HR MGMT Chapter 5

There are three main types of employment agencies:

(1) public agencies operated by federal, state, or local governments; (2) agencies associated with nonprofit organizations; and (3) privately owned agencies.

Another simple approach, ratio analysis, means making forecasts based on the historical ratio between

(1) some causal factor (like sales volume) and (2) the number of employees required (such as number of salespeople).

Recruitment sourcing involves determining what your recruitment options are, and then assessing which are best for the job in question. Internal

(within company) sources include, for instance, employee referrals and job posting systems. External (outside company) sources range from social media sites like LinkedIn to executive search firms and newspaper ads.

A scatter plot shows graphically how two variables—such as sales and your firm's staffing levels—are related. If they are,

, then if you can forecast the business activity (like sales), you should also be able to estimate your personnel needs.

Therefore, the firm must generate about

1,200 leads to be able to invite in 200 viable candidates of which it interviews about 150, and so on.

Note that although simple, tools like scatter plots have drawbacks.

1. Historical sales/personnel relationships assume that the firm's existing ways of doing things will continue as is. 2. They tend to reward managers for adding employees, irrespective of the company's needs. 3. They tend to institutionalize existing ways of doing things, even in the face of change.

position replacement card

A card prepared for each position in a company to show possible replacement candidates and their qualifications.

Ratio analysis

A forecasting technique for determining future staff needs by using ratios between, for example, sales volume and number of employees needed.

Application form

A form used by employers to compile information regarding an applicant's identity and educational, military, and work history.

Scatter plot

A graphical method used to help identify the relationship between two variables.

2

Build a pool of candidates for these jobs, by recruiting internal or external candidates.

personnel replacement charts

Company records showing present performance and promotability of inside candidates for the most important positions.

5

Decide to whom to make an offer, by having the supervisor and perhaps others interview the candidates.

Steps in Recruitment and Selection Process: 1

Decide what positions you will need to fill, through workforce planning and forecasting.

Employee recruiting

Finding and/or attracting applicants for the employer's open positions.

To help avoid problems:

Give the agency an accurate and complete job description. Make sure tests, application blanks, and interviews are part of the agency's selection process.

3

Have candidates complete application forms and perhaps have initial screening interviews.

Third,

Internet access makes it relatively easy for more people to access the firm's computerized files. 17 The U.S. Office of Personnel Management lost data on as many as 14 million current and former employees this way. 18 Solutions include the need for password-protected folders.

Applicant tracking systems

Online systems that help employers attract, gather, screen, compile, and manage applicants.

job posting

Publicizing an open job to employees (often by literally posting it on bulletin boards) and listing its attributes, like qualifications, supervisor, working schedule, and pay rate.

College recruiting

Sending an employer's representatives to college campuses to prescreen applicants and create an applicant pool from the graduating class.

on-demand recruiting services (ODRS)

Services that provide short-term specialized recruiting to support specific projects without the expense of retaining traditional search firms.

Trend analysis

Study of a firm's past employment needs over a period of years to predict future needs.

Recruiting yield pyramid

The historical arithmetic relationships between recruitment leads and invitees, invitees and interviews, interviews and offers made, and offers made and offers accepted.

Succession planning

The ongoing process of systematically identifying, assessing, and developing organizational leadership to enhance performance.

workforce (or employment or personnel) planning

The process of deciding what positions the firm will have to fill, and how to fill them.

Recruiting Yield Pyramid

The ratio of offers made to actual new hires is 2 to 1. The ratio of candidates interviewed to offers made is 3 to 2. The ratio of candidates invited for interviews to candidates interviewed is about 4 to 3. Finally, the firm knows that of six leads that come in from all its recruiting sources, it typically invites only one applicant for an interview—a 6-to-1 ratio.

Alternative staffing

The use of nontraditional recruitment sources.

4

Use selection tools like tests and background investigations to screen candidates.

Use one if:

Your firm doesn't have its own human resources department and feels it can't do a good job recruiting and screening. You must fill a job quickly. There is a perceived need to attract more minority or female applicants. You want to reach currently employed individuals, who might feel more comfortable dealing with intermediaries. You want to reduce the time you're devoting to recruiting

Furthermore, effective online ads don't just transfer newspaper ads to the Web. As one specialist put it, "getting recruiters out of the 'shrunken want ad mentality' is a big problem." The ineffective online

ad in Figure 5.7 has needless abbreviations and says little about why job seekers should want that job.

Filling open positions with inside candidates has several advantages. First, there is really no substitute for already knowing a candidate's strengths and weaknesses. Current employees may

also be more committed to the company. Morale and engagement may rise if employees see their colleagues promoted for loyalty and competence. And inside candidates should require less orientation and (perhaps) training than outsiders.

Qualifications skills inventories may reveal employees who have potential for further training, or who have the right background for the open job. Similarly,

an examination of personnel records (including application forms) may uncover employees who are working in jobs below their educational or skill levels and may also reveal persons who have the right background for the open jobs in question.

There are other advantages. External hires tend to come in at higher salaries than do those promoted internally,

and some apparent "stars" hired from outside may turn out to have excelled more because of the company they came from than from their own skills.

Most systems are from application service providers (ASPs). These basically redirect

applicants from the employers to the ASP's site where, for instance, they may fill out forms and take tests.

Some employers have mixed experiences with public agencies. For one thing, applicants for unemployment insurance are required to register and to make themselves

available for job interviews. Some of these people are not interested in returning to work, so employers can end up with applicants who have little desire for immediate employment. And fairly or not, employers probably view some of these local agencies as lethargic in their efforts to fill area employers' jobs.

Yet using employment agencies requires

avoiding the potential pitfalls.

Workforce planning is part of the firm's strategic and

business planning processes

As with all employees, the employer should carefully select and train recruiters. This should include interpersonal skills training (such as in communicating), as well as providing

basic knowledge about how to recruit, the employer's recruitment process, the pros (and cons) of working for the employer, and about how laws (such as EEO) affect what recruiters can do.

Filling even a few positions might require recruiting dozens or hundreds of

candidates. Managers therefore use a recruiting yield pyramid

For each current employee, list the person's skills, education, company-sponsored courses taken,

career and development interests, languages, desired assignments, and other relevant experiences. Computerized versions of skills inventory systems are also available.

For a target firm, there is no way to become "poaching proof." However, steps such as having employees sign noncompete agreements prohibiting them from joining competitors for a reasonable time or antisolicitation

clauses prohibiting them from soliciting current customers may, if crafted wisely, protect the target employer for a time.

Larger firms can't track the qualifications of hundreds or thousands of employees manually. Therefore they computerize this information, using packaged software systems such as Skill-Base's skills inventory software. 12 Skills inventory systems such as these enable employers to collect and

compile employee skills information in real time via online employee surveys. Skills inventory programs help management anticipate staffing and skills shortages, and facilitate workforce planning, recruitment, and training.

Apple recently hired someone who was managing Amazon's Fire TV business to run Apple TV. Such "poaching" of

current employees from competitors is a popular and potentially useful source of recruits, but also one fraught with potential problems.

Of course, it is not just recruiting but

effective recruiting that is important, starting with the recruiters themselves.

In a perfect world, the employer will adhere to formal internal-recruitment policies and practices. These typically rely heavily on job posting and on the firm's skills inventories. Job posting means publicizing the open job to

employees (usually by posting it on company intranets or bulletin boards). These postings list the job's attributes, such as qualifications, supervisor, work schedule, and pay rate.

Employers also use a mathematical process known as Markov analysis (or "transition analysis") to forecast availability of internal job candidates. Markov analysis involves creating a matrix that shows the probabilities that

employees in the chain of feeder positions for a key job (such as from junior engineer to engineer, to senior engineer, to engineering supervisor, to director of engineering) will move from position to position and therefore be available to fill the key position.

Recall that Valero Energy almost lacked sufficient time to implement a plan to replace

employees who would soon retire. Best talent management practice therefore requires paying continuous attention to workforce planning issues. Managers call this predictive workforce monitoring.

Third,

employment law prescribes what you can do

Every state has a public, state-run employment service agency. The U.S. Department of Labor supports these agencies, through grants and through other assistance such as a nationwide job bank. The National Job Bank

enables agency counselors to advise applicants about available jobs in other states as well.

With more jobs technology-based, many applicants will lack required skills, such as in math and teamwork; the manager will therefore have to

factor such things as training and development into the workforce plan

Private employment agencies are important sources of clerical, white-collar, and managerial personnel. They charge fees

for each applicant they place. Most are "fee-paid" jobs, in which the employer pays the fee.

Just about every country

has its own recruitment sites

Yet these agencies are useful. Beyond just filling jobs, counselors will visit an employer's work site, review the employer's job requirements, and even assist the employer in writing job descriptions. Most states

have turned their local state employment service agencies into "one-stop" shops—neighborhood training/employment/career assessment centers.

A deluge of applications means that just about all Fortune 500 companies and many others now use applicant tracking software to screen applications. 55 Applicant tracking systems (ATS) are online systems that

help employers attract, gather, screen, compile, and manage applicants. 56 They also provide other services, including requisitions management (for monitoring the firm's open jobs), applicant data collection (for scanning applicants' data into the system), and reporting (to create various recruiting-related reports such as cost per hire and hire by source).

Employers can easily

improve their online recruiting results.

Although recruiting may bring to mind LinkedIn and classified ads, internal sources—

in other words, current employees or "hiring from within"—are often the best source of candidates.

. Its aim is to identify and to eliminate the gaps between the employer's forecasted workforce needs and the current employees who might be suitable for filling those needs. Workforce planning

is also known as employment or personnel planning. Workforce planning embraces all future positions, from maintenance clerk to CEO. However, most firms call the process of deciding how to fill executive jobs succession planning

The employer must control the personal data stored in its data banks, and all managers must be vigilant about protecting employees' privacy, for several reasons. First

is the volume and personal nature of information in most employee data banks.

Second

laws (such as HIPAA, the Health Insurance Portability and Accountability Act) give employees legal rights regarding access to their information.

However online recruiting has two potential problems. First, older people and some minorities are

less likely to use the Internet, so online recruiting may inadvertently exclude older applicants (and certain minorities). 53 The second problem is Internet overload: Employers end up deluged with résumés. Self-screening helps

They typically include items like work experience codes, product knowledge, the employee's level of familiarity with the employer's product

lines or services, the person's industry experience, formal education, foreign language skills, relocation limitations, career interests, and performance appraisals.

Hiring from within can also backfire. Inbreeding is a problem if new perspectives are required. The process of posting openings and getting inside applicants can also be a waste of time because often the department

manager already knows whom he or she wants to hire. Rejected inside applicants may become discontented; telling them why you rejected them and what remedial actions they might take is crucial.

Computerized forecasts enable

managers to build more variables into their workforce projections.

Few historical trends, ratios, or relationships will continue unchanged into the future. Judgment is needed to adjust the forecast. Illustrative factors that

may modify your initial forecast of personnel requirements include decisions to upgrade quality or enter into new markets; technological changes resulting in increased productivity; and financial resources available, for instance, a looming budget crunch.

Digital recruiting is replacing traditional help wanted ads, but print ads are still popular. Here employers should address two issues: the advertising

medium and the ad's construction. The best medium—the local paper, The Wall Street Journal, The Economist, for instance—depends on the positions for which you're recruiting.

Most (nonprofit) professional and technical societies, such as the Institute for Electrical and Electronic Engineers (IEEE), have units that help

members find jobs. Public agencies place people such as those who are disabled.

Employees, unions, legislators, and even many business owners feel that "shipping jobs out" (particularly overseas) is ill-advised, and that feeling became more intense with the new Republican administration. That

notwithstanding, employers are sending jobs out, and not just blue-collar jobs.

Many employers encourage internal recruiting,

on the reasonable assumption that doing so improves employee engagement.

Like any good plans, workforce plans are built on forecasts—basic assumptions about what the future will be. Here the manager will need three forecasts: one for personnel needs (demand),

one for the supply of inside candidates, and one for the supply of outside candidates. With these in hand, the manager can identify supply-demand gaps and develop action plans to fill the projected gaps.

Online recruiting is getting more sophisticated. In Hungary, the local office of accountants PriceWaterhouseCoopers (PWC) lets prospective applicants use an

online simulation it calls Multipoly, to give applicants a better idea of what working for PWC is like. The firm attributes a significant increase in applicants to use of the game.

For assessing which source is best for the job, most employers probably still look first at the number of applicants the source produces. However quantity doesn't necessarily mean quality. Therefore

other effectiveness metrics would include, for each source, how many of its applicants were hired, how well its applicants performed on the job, how many failed and had to be replaced, and applicants' performance in terms of training, absence, and turnover.

Most firms start by determining which current (inside) employees are qualified or trainable for the projected openings. Department managers or

owners of smaller firms can use manual devices to track employee qualifications (or will simply know who can do what).

Often the employee, supervisor, and human resource manager will enter information about the employee's background, experience, and skills via the system. Then, when a manager needs a person for a position, he or she uses key words to describe the position's specifications (for instance, in terms of education and skills). The computerized system then

produces a list of qualified candidates. As the user of one such system said, it "allows us to track and assess the talent pool and promote people within the company . . . 75% of key openings are fulfilled by internal candidates. The succession module helps us to identify who the next senior managers could be and build development plans to help them achieve their potential.

The basic process here usually starts with forecasting revenues. From a practical point of view, the demand for your product or service is paramount. Thus, in a manufacturing firm, sales are projected first. Then the volume of

production needed to meet the sales requirements is determined. Finally, the staff needed to maintain this volume of output is estimated. In addition to production or sales demand, the manager will also consider factors such as projected turnover, decisions to upgrade the quality of products or services, technological changes resulting in increased productivity, and the financial resources available to your department.

The manager interested in fostering employee engagement can draw several lessons from FedEx's successful promotion-from-within system: show a genuine interest in your employees' career aspirations;

provide career-oriented appraisals; see that your employees have access to the training they need to develop themselves; and balance your desire to keep good employees, with the benefits of helping them learn of and apply for other positions in your company.

Trend analysis provides an initial rough estimate of future staffing needs. However, employment levels

rarely depend just on the passage of time. Other factors (like productivity, for instance), will influence impending workforce needs.

Second,

recruiting depends on nonrecruitment issues such as pay scales.

Like trend analysis, ratio analysis assumes that things like productivity

remain about the same. If sales productivity were to rise or fall, the ratio of sales to salespeople would change.

Computerized systems and Excel spreadsheets quickly translate estimates of projected productivity and sales levels into forecastable personnel

requirements. Many firms particularly use computerized employee forecasting systems for estimating short-term needs.

Online recruiting generates more responses quicker and for a longer time at less cost than just about any other method. And, because they are

richer and more comprehensive in describing the jobs, Internet-based ads have a stronger effect on applicant attraction than do printed ads.

Many (or most) job openings aren't publicized at all; jobs are created and become available when employers

serendipitously come across the right candidates.

Effective recruiting is not easy. First,

some recruiting methods are superior to others, depending on the job

Job applicants view ads with more

specific job information as more attractive and more credible

Rather than bringing people in to do the company's jobs, outsourcing and offshoring send the jobs out. Outsourcing means having outside vendors

supply services (such as benefits management or manufacturing) that the company's own employees previously did in-house. Offshoring means having outside vendors or employees abroad supply services that the company's own employees previously did in-house.

It starts with an attention-grabbing heading and uses the extra space to provide more specific job information. It provides good reasons to work for this company. Many employers include the entire job description. 64 Ideally,

the ad should provide a checklist of the job's human requirements for applicants to gauge if the job is a good fit.

The demand forecast only answers the question: "How many employees in what positions will we need?" Next,

the manager must forecast the supply of available inside and outside candidates.

Assuming the employer authorizes the manager to fill a position,

the next step is to build an applicant pool

Most employers recruit through

their own websites, or use job boards such as Indeed.com

Effective branding

therefore requires effective policies

Line and staff cooperation in recruitment is essential. The human resource manager charged with filling a position is seldom very familiar with the job itself. He or she will

therefore work with the supervisor to ascertain what the job really entails and its job specifications, as well as informal things like how the team gets along.

Employers can't always get all the employees they need from their current staff, and sometimes they just don't want to. If so,

they turn to outside candidates. There are many ways to do this.

More employers are using marketing techniques to bolster their recruiting;

this usually starts with building their "employer brand." Most obviously, it is futile to recruit if the employer's reputation is that it's an awful place to work.

If there will not be enough inside candidates to fill anticipated openings (or you want to go outside for another reason), you will probably focus next on projecting supplies of outside candidates—

those not currently employed by your organization. Doing so can help you anticipate and adapt to problems finding qualified candidates. This forecast depends first on the manager's own sense of what's happening in his or her industry and locale

The basic tools for projecting personnel needs include

trend analysis, ratio analysis, and the scatter plot.

Virtual (fully online) job fairs are another option. Here online visitors see a similar setup to a regular job fair. They can listen to presentations,

visit booths, leave résumés and business cards, participate in live chats, and get contact information from recruiters and even hiring managers. 50 Fairs last about 5 hours.

Prospective applicants typically peruse several online reviews while deciding whether to apply. 34 How does the employer want others to see it as a place to work? Branding often focuses on

what it's like to work at the company, including company values and the work environment. 35 GE, for instance, stresses innovation (hiring "bright, interesting people working together on new and exciting projects"). 36 Others stress that they are environmentally or socially responsible."

There are some practical rules to use in determining whether to go outside or promote from within. If you need specific skills that aren't available in your company, or have to embark on a tough turnaround, or face a situation in

which your current succession planning or skills inventory systems are inadequate, it may be best to look outside. But if your company is thriving and you have the skills you need internally, and have a unique and strong company culture, then look within

Personnel replacement charts (Figure 5.4) are another option, particularly for top positions. They show the present performance and promotability for each position's potential replacement. As an alternative,

you can develop a position replacement card. For this you create a card for each position, showing possible replacements as well as their present performance, promotion potential, and training.