)      Supply and demand of specific skills in the labour market;
b)      Company’s image perception of the job seekers about the company.
c)       External cultural factors: Obviously, the culture may exert considerable check on recruitment. For example, women may not be recruited in certain jobs in industry.
d)      Economic factors: such as a tight or loose labour market, the reputation of the enterprise in the community as a good pay master or otherwise and such allied issues which determine the quality and quantity of manpower submitting itself for recruitment.
e)      Political and legal factors also exert restraints in respect of nature and hours of work for women and children, and allied employment practices in the enterprise, reservation of Job for SC, ST and so on.
Recruitment is the process of location,  identifying,  and  attracting  capable  applications  for  jobs  available  in  an  organization.  Accordingly,  the  recruitment  process  comprises  the  following  five  steps:
a)      Recruitment planning;
b)      Strategy Development; 
c)       Searching;
d)      Screening;
e)      Evaluation and Control.
a)      Recruitment Planning: The first involved in the recruitment process is planning.  Hire, planning involves to draft a comprehensive job specification for the vacant position, outline its major and minor responsibilities; the skills, experience  and  qualifications  needed;  grade  and level  of  pay;  starting  date;  whether  temporary  or  permanent;  and  mention  of special  condition,  if any,  attached  to  the  job  to  be  filled.
b)      Strategy Development: Once  it  is  known  how  many  with  what  qualification  of  candidates  are required,  the  next  step  involved  in  this  regard  is  to  device  a  suitable  strategy for  recruitment  the  candidates  in  the  organization.  The strategic considerations to  be  considered  may  include  issues  like  whether  to  prepare  the  required candidates  themselves  or  hire  it  from  outside,  what type  of  recruitment method  to  be  used,  what  geographical  area  be  considered,  for  searching  the candidates,  which  source  of  recruitment  to  be  practiced,  and  what  sequence  of activities  to  be  followed  in  recruiting  candidates  in  the  organization.
c)       Searching: This step involves attracting job seeders to the organization.  There are broadly two sources used to attract candidates.  These are:
Ø  Internal Sources
Ø  External Sources.
d)      Screening: Through  some  view  screening  as  the  starting  point  of  selection,  we  have considered  it  as  an  integral  part  of  recruitment.  The reason being  the selection  process  starts  only  after   the  application  have  been  screened  and  short listed. Those who do not qualify are straightway eliminated from the selection process. The techniques used for screening candidates are vary depending on the source of supply and method used for recruiting. Preliminary applications, de-selections tests and screening interviews are common techniques used for screening the candidates.
e)      Evaluation and control: Given the considerable involved in the recruitment process, its evaluation and control is, therefore, imperative. The costs generally incurred in a recruitment process include Salary of recruiters, Cost of time spent for preparing job analysis, advertisement, Administrative expenses, Cost of outsourcing or overtime while vacancies remain unfilled, Cost incurred in recruiting unsuitable candidates.  
In view of above, it is necessary for a prudent employed to try answering certain questions like:
1)      Whether the recruitment methods are appropriate and valid?
2)      Whether the recruitment process followed in the organization is effective at all or not?

Meaning of Scientific Recruitment and Selection
A scientific recruitment and selection process involves job analysis, advertisements, written tests, personal interviews, medical examination, final selection, etc. It is conducted by different types of experts. It involves a lot of time, energy and money (cost). Even then most organisations use a scientific selection policy to select their employees. This is because of its various advantages. 
Importance of Scientific Recruitment and Selection
The scientific selection policy is given importance due to these reasons:-
a)      Right job for the Right Person : Scientific selection policy helps to find the right man for the right job. It also helps to find the right job for the right person.
b)      Reduces Labour Absenteeism and Turnover : Labour absenteeism refers to the employees remaining absent from regular duty (work). Labour turnover refers to the employees leaving the company. Scientific selection policy helps to reduce both labour absenteeism and labour turnover. This is because it helps to select the right candidates for the right jobs. These candidates get job satisfaction, and they have a high morale. So they will not remain absent, and they will not leave the company.
c)       Reduces wastages, damages and accidents : The scientific selection policy results in the selection of qualified and interested employees. These employees will be very careful while handling machines and materials. This will reduce wastage, damages and accidents.
d)      Reduces Training and Supervision Costs : The scientific selection policy results in the selection of qualified and interested employees. These employees require less training and supervision. This will reduce the training and supervision cost.

e)      Improves Goodwill of the Company : Scientific selection policy results in the selection of interested employees. These employees will maintain very good relations with the shareholders, customers, public etc. This will improve the goodwill of the company.
f)       High Morale : The employees who are selected through scientific selection policy do get job satisfaction. This will increase their morale. High morale brings many benefits to the company.
g)      High Efficiency and Productivity : The employees selected through this policy will perform their jobs very efficiently. This will increase the productivity & profitability of the organisation.
Meaning and Definition of Compensation
In layman’s language the word ‘compensation’ means something, such as money, given or received as payment for service. The word compensation may be defined as money received in the performance of work, plus the many kinds of benefits and services that organization provides their employee. It refers to wide range of financial and non-financial rewards to employee for their service rendered to the organization. It is paid in the form of wages, salaries , special allowance and employee benefits such as paid vacation, insurance, maternity leaves, free travel facility , retirement benefits etc.
According to Wendell French,” Compensation is a comprehensive term which includes wages, salaries and all other allowance and benefits.”
Wages are the remuneration paid for skilled, semi-skilled and unskilled operative workforce. Salary is the remuneration of those employees who provides mental labour to the employer such as supervisor, office staff, executive etc wages are paid on daily or hourly basis where as salary is paid on monthly basis.
Factors Affecting Compensation Planning
A combination of external and internal factors can influence, directly or indi­rectly, the rates at which employees are paid. Through their interaction these factors constitute the wage mix, as shown below.
A. External Factors: The major external factors that influence wage rates include labor market condi­tions, area wage rates, cost of living, legal requirements, and collective bargain­ing if the employer is unionized.
Labor Market Conditions: The labor market reflects the forces of supply and demand for qualified labor within an area. These forces help to influence the wage rates required to recruit or retain competent employees. It must be recognized, however, that counter-forces can reduce the full impact of supply and demand on the labor market. The economic power of unions, for example, may prevent employers from lowering wage rates even when unemployment is high among union members. Govern­ment regulations also may prevent an employer from paying at a market rate less than an established minimum.
Area Wage Rates: Data from area wage surveys can be used to prevent the rates for certain jobs from drifting too far above or below those of other employers in the region. When rates rise above existing area levels, an employer’s labor costs may become excessive. Conversely, if they drop too far below area levels, it may be difficult to recruit and retain competent personnel. Wage-survey data must also take into account indirect wages paid in the form of benefits.
Cost of Living: Because of inflation, compensation rates have had to be adjusted upward periodically to help employees maintain their purchasing power. This can be achieved through escalator clauses found in various labor agreements. These clauses provide for quarterly cost-of-living adjustments (COLA) in wages based on changes in the consumer price index (CPI). The CPI is a measure of the average change in prices over time in a fixed “market basket” of goods and services.
Collective Bargaining: One of the primary functions of a labor union is to bargain collectively over conditions of employment, the most important of which is compensation. The union’s goal in each new agreement is to achieve increases in real wages--wage increases larger than the increase in the CPI--thereby improving the purchasing power and standard of living of its members. This goal includes gaining wage settlements that equal if not exceed the pattern established by other unions within the area.
B. Internal Factors: The internal factors that influence wage rates are the employer's compensation policy, the worth of a job, an employee's relative worth in meeting job require­ments, and an employer's ability to pay.
Employer’s Compensation Policy: The compensation objectives of two organiza­tions can be quite different. One might strive to be an industry pay leader, while another seeks to be wage-competitive by paying employees at the seventy-fifth percentile of their competitors’ wages. Both employers strive to promote a compensation policy that is fair and competitive. All employers will establish nu­merous compensation objectives that affect the pay employees receive.
Worth of a Job: Organizations without a formal compensation program generally base the worth of jobs on the subjective opinions of people familiar with the jobs. In such in­stances, pay rates may be influenced heavily by the labor market or, in the case of unionized employers, by collective bargaining.
Employee’s Relative Worth: In industrial and office jobs, differences in employee performance can be recognized and rewarded through promotion and with various incentive systems. Superior performance can be rewarded by granting merit raises on the basis of steps within a rate range established for a job class.
Employer’s Ability to Pay: In the public sector, the amount of pay and benefits employees can receive is lim­ited by the funds budgeted for this purpose and by the willingness of taxpayers to provide them. In the private sector, pay levels are limited by profits and other fi­nancial resources available to employers. Thus an organization's ability to pay is determined in part by the productivity of its employees.
Essentials of an ideal Compensation Management System
Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the labour expects wages from the process.
Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:
1)      An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.
2)      It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable.

3)      Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.
4)      The system should be simple and flexible so that every employee would be able to compute his own compensation receivable.
5)      It should be easy to implement, should not result in exploitation of workers.
6)      It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.
7)      Such system would help management in complying with the various labor acts.
8)      Such system should also solve disputes between the employee union and management.
9)      The system should follow the management principle of equal pay.
10)   It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.
11)   Sound Compensation/Reward System brings peace in the relationship of employer and employees.
12)   It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.
13)   The system provides growth and advancement opportunities to the deserving employees.
14)   The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.
15)   The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.
16)   The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.
17)   The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.
Objectives of Compensation Management
The compensation paid to employees is agency consideration. Each party to agency tries to fix this consideration in its own favor. The employers want to pay as little as possible to keep their costs low. Employees want to get as high as possible. The compensation management tries to strike a balance between these two with following specific objectives:
1. Attracting and Retaining Personnel: From organisation’s point of view, the compensation management aims at attracting and retaining right personnel in the organisation. In the Indian corporate scene, there is no dearth of personnel at operative levels but the problems come at the managerial and technical levels particularly for growing companies. Not only they require persons who are well qualified but they are also retained in the organisation. In the present day context, managerial turnover is a big problem particularly in high knowledge-based organisations.
2. Motivating Personnel: Compensation management aims at motivating personnel for higher productivity. Monetary compensation has its own limitations in motivating people for superior performance. Alfie Kohn (an American author and lecturer who has explored a number of topics in education, parenting, and human behavior.) has gone to the extent of arguing that corporate incentive plans not only fail to work as intended but also undermine the objectives they intend to achieve. He argues that this is due to inadequate psychological assumptions on which reward systems are based. His conclusions are as follows:

a.       Rewards punish people-their use confirms that someone else is in control of the employee.
b.      Rewards rupture relationships-they create competition where teamwork and collaboration are desired.

c.       Rewards ignore reasons-they relieve managers from the urgent need to explore why an employee is effective or ineffective.
d.      Rewards discourage risk taking-employees tend to do exactly what is required to earn the reward, and not any more.
e.      Rewards undermine interest-they distract both manager and the employee from consideration of intrinsic motivation.
f.        Notwithstanding these arguments, compensation management can be designed to motivate people through monetary compensation to some extent.
3. Optimizing Cost of Compensation: Compensation management aims at optimizing cost of compensation by establishing some kind of linkage with performance and compensation. It is not necessary that higher level of wages and salaries will bring higher performance automatically but depends on the kind of linkage that is established between performance and wages and salaries. Compensation management tries to attempt at this.
4. Consistency in Compensation: Compensation management tries to achieve consistency-both internal and external-in compensating employees. Internal consistency involves payment on the basis of criticality of jobs and employees’ performance on jobs. Thus, higher compensation is attached to higher-level jobs. Similarly, higher compensation is attached to higher performers in the same job. Level of jobs within an organisation is determined by job evaluation. External consistency involves similar compensation for a job in all organisations. Though there are many factors involved in the determination of wage and salary structure for a job in an organisation which may result into some kind of disparity in the compensation of a particular job as compared to other organisations, compensation management tries to reduce this disparity.
Steps in Selection Process:
Selection is a process of choosing right person for the right job. The selection process consists of a series of steps or techniques as follows:
1)         Job Analysis: The first step in selection process is analyzing the job. Job analysis consists of two parts :
a)      Job Description, and
b)      Job Specification.
Proper job analysis helps to advertise the job properly. Accordingly, the right candidates may apply for the job, thus saving a lot of time and effort of the selectors.
2)         Advertising the Job: The next step is to advertise the job. The job can be advertised through various media. The right details about the job and the candidate must be given in the advertisement.
3)         Initial Screening: The initial screening can be done of the applications and of the applicant. Usually, a junior executive does the screening work. At this stage, the executive may check on the general personality, age, qualifications, family background of the candidate. The candidate may also be informed of salary, working conditions, etc.
4)         Application Blank: It is a prescribed form of the company which helps to obtain information about candidate in respect of social, biographic, academic, work experience, references, etc. The application blank helps to –
a)      It provides input for the interview.
b)      It provides basis to reject candidates if they do not meet eligibility criteria, such as experience, qualifications, etc.
5)         Tests: Various tests are conducted to judge the ability and efficiency of the candidates. The type of tests depends upon the nature of job. An important advantage of testing is that it can be administered to a large group of candidates at a time and saves time and cost. The various tests are: (a) Personality test, (b) Intelligence test,   (c) Performance test, (d) Stress test, etc.
6)         Interview: It is face to face exchange of views, ideas and opinions between the candidate and interviewer(s). There are various types of interviews such as:  (a) Panel Interview, (b) Individual Interview, (c) Group Interview, (d) Stress Interview, (e) Exit Interview.
7)         Reference Check: A candidate may be asked to provide references from those who are willing to supply or confirm about the applicant’s past life, character and experience. Reference check helps to know the personal character and family background of the candidate. It also helps to guard against possible false information supplied by candidate.
8)         Medical Check : Medical examination of the candidates is undertaken before they join the firm in order to:
a)      Find out whether the candidate is physically fit to carry out duties and responsibilities effectively,
b)      Ensure the health and safety of other employees,
c)       Find out whether the candidate is sensitive to certain work place such as in a chemical factory.
9)         Final Interview: Before making a job offer, the candidates may be subjected to one more oral interview to find out their interest in the job and their expectations. At this stage, salary and other perks may be negotiated.

10)      Job Offer: This is the most crucial and final step in selection process. A wrong selection of a candidate may make the company to suffer for a good number of years and the loss is incalculable. Company should make a very important decision to offer right job to the right person.