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To Learn How to Assess the Impact of HR Policies and Procedures On Chapter 5 - 1: Recruiting Chapter 5: Attracting Desired Applicants This chapter describes how to evaluate the impact of HR practices that solicit applicants for employment from the labor market. Hopefully it is intuitively obvious that quality and quantity of applicants directly influences downstream business metrics. Chapter 5 Goal: To learn how to assess the impact of HR policies and Chapter 3 described the Taylor-Russell model of personnel selection procedures on potential employees’ utility, in which base rate and selection ratio influenced whether decisions to become applicants using business metrics line managers can new hires were likely to perform adequately. Better recruiting understand and relate to important business decisions. generates a higher percent of applicants capable of adequate job performance, or a higher base rate. Better recruiting generates more applicants, increasing the bottom part of the selection ratio, i.e., number of open positions divided by Good recruiting can lead to low number of applicants. Quality and quantity of applicants also selection utility. A curious side effect of good recruiting can be lower influence the average performance on the selection test of those selection utility. Consider “perfect” recruiting policies that generate only selected (푧̅ ) and subsequent variation observed in job performance 푠 applicants who are capable of performing the job adequately, i.e., a of those hired (SDy) in Chapter 3’s Brogdon-Cronbach-Gleser base rate = 100%. We don’t have to model. Recruiting higher quality applicants increases the average use the Taylor-Russell table from Chapter 3 to know a selection system test score of all applicants, including those selected (푧푠̅ ). Recruiting cannot add utility by improving on a base rate of 100%. This is an extreme more applicants will also lower the selection ratio, causing the cut example of a simple fact – selection systems add value by reducing score to be higher and thus increasing the average score of those uncertainty about who will perform well in the future. When there is little selected (푧̅ ). Recruiting can also affect whether firms meet 푠 or no uncertainty in forecasting which affirmative action goals and avoid charges of adverse impact. applicants will perform well in the future, selection systems add little or Quality and quantity of recruits drive attendance in subsequent no value. Anything that reduces that uncertainty, including recruiting training programs when large numbers of new hires lack needed nothing but very good (or very poor) applicants, reduces the opportunity for skills. Recruiting can also have immediate effects on labor costs a selection system to add utility. Uncertainty captured by the Taylor- when hiring high vs. low performing recruits into commission-based Russell model is maximized when base rates – 50%. Uncertainty in the sales positions. Recruiting that leads to long job tenure further Brogdon-Cronbach-Gleser model occurs when SDy is as large as possible. Page 5 - 1 Chapter 5 - 2: Recruiting lowers turnover cost as described in Chapter 4. In sum, HR policies and practices attracting desirable applicants affect the quality and quantity of employees coming into the firm and every down-stream business metric affected by those new employees. As in previous chapters, I will first share some “recruiting musings” about unique problems and opportunities in this area. I then describe a host of business metrics that will be more or less relevant depending on a firm’s unique strategic needs. The remainder of Chapter 5 explores how to use those business metrics in various case applications to evaluate how well the organization is attracting applicants. Recruiting Musings I have always found it helpful to view recruiting as the sales and marketing of the company’s job offerings to “customers” in the labor market. Just like it sells and markets laundry detergent and personal hygiene products to consumers, Proctor and Gamble also sells and markets job opportunities to individuals actively seeking employment, or job “consumers,” in the labor market. Proctor and Gamble can reach labor market “consumers” (applicants) through many channels, just as it manages distribution of its products through various supply chains.1 Each “recruiting source” applicants are drawn from is the HR equivalent of labor market supply chain. Unfortunately, tools used by recruiting professionals are simply not as sophisticated as those used in marketing. This may be due to HR’s long-time roots in labor economics, with its annoying habit of assuming “homogeneity of labor units,” i.e., that all applicants in the labor market are equally skilled, motivated, and decide to apply for and accept job offers in exactly the same way. I believe Henry Ford was the last successful large manufacturer who made similar marketing assumptions when he said “(a)ny customer can have a car painted any colour that he wants so long as it is black,” (Ford, 1922). Labor economists’ assumptions may be appropriate for some types or levels of analysis (e.g., studying market 1 Proctor and Gamble is on the “sending” and “receiving” ends of product market supply chains and on the “receiving” end of labor supply market supply chains. Page 5 - 2 Chapter 5 - 3: Recruiting behavior as opposed to applicant behavior), though unthinking adoption of labor economists’ assumptions suggests HR professionals should . 1. randomly select new employees, since they are all equally skilled and motivated. 2. use one advertisement or notice of job openings with constant information about job content and employment opportunities, since all applicants decide to accept job offers for the same reasons. 3. use the same employment offer for all new hires, since all applicants are equally skilled and similarly motivated to accept employment. It makes me wonder whether university economics departments actually follow such practices when hiring new faculty members! Evidence compiled by industrial and organizational psychologists strongly suggests labor economists’ assumptions are flawed when applied to HR practice. We will assume applicants exhibit job- related individual differences in knowledge, skills, abilities, personality characteristics, prior work experience, motivation to accept employment, and motivation to work hard once they are on the job. Further, if we know what these individual differences are and how they are job-related, communications about job opportunities can be tailored in ways optimized to attract desirable applicants from each labor market segment. The question ultimately addressed in this chapter is how knowledge of these individual differences in recruiting efforts helps obtain desired levels of important business metrics. Page 5 - 3 Chapter 5 - 4: Recruiting Who is in the labor market and who is an applicant? Before we do that, however, we must revisit when an individual is a member of the relevant labor market (i.e., a “potential” applicant) and when an individual actually becomes an applicant. I think it is safe to assume anyone actively looking for employment or willing to consider the “right” job offer is a “potential” applicant – s/he is part of the target labor market population. Regardless of where they currently live, as long as these individuals are willing to consider moving to the employment location for the “right” job, they are part of the relevant labor market. This would include happily employed individuals who are not currently looking for alternative employment, but might be enticed back into the market if the right opportunity came along. Who is an Applicant? Effective October 6, 2006, the OFCCP implemented a “final rule” for describing who constituted an “internet applicant” for purposes of reporting requirements. The final rule, published in the Federal Register on October 7, 2005, defined “Internet Applicants” as: Internet Applicant. (1) Internet Applicant means any individual as to whom the following four criteria are satisfied: (i) The individual submits an expression of interest in employment through the Internet or related electronic data technologies; (ii) The contractor considers the individual for employment in a particular position; (iii) The individual’s expression of interest indicates the individual possesses the basic qualifications for the position; and, (iv) The individual at no point in the contractor’s selection process prior to receiving an offer of employment from the contractor, removes himself or herself from further consideration or otherwise indicates that he or she is no longer interested in the position. (2) For purposes of paragraph (1)(i) of this definition, ‘‘submits an expression of interest in employment through the Internet or related electronic data technologies,’’ includes all expressions of interest, regardless of the means or manner in which the expression of interest is made,if the contractor considers expressions of interest made through the Internet or related electronic data technologies in the recruiting or selection processes for that particular position. (3) For purposes of paragraph (1)(ii) of this definition, ‘‘considers the individual for employment in a particular position,’’ means that the contractor assesses the substantive information provided in the expression of interest with respect to any qualifications involved with a particular position. A contractor may establish a protocol under which it refrains from considering expressions of interest that are not submitted in accordance with standard procedures the contractor
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