Cost efficient recruitment and selection strategies

 

Introduction

The human resource function plays a very important role in organizations.  Human resources are by far the most important asset that an organization can have if it chooses the right persons. In the course of an organization’s lifetime, its workforce keeps changing. Based on the employee turnover rate, the human resource manager will engage in staffing functions from time to time. The effectiveness and efficiency of the hiring process has an impact on the level of employee turnover. When the hiring policies are inadequate, the firm incurs huge cost in terms of wasted time and money as new trainees are recruited, selected and trained for the job. As such, an ineffective recruitment and hiring policy leads to wasted resources. To reduce such waste, it is important for a firm to develop a hiring strategy that is cost effective. As Rioux and Bernthal notes, the effectiveness of a hiring strategy determines the ability of a firm to hire and retain competent personnel.

Resourcing and development

Each and every organization desires to achieve better results always. This can only be achieved by having the required manpower to accomplish upcoming and scheduled organizational task. Employee resourcing ensures that an organization has appropriate skilled people. The aim of resourcing strategy is to ensure that the organization identifies its personnel need both now and in the future, and tries to meet them through internal and external recruitment s as well as employee development (loosemore, Dainty and Lingard 2003). Employee resourcing is categorized under human resource planning function. With effective management, employee resourcing can help the organization to achieve organizational flexibility by ensuring access to full range of skills that can be utilized for longer term strategic planning and immediate response to upcoming problems and arising opportunities. Employee resourcing can enhance can help to achieve job satisfaction, employee development and career management process (loosemore, Dainty and Lingard 2003). Employee resourcing is concerned with many activities a part from recruitment and selection. It is concerned with many areas that ensure an organization meets its needs for certain required skills and behaviours.

Cost efficient recruitment and selection strategies

The success of an organization is highly dependent on the quality of the workforce. To obtain the most qualified employees, organizations have recently adopted a recruitment and selection strategy that is effective, cost efficient and easy to align with the overall organizational strategy. This strategy is employee outsourcing (Nolot, 2011 and Klaas et all, 2006. This entails contracting the services of a competent recruitment and selection firm to offer these services to the firm as it concentrates on other areas of the organization’s operations, for a small company like ours, cutting cost is important if the firm is to survive in the highly volatile software developing industry. Thus the outsourcing strategy is the most cost effective strategy for optimal hiring. Other than leaving the organization’s human resource department with enough time to handle other HR functions, the firm offering these outsourcing services is a qualified firm that has devoted its time to this task entirely. Thus, the chances of making a misjudgement in finding an employee for the given post are very low. Moreover, the competition that is prevalent in this new yet thriving business has ensured that the cost of acquiring these services is very reasonable and affordable. However, this strategy cannot be effective if the firm does not give maximum support to the service provider. This strategy calls for the active participation of the HR department in a number of areas.

The role of such a strategy is to enhance an organization’s ability to hire and retain qualified employees. More so, the recruitment process needs to be attract only competent candidates, not over qualified or under qualified candidates. Reducing cost is crucial in such a strategy and the human resource manager has the role of designing and ensuring implementation of such a strategy. For the process to be cost effective, it has to highlight the importance of a clear job analysis and specification. The current job market if filled with job seekers and an unclear job specification can lead to numerous applications. To avoid this, the firm, through the human resource department will engage in a rigorous exercise aimed at identifying the requirements of a job in detail. For instance, in the current vacant position, there will be specifications on age since the firm requires young software engineers.

A detailed job analysis will help job seekers to easily identify whether they fit the advertised job. Moreover, it will help the interviewers to easily tell the extent to which a candidate is fit for the selection and even for hiring. Therefore, the first step in this strategy is to give a detailed description of each job or vacant position in the firm.  This will identify the job design and evaluation criteria. By so doing, the firm will be able to identify probable future jobs and candidates thus avoiding wastage of time in establishing such requirements. In addition, a detailed job description will help in avoiding time wastage since likely candidates are identified beforehand.

Since the recruitment process can identify candidates from within or from outside the organization, the strategy will entail employee participation in the recruitment process. As noted by Griffin (2011) employee involvement has a lot of benefits. First, employees have firsthand experience of the job and know the type of skill required in handling the task. This way, they are able to describe the job in more job related terms that will easily grab the attention of qualified candidates while leaving out the under qualified lot. In the actual selection process, employee involvement helps to identify overqualified candidates who may become dissatisfied with the job soon after employment and leave either willingly or unwillingly resulting in increased turnover.

Thirdly, employees can identify potential qualified candidates reducing the tasks involved in recruitment. This will be used for some technical posts where employees will be allowed to recommend candidates for certain posts based on their networking experience. Some of the tasks that the firm’s HR will engage in to promote quick recruitment will include determining in advance the remunerations that the firm will offer for each job and recording and storing the particulars of various job positions and policies on employment equity and criteria (Richardson). The issue of remuneration is especially important since most qualified candidates refuse job offers due to unsatisfactory compensation (Bernthal).

In assisting the outsourcing service provider to come up with a manageable list of qualified candidates, the HR department will continuously keep in touch with the firm to give assistance on areas such as the organizational culture and values of the firm (Evans et al, 2007). This is because the right candidate is one who is highly likely to be comfortable and to fit in with the culture of the firm. Such assistance will involve the participation of the HR officials in some of the interviewing sessions to ensure that the firm conducts it in a manner that is likely to produce the required outcome.

Costs associated with hiring that will be reduced through outsourcing strategy

Outsourcing these services will save costs in more than one area. Other that the recruitment and selection related costs, the firms offering these services also offer payroll management services hence reducing costs in this area. Moreover, by ensuring that only competent persons are hired, the ratio of operation costs to productivity reduces due to a motivated productive employee base (The Times 100, 2011). This is mainly because as the turnover reduces, the employees will become more skilled in their profession. This strategy will help the firm to maximize on the service provider’s technology and expertise and to get international competent employees at minimal cost. It will also help to do away with fixed hiring costs that are unnecessarily incurred due to the unpredictable nature of hiring needs (Byham:13).

Costs of hiring can be much hidden such that they are not carefully managed when recruitment and hiring is done internally. Some firms engage in informal interview sessions where potential employees are interviewed in informal settings such as restaurants. Such interviews lead to refreshment expenditures that make the hiring process expensive. Moreover, internally operated recruitment and selection exercise may necessitate use of several advertisement mediums such as newspapers and internet to reach the required target. When this job market is international in nature, the costs of advertising go up. Another cost lowered by outsourcing is the cost of flying in such international candidates for evaluation and testing. In addition, when the evaluation and assessment process has to be conducted on all candidates, the costs increase. However, when the firm develops a lasting relationship with an outsourcing service provider, these costs will go down due to the economies of large scale recruitment that it enjoys. Moreover, such firms have a large accessible database of qualified candidates based on previous evaluations done. As Hudson (2010) notes, such firms maintain well updated and relevant databases of all employees that they have screened as well as resumes of potential candidates who have registered with. In this case, it the strategy will save the firm a lot of time and money which is the main objective of developing this strategy.

It is however important to note that the cost of using these services can outdo those of internal recruitment and selection exercise if the firm is not chosen well. As such, before selecting the firm to contact with, the software firm will conduct a critical review of the service providers in the market to understand the average costs of outsourcing, the level of screening and selection skill of the firm’s professionals and the flexibility of the contract terms to ensure that the firm will be committed to helping the business to meet its cost efficiency goal in hiring and in overall operations.

Other benefits that will accrue from outsourcing include flexibility of the managerial focus on other HR issues as well as increased autonomy from tight organizational policies. It will lead to a more flexible operations environment where the firm will attain a competitive advantage and greater creation of value in each process of software development (Naikrihub.com, 2011). The firm will however have to exercise maximum care to ensure that the process does not lead to divulging of critical inside information to outside parties who may knowingly or unknowingly expose it to our its competitors (Belcourt, 206).

There a number of studies that supports the outsourcing of recruitment and selection services. According to Ordanini and Silvestri (2008), this service plays a very important role in determining the quality of the firm’s workforce. As such, deciding to outsource these services may lead to high quality of work due to the expertise of the service provider. They also note that outsourcing recruitment and selection services increases the firm’s resource base, based on the resource based view of the firm. In addition, this strategy is highly linked to the firm’s cost reduction strategy since it leads to reduction of costs such as training costs and adverting costs.

Ume (2008) notes that this strategy has benefited several firms a great deal. He however warns that this strategy must be coupled with other HR strategies to avoid the event that a firm loses competence and ability to innovate. If the management does not monitor the recruitment and selection process closely, some aspects of its organizational needs may be undermined. Thus, in the implementation of this strategy, the HR manager will be closely involved to ensure that the needs of the particular job and the organization as whole are put into consideration. This will ensure that the hired persons have the right mix of skill and temperament to handle the job. Such aspects will go a long way in improving the firm’s ability to retain its competent employees. Moreover, better retention rates will allow the firm to focus on career building which in turn will lead to a contented workforce with high productivity.

This article highlights major companies that have in the past used the strategy to reduce hiring costs and increase quality of work. One such company is Ford Company limited that used the services of The Outsourced Training Company to maximize on the skills available in the UK resource market. This service allowed the firm to attain the best workforce while saving the hassle of going through the many applications that would have landed on the HR manager’s desk. Another company highlighted is the M&G Investments in UK that has in the past reduced hiring costs by outsourcing its employees through the Origin HR Company. The managers of these firms assert that this strategy is highly beneficial which indicates that it is the best strategy to adopt in the software company.

Bracken (2011) also supports the recruitment outsourcing strategy of engaging in cost efficient hiring process by noting that the strategy reduces the cost of each single hire, reduces time of filling out vacant positions and provides access to effecting hiring technology without having to make extra investments. The efficiency of the outsourcing strategy includes the excellence involved in the whole process from job profiling all the way to training of new employees for the particular task. Given the sensitivity of the current job position, outsourcing will play a major role in ensuring that the young software engineers hired are well suited for the role and the organization.

 

 

Conclusion

In reducing cost of hiring, firms are now outsourcing this service from more competent organizations. This strategy will help the firm to reduce the number of job finalists that are interviewed for a job thus reducing the time and financial resource spent on the hiring process. Moreover, outsourcing will lead to hiring of the right persons thus increasing quality of work and reducing employee turnover at the advantage of the firm. This strategy not only leads to quick, cost efficient hiring of the right persons for the 5 vacancies and future positions, it will also open up the software firm to strategic business alliances. Since recruitment and selection outsourcing firms use different software to screen and assess candidates, the competent employees employed through the outsourcing process will be engaged in developing such software which will then be sold to the firm at a subsidized price.

References

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Review, Vol. 16 (2), pp 269-279. Available at:

http://www.sciencedirect.com/science/article/pii/S1053482206000234

Bernthal P. R.  Recruitment and Selection. Available at:

http://www.ddiworld.com/DDIWorld/media/trend-research/recruitment-and-selection_ere_es_ddi.pdf?ext=.pdf

Bracken, C., 2011. Using Recruitment Process Outsourcing to Reduce Cost Per Hire.

Available at: http://iq.callme.io/2011/09/28/using-recruitment-process-outsourcing-to-reduce-cost-per-hire/

Byham, W. C. The outsourcing question, p 13. Available at:

http://www.ddiworld.com/DDIWorld/media/white-papers/outsourcingquestion_wp_ddi.pdf?ext=.pdf

Evans et al, 2007. Effective recruitment strategies and practices: addressing skills needs and

gender diversity challenges in ITEC and related sectors. Available at: http://www.uoc.edu/symposia/genere_tic/pdf/pres/Recruitment_Strategies__Practices-ebook.pdf

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http://smallbusiness.chron.com/employee-selection-strategy-2539.html

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Available at: http://hudsonrpo.com/node.asp?kwd=3-way-rpo-reduces-cost

Klaas et al, 2006. HR outsourcing and its impact: the role of transaction costs.

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http://onlinelibrary.wiley.com/doi/10.1111/j.1744-6570.1999.tb01816.x/

Loosemore, M. Dainty, A. & Lingard, H. 2003, Human resource management in construction industry: strategic and operational approaches, Taylor & Francis, New York.

 

Nolot, 2011. Recruitment Process Outsourcing. Available at: http://www.nolot.net/services-

and-solutions/outsourcing-services/recruitment-process-outsourcing

Naikrihub.com, 2011. Advantage of outsourcing recruitment. Available at:

http://recruitment.naukrihub.com/advantage-of-outsourcing-recruitment.html

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