The internal context HR Management

The discussions above relate to external factors influencing recruitment and selection activities and go some way to explaining why we see both similarities and differences in recruitment activity. While legislation and codes of conduct would suggest a certain approach in the UK, differences in job/occupation being recruited, labour markets and skills availability might cause this approach to be modified.

However, factors within organisations also affect the way recruitment and selection is handled. In this section we explore the extent to which recruitment and selection activities are aligned with overall business strategy; the impact of an organisation’s approach to HRM, its financial position, the size of the organisation, its industrial sector, and its culture. This section also considers the approaches adopted by multinational corporations.

  • A strategic HRM approach?

The reasons for preferring certain approaches to the management of people received considerable attention in the 1980s as the influence of HRM grew. Within academic literature, normative models, based on a classical view of strategic decision-making, suggest that recruitment and selection policies should be aligned to a variety of organisational factors. Most illustrate the view that HR strategies and activities, including recruitment and selection, should be both vertically integrated with the organisation’s position or preferred business strategy and horizontally integrated with each other.

Parallel strategies in recruitment, selection, pay and development, in particular, are suggested. A discussion of the following models can be found in Legge (1995). The Kochan and Barocci model, outlined in Figure, argues that organisations have life cycles, and that recruitment, selection and staffing policies vary according to an organisation’s perceived stage in the cycle. Other models attempt to link recruitment and selection to product strategies (e.g. Fombrun et al., 1984) or overall business strategy (e.g. Miles and Snow, 1984).

Goold and Campbell (1987) consider that human resource strategies, including recruitment and selection, depend on whether an organisation’s strategic management style can be classified as one of strategic planning (maximum competitive advantage through the pursuit of ambitious long-term goals, with subsequent investment in the long-term development of employees), financial control (with an emphasis on short-term utilisation of, and minimal investment in, employees), or strategic control (a balance of the two).

The US writers Schuler and Jackson (1996) argue that the organisation’s competitive strategy (cost reduction, quality improvement and customer focus, innovation or speed of response) is crucial:

Kochan and Barocci’s model of recruitment, selection and staffing functions at different organisational stages

Kochan and Barocci’s model of recruitment, selection and staffing functions at different organisational stages

The models serve to highlight possible reasons for variations in approach to recruitment and selection. However, there is considerable debate about the extent to which a classical and rational approach to decision-making in organisations is either sensible or even exists. The problems include:

  • the difficulties in agreeing what corporate strategy is, and the extent to which it is perceived as planned rather than emergent;
  • a perception of critical time lag between ‘strategic decision-making’ and implementation of the policies deemed necessary to achieve corporate objectives;
  • pressures to recruit and select in the short term via the external labour market to meet urgent needs, which may conflict with the chosen longer-term strategy of internal labour market development.

A further explanation of differences might therefore be the lack of adopting and pursuing a strategic approach to HRM within an organisation. Schuler and Jackson (1996) highlighted an international insurance company where successful development had been through key competences in marketing, rapid response to new business areas, and creation of new products.

Working in a ‘highly decentralized manner through the creation of literally hundreds of new companies to attack new markets’, it poached experts with the skills needed in the industry, through offering much higher pay. When the market dried up or tough competition arrived, these employees were ‘let go’ to return to the labour market. Littlewoods, the UK stores and leisure group, aimed to become ‘the UK’s most admired consumer business’ with equal opportunities in recruitment and selection necessary for the aim to be achieved. By reaching out to minority groups, they appear to have recruited a more effective workforce through ‘fishing in the biggest possible pool’, and to have increased profitability through widening the customer base (Pickard, 1999).

In an attempt to increase profitability and finance anticipated growth, the strategic objectives of many growing call centres in the UK at the turn of the century included reducing labour turnover (running at around 30 per cent per annum) and waste in recruitment and training costs (estimated at over £100 million) (Davis, 1999). Of several suggestions made, one approach that appeared to have considerable success was the introduction of more rigorous selection techniques (such as competence-based interviews, psychometric tests, work sample tests and simulations) to identify the ‘ideal person’ for call centre work (which industry research suggests is ‘rule conscious, dutiful, conscientious, perfectionist and introverted’) (Whitehead, 1999).

  • A soft or hard approach to HRM?

Whether or not an organisation is pursuing a strategic HRM approach to the management of people, organisations still have to choose whether to fill a vacancy through internal or external labour markets, or both.Some organisations prefer to fill as many vacancies as possible with existing employees.

The opportunities for promotion and transfer can be perceived to be highly motivational and attractive in terms of personal development, with critical skills retained in-house. Such an approach is consistent with ‘soft’ HRM, and has implications for human resource activities: Soft contracting implies an elaborate internal labour market, managed by a sophisticated HR function, with strong HR policies to govern relationships, pay, promotions, appraisal and development. (Storey and Sisson, 1993) This ‘soft’ approach implies long-term commitment to investment in training and development and probably a rigorous appraisal scheme with an emphasis on identifying potential and on engendering commitment from employees.

The organisation’s expectations are of loyalty and retention from staff in return. Alternatively, organisations pursuing a ‘hard’ HRM approach search for new employees in external labour markets. This may suggest a short-term focus, or an unwillingness or inability to invest in the human resource (see also Chapter). Within the UK the unwillingness may be a fear of engaging in costly development activities with staff, which could make them attractive to competitors. Alternatively, the organisation may be aware that the future may pose problems in offering long-term employability or promotion and not wish to raise unrealistic expectations.

Hard HRM may also be seen as an approach that brings new skills, ideas and experiences into an organisation as they are needed, rather than in expectation of need. In addition, rapidly changing competences may mean there is no time to develop the required competences in-house, which must be bought in from outside (Schuler and Jackson, 1996).

  • Financial position of organisation

The financial position of an organisation can impact significantly on recruitment and selection practices. ‘Cash rich’ organisations may find it easy to find agreement for the budgets required for a soft approach to recruitment and selection but a constrained financial situation can forestall the investment in training and development necessary to tap the potential of the internal labour market, with decision makers seeing training budgets as costly ‘extras’.

Financial constraints can push an organisation towards a ‘hard’ approach to HRM, but can limit the number and quality of recruitment and selection methods available for use. Assessment centres may be deemed appropriate in terms of their purpose and suitability, but remain unused because cheaper selection tools exist. In addition, tight budgets may limit the amount of cash available to fund higher reward packages expected by highest-quality applicants.

  • Size of organisation

While large organisations with over 500 employees comprise only 3 per cent of total workplaces, they account for nearly a third of all employees in the UK (Cully et al., 1999) and ‘size matters, all other things being equal, because larger units increase the complexity of the management task … and the greater the need for rules and procedures to achieve consistency of behaviour on the part of individual managers’ (Sisson and Marginson, 1995).Within the largest organisations HR policy may be decided by a powerful central function, developed over time, with individual business or service units expected to maintain strict adherence to written policy and procedure.

Small organisations (25–49 employees), on the other hand, account for over half of UK workplaces. Within them, well-developed personnel functions or recruitment and selection systems may not exist. Recruitment may be irregular, with a heavy reliance on informal methods of recruitment, especially if these have worked well previously. Responsibility for the recruitment activity, in particular, may be passed to enthusiastic ‘amateurs’ within the organisation, or outsourced to a third party. However ‘best practice’ models in recruitment and selection are available for small organisations via government agencies and publications (e.g. Jobcentre Plus and local Chambers of Commerce), for those that know of, and wish to use them.

  • Industrial sector

‘The output of a workplace, and the type of environment in which it operates, are likely to be significant determinants of how work is organised’ (Cully et al., 1999) and marked differences between public and private sector recruitment and selection practice is reported (CIPD, 2002a). WERS 4 data suggest that 72 per cent of all workplaces in the UK are in the private sector, with financial services, manufacturing, wholesale/retail, hotels and restaurants almost totally within private ownership (Cully et al., 1999).

The probable usage of third parties in recruitment appears high within this group, and the financial services and manufacturing industries are key users of executive search and selection. Financial services, information technology, customer care, engineering and design organisations are also predicted to grow the extent to which they outsource their processes, including HR, in the next five years (Crabb, 2003).

Conversely, public administration and education are firmly located in the public sector, where third-party recruitment has traditionally been very limited, with both recruitment and selection being maintained in-house by teams of professionals and specialists. The use of application forms is more prevalent, as is the checking of references and skills, literacy and numeracy tests. Similarly, assessment centres and competencybased selection are more common in this sector (CIPD, 2002a). The public sector organisations tend to have policies which require all posts to be advertised externally (as well as internally) in the pursuit of equal opportunities.

  • Cultural differences between organisations

Differences exist even within similar industries, sectors and sized organisations. Several factors need to be considered: perhaps those who hold power in organisations have a strong preference for one particular recruitment method or have a dislike of any selection method except one-to-one interviewing? Perhaps expectations of the processes are based on custom and practice built over many years, which may or may not include a well-established routine, backed by written policies, procedures and monitoring systems, and an insistence on formal training for individuals in recruitment and selection?

Perhaps recruitment is seen as a marginal activity, undertaken as required in an ad hoc manner by some delegated employee or outsourced to a third party as and when need arises? The roles (and training) of those engaged in recruitment and selection may vary from one business unit to another, as may the extent to which divergence from organizational policy is permitted (Cully et al., 1999).Regional differences influence methodology.

Head offices tend to be in London and the South East, and here the use of headhunters is far greater (with more than 50 per cent using them), the use of job centres is lower, as is the use of local press in advertising. In Northern Ireland strong anti-discrimination legislation leads to less use of informal recruitment methods or headhunters.Small organisations are less likely to use certain recruitment methods (e.g. radio and television, national newspaper advertising, educational links or promotional events) because of the resources required … tend to favour informal and less structured selection practices, are less likely to get involved in assessment centres, check references, or carry out selection testing but are more likely to use CVs and letters of application. (CIPD, 2002a)

  • Multinational perspectives on recruitment and selection

Earlier in the chapter we discussed differences that may occur in national labour markets because of levels of education and government support for training. Other international differences can include attitudes regarding the sourcing of recruits (see also Chapter). In many areas of the world the main sources of recruits are relatives, friends or acquaintances of existing employees:

This nepotistic approach may challenge our Western view of employee relations and equal opportunities, although even within the UK it is possible to find examples of organisations that recruit predominantly via word of mouth:

In some countries (such as Australia and Spain) a large proportion of organisations are in foreign ownership. In these companies recruitment and selection practices often reflect organisational rather than national values, especially where organisation culture is strong and recruitment and selection activity is carried out by those who are not host country nationals (Hollingshead and Leat, 1995).

An examination of the WERS 4 data (Cully et al., 1999) suggests that the growth of wholly foreign or partly foreign ownership in the UK is also on the increase. Private sector figures indicate that 6 per cent of workplaces were partly foreign owned and 13 per cent predominantly (that is, 51 per cent or more) or wholly foreign owned. The larger the workplace, the more likely it is to be foreign owned. The result of a growth in multinational presence may include different approaches to recruitment and selection, different competences required in the workforce, and alternative recruitment methods and selection techniques.

Four distinct approaches have been identified for recruitment in multinational companies. They imply different patterns of control over the ‘overseas’ activities’, and have varying impacts on career development for the employees concerned:

  • Ethnocentric, where all key positions are filled by nationals of the parent company. This is a typical strategy employed in the early days of the new subsidiary, and suggests that power, decision-making and control are maintained at parent headquarters.
  • Polycentric, where host country nationals fill all key positions in the subsidiary. Each subsidiary is treated as a distinct national entity, though key financial targets and investment decisions are controlled by parent headquarters, where key positions remain with parent country nationals.
  • Regiocentric, where decisions will be made on a regional basis (the new subsidiary will be based in one country of the region), with due regard to the key factor for success of the product or service. For example, if local knowledge is paramount, host country nationals will be recruited; if knowledge of established product is the key factor, parent country nationals are likely to be targets, though anyone from the geographical region would be considered.
  • Geocentric, where the ‘best people’ are recruited regardless of nationality for all parent and subsidiary positions: for example, a national of a country in which neither the parent nor subsidiary is based could be considered.

This results in a thoroughly international board and senior management, and is still relatively uncommon. Increased internationalisation of business generates other issues of relevance when considering recruitment and selection. Hendry (1995) identifies an increasing number of managers and professionals affected by international assignments, leading to increased importance of managing international careers.

PriceWaterhouseCoopers report growth of over 40 per cent in expatriate, especially short-term, assignments throughout the world between 1997 and 1999 (PriceWaterhouseCoopers, 1999).

Competence in language and technical skills are deemed to be key requirements, and many organizations provide language training for potential recruits. International awareness has been found useful in successful placements, as has an individual’s ability to change his or her personal behaviour to fit with cultural requirements. Without international experience, opportunities for individuals to develop career paths appear increasingly limited in multinational organisations.

Sparrow (1999) concludes, however, that there are ‘no simple recipes that can be followed when selecting for international assignments. Rather there are choices to be made and opportunities to be pursued’ (p. 40). He identifies three main resourcing philosophies. The first is a traditional, predictive approach, using psychometrics and competence frameworks to assess a person’s suitability; the second is a risk assessment approach, which concentrates on cultural adaptability.

His third philosophy involves reversing the process, and designing the assignment to match the skills of the manager. Specific training and preparation become vitally important to ensure that such relocation is effective, and that high levels of expatriate failure are avoided. Likely interventions include pre-move visits to the proposed host country (often with family members), language and cross-cultural training for managers and families, and briefing by both host country and in-house representatives.


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