Employee Recruitment, Selection and Retention

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Contents

  1. Introduction
  2. Employee attitude
  3. Organizational commitment
  4. Job involvement
  5. Conclusion


Introduction

In today’s challenging business climate, management of company’s human capital is critical to success. Attracting and retaining top quality employees is a priority for all discerning businesses.

Just a few years ago, as job growth in Europe and the United States out-paced the supply of employees; most human resources professionals were grappling with the serious challenge of recruiting qualified workers to fill available positions. Retaining these workers in an overheated job market was a serious challenge.

While the business landscape has changed dramatically, recruiting and retaining the right people is just as important as before. But the stakes are higher now that the margin between success and failure is razor thin.  In today’s climate, HR is expected to deliver business results on a much tighter budget. Lower headcounts mean that each new hire is that much more crucial to the firm’s success, and the departure of a star performer can impact financial results that investors are watching more closely than ever. In this environment, HR leaders need to develop business processes that allow their teams to be more efficient and productive. At the same time, they will need to build air-tight business cases for any proposals to spend money on initiatives related to recruiting, training and retention efforts.

Just as the business climate has shifted, employee attitudes toward work have undergone a radical transformation in just a few short years.

Widespread layoffs, corporate financial scandals and the dramatic decrease in public perceptions of global security that followed September 11, 2001 have all contributed to a re-evaluation of career and life priorities among many employees. Attracting and retaining the best people is no longer simply about compensation. As these trends interact with deeper economic shifts, HR executives face pressure from both management peers and employees to evolve a new, more strategic approach to recruitment and retention. The new holistic approach to workforce management is often referred to as human capital management.

OfficeTeam, a leading staffing service, surveyed 567 men and women employed full time in professional environments. When asked “What is your number-one concern about your career? Respondents put work-life balance first.

Times are changing. People want flexible working lives. They want a more mobile, versatile, rewarding career that fits in with their lifestyle, rather than usurps it. Many are choosing to freelance to ensure they get that flexibility and freedom. Whatever the reason, there is a common feeling that the talent pool is shrinking.

The importance of retaining and rewarding good staff should not be underestimated. The products and services have no value if there is no right staff behind them. Intangible metrics such as company culture and staff morale can, and do, directly impact the bottom line. “People factor” should be as integral to risk strategy as physical assets and financial reporting.

The Human Capital Revolution

A key business lesson of the .Information Age is that strategic value is shifting from tangibles, factories, inventories, physical infrastructure to intangibles. As noted in an article in London-based finance publication The Economist, “Economies are increasingly based on knowledge, what is new is that a growing chunk of production in the modern economy is in the form of intangibles, based on the exploitation of ideas, rather than material things.” (Best Practices, 2003)

Among companies, increasingly valuable intangibles, which include intellectual property, brand value, and customer relationships, human capital is perhaps the most vulnerable to erosion. The very definition of human capital is that it walks out the door every evening, and exits permanently with an employee who leaves a company. Nobel Prize winning economist Gary S. Becker, who coined the term “human capital” explains it this way in his book of the same name: “You cannot separate a person from his or her knowledge, skills, health, or values the way it is possible to move financial and physical assets while the owner stays put.” (Best Practices, 2003) Knowledge management efforts, which increasingly involve HR organizations in their implementation, are one approach to mitigating human capital losses, but Becker’s work shows that reducing the number of people who leave voluntarily is critical.

In a recent interview with LiNEZine, an online publication about learning in the New Economy, Becker restated his famous formulation in a novel way: “I would start out with some obvious things that are still sometimes forgotten: the basic resource in any company is the people”, said Becker. “The most successful companies and the most successful countries will be those that manage human capital in the most effective and efficient fashion.” (Best Practices, 2003)

Becker’s statement serves as an excellent checklist for the approaches that leading companies use not only to keep the employees they have, but also to set themselves apart as “employers of choice” that attract the best candidates to start with. Though recruiting and retention are separate issues that each require specific business processes, a strong understanding of the principles of human capital management shared throughout the organization can unite your efforts.

Once the principles of human capital management are established internally, experts offer clear direction on a number of practical steps that will help advance recruitment and retention success. Dave Lefkow, an interactive solutions consultant with global HR communications and solutions provider TMP Worldwide, offers several insights in a recent article in specialist online publication Electronic Recruiting Exchange. Examining companies like Nike and Microsoft that he cites as having leading recruitment efforts, he observes several trends, including:

  • Centralization of HR efforts. Centralizing the recruiting team not only allows economies of scale, but also brings together expertise formerly distributed throughout the organization to create a center of excellence.
  • Specialization. Aided by centralization, developing specialist practices within recruiting allows innovation around key functions like workforce planning, hiring process management, business analysis and others.
  • Focused recruiting. As basic HR processes like applicant tracking become ubiquitous, HR staff can spend more time on activities focused on identifying successful professionals who are most likely to offer your company high value and the least likely to be in the general pool of job-seekers. (Best Practices, 2003)

These three efforts are interrelated and each puts a premium on having an infrastructure that allows efficient teaming, process management and collaboration. As process improvements to support these efforts are implemented, it is important to measure recruiting success against overall business goals and communicate these metrics within the HR organization and the larger enterprise. For example, is one business unit more successful in closing offers with high value candidates? Knowledge of this success is a key step in replicating it throughout the organization.

Similarly, employee retention requires business processes that combine measurement, training and collaboration. Beyond the top-line strategic value of proper management of human capital, a strong retention program can offer dramatic cost savings and productivity gains. Turnover is a serious business problem in every industry and requires a strategic, process-based retention program to stop the losses and enable human capital value creation. (Best Practices, 2003)

Employee Attitude

How are employees linked to the organization for which they work (or to which they belong)? Such a question has been with us for a long time in academia as well as in real life. Early management literature discussed the issue of employee loyalty. For example, to Barnard, (2) loyalty is a willingness of persons to contribute efforts to the cooperative system of the organization, which he believed is an essential condition of organization. However, the controversies over the origin, nature, and creation of loyalty continued into and through the 1960s. By the early 1970s the concept of loyalty began to be discussed under a new description called organizational commitment and employee attitude.

Employee attitude illustrates relation of the worker to his organization. Employee attitude surveys allow an organization to understand employee perceptions. Perception is reality. Because employees at every organization act on the basis of their perceptions, management must be keenly aware of employees’ views. There are special employee attitude surveys that  deliver a successful means of measuring, and acting upon, employees’ current beliefs on many job-related subjects.

The information garnered from employee attitude surveys can give organization the management knowledge that directly impacts the bottom line and fosters positive employee relations in any or all of the following ways:

  • identifying cost-saving opportunities
  • improving productivity
  • reducing turnover
  • curbing absenteeism
  • strengthening supervision
  • evaluating customer-service issues
  • assessing training needs
  • streamlining communication
  • benchmarking the organization’s progress in relation to the industry
  • gauging employees’ understanding of, and agreement with, the company mission (Barnard C. , 1983)

Organizational Commitment

There is another concept strongly connected to employee attitude. It is organizational commitment. Kiesler [7] defined commitment as the dedication of an individual to a given behaviour. Brickman [6] asserted that such commitment allows for life to be fulfilling; it provides human beings with a purpose. An ample body of research demonstrates that at least 3 forms of commitment – organizational, job and project commitment – are linked to a number of significant individual, group and organizational outcomes.

According to Mathiew [3], organizational commitment is a psychological state in which individuals value their involvement, and desire to remain involved, in an organization. Accordingly, commitment to an organization often inspires individuals to invest substantial time and energy to their work. Randall [4] found that commitment served as a buffer against job turnover; not surprisingly, employees who reported low levels of commitment to an organization were more likely to leave than employees who were highly commited. Commitment is associated with effective individual and group performance.

There are two discrete forms of organizational commitment: affective and continuance commitment. Affective commitment is characterized by emotional attachment to, identification with, and involvement in the organization. This positive form of commitment is contrasted with continuance commitment, in which commitment is motivated by perceived costs of departing from the organization. Thus, high affective commitment  is associated with high job performance, whereas continuance commitment correlates negatively with performance. Some researches distinct also normative component of commitment, that includes feeling of obligation to remain with the organization. Also, there typer of organization commitment according to the worker’s posts and features, appropriate to definite positions in organization:

1) Administrative Support

Actively supports the organization. – Respects and accepts what the organization defines as important.  Makes choices and sets priorities to meet the organization’s needs and fit the organization’s mission.  Explains to clients, partners and stakeholders the context for departmental actions.  Cooperates to achieve organizational objectives.

2) Professional

Anticipates and meets organizational needs. – Speaks up when a problem exists and offers solutions.  Willingly moves outside the boundaries of his/her job description if necessary to meet organizational and client needs.  Takes calculated risks where needed and offers ideas and suggestions to “fill the void”.  Shows initiative.

3) Managers

Takes tough stands – Stands by decisions that are perceived to be a benefit to the organization even if they are unpopular and controversial

4) Executive Managers

Focuses on long term good of organization. – Demonstrates willingness to sacrifice own unit’s short term good for the long term good of the organization.  Asks others to make sacrifices in order to meet the larger organization’s entire needs. [5]

Job Involvement

And there one more concept left that is closely interrelated to the previous two – job involvement. Kanungo [6] defined job involvement as “a belief descriptive of the present job that tends to be a function of how much the job can satisfy one’s present needs”. Job involvement has also been described as the extent to which an individual’s self-esteem is affected by performance and the degree to which an individual is psychologically involved with job (Kanungo, 1982 in Scott et al., 1997).

Job involvement, which is the form of work commitment, is predominantly discussed within the American organizational behaviour and psychology literature, and is often viewed as an important part of a work life concept. Job involvement refers to an extent, to which workers identify with, and are absorbed in, their present jobs. The Job involvement literature may be grouped into social and psychological approaches.

Thus, as it was said before, employee attitude, work commitment and job involvement strongly influence the activity and productivity of organization. To finish, I’d like to notice, that assessing employee attitude, work commitment and job involvement has a number of benefits, namely:

  1. A source of quantifiable information that will provide an accurate representation of work force satisfaction drivers and productive activity
  2. More productive and satisfied employees
  3. Maximize employee performance
  4. Goodwill generated by taking the time to listen to employees
  5. More defined and effective training requirements
  6. Enhanced development of highly effective employees
  7. Reduced employee turnover
  8. Opportunity to measure manager effectiveness
  9. Opportunity to provide more focused and productive employee training

Conclusion

The need to increase recruiting and retention effectiveness is not just an issues in the United States and Europe, but is in fact a worldwide issue. The business benefits of these approaches are reaching into the developing world, an encouraging sign that the learnings of human capital management can help raise global workforce standards.

Several Indian companies offer examples of comprehensive retention programs that include employee stock option plans (ESOPs). Business leaders in India are increasingly concerned with the challenges of recruiting and retaining talented employees, despite a population of over one billion. The Workforce Stability Institute, a U.S.-based not-for-profit research and educational organization, reports that the Indian mutual-fund industry has been a leader in creating ESOPs designed to help address the problem. (Best Practices, 2003)

Templeton Asset Management (India) launched one such program. Templeton India CEO Rajiv Vij stated that the program is designed to retain our best talent by enhancing the feeling of ownership at a time when the industry as a whole is facing an attrition problem. Vij sums up the logic of human capital management by adding, “People are the key asset for us.” (Best Practices, 2003)

Pacific Bridge Consulting, a U.S. -based human resources consultancy focused on Asia, reports that retention is also an increasing focus of both state-owned enterprises and foreign firms operating in China. In an indication that cultural differences play an important role in creating effective retention plans, Pacific Bridge notes that to an even greater degree than in other nations, one of the most vital elements of employee .compensation and retention is treating employees well. This means that companies in China must make real efforts to engender employee loyalty, feeling of belonging, and commitment to the firm. Beyond these soft retention efforts, compensation programs that involve personal and team incentives are increasingly important in China. (Best Practices, 2003)

Political and economic issues in China make stock-option programs for Chinese employees challenging, but this has not stopped companies like Lucent and Intel from developing innovative incentive programs that offer similar rewards tied to corporate performance. (Best Practices, 2003)

As these global developments make clear, sophisticated employee recruitment and retention programs are increasingly seen as integral to business success.

References:

  1. Best Practices: Recruiting and Retaining Talented Employees. HR Agenda. September, 2003.
  2. Barnard C. I. The Functions of the Executive, Harvard University Press, Cambridge, MA, 1983.
  3. Mathieu J. E. , Zajac D. M., A review and meta-analysis of the antecedents, correlates, and consequences of organizational commitment, Psychol. Bull., 108 (2) , (1990) 171–194.
  4. Randall D. A., The consequences of organizational commitment: Methodological investigation, J. Organ. Behav., 11 (1990) 361–378.
  5. Meyer J. P. , Allen N. J. Commitment in the Workplace; Theory, Research and Application, Sage Publication, Thousand Oaks, CA, 1997.
  6. Brickman P. Commitment, conflict and caring. Englewood Cliffs, NJ: prentice-Hall, 1987.
  7. Kiesler C. The psychology of commitment. New York: Academic press, 1971.
  8. Kanungo R. Measurement of job and work involvement. Journal of applied psychology, 67(3), 1982

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