The personnel recruitment of small and medium enterprises in ha noi area in the international integration period

- How is the current status of recruitment and selection practice among SMEs Location scope: This study will be carried out at level of SMEs in Hanoi area - Scope of contents: the curren

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN THANH TÙNG

THE PERSONEL RECRUITMENT OF SMALL AND MEDIUM ENTERPRISES IN HANOI AREA IN THE INTERNATIONAL INTEGRATION PERIOD

CÔNG TÁC TUYỂN DỤNG NHÂN LỰC TẠI CÁC DOANH NGHIỆP VỪA VÀ NHỎ

TRÊN ĐỊA BÀN HÀ NỘI TRONG THỜI KỲ HỘI NHẬP

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN THANH TÙNG

THE PERSONEL RECRUITMENT OF SMALL AND MEDIUM ENTERPRISES IN HANOI AREA IN THE INTERNATIONAL INTEGRATION PERIOD

CÔNG TÁC TUYỂN DỤNG NHÂN LỰC TẠI CÁC DOANH NGHIỆP VỪA VÀ NHỎ

TRÊN ĐỊA BÀN HÀ NỘI TRONG THỜI KỲ HỘI NHẬP

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TRỊNH NGỌC HUY

Hà Nội - 2018

DECLARATION

The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research period and it is not yet published in other‟s research and article

The other‟s research result and documentation (extraction, table, figure, formulaand other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business, and the laws for above-mentioned declaration

Hanoi, date of …… / …… /……

ACKNOWLEDGEMENT

I hereby certify that I am the sole author of this thesis and no part of this thesis has been published or submitted for publication I certify that, my thesis does not violate anyone‟s copyright Additionally, all ideas, quotations, or material from the work of other people included in my thesis, published or otherwise, are fully acknowledged with the standard of references

I declare that this is a true copy of my thesis The content of this thesis has been approved by the committee of Vietnam National University, Hanoi – Hanoi School of Business (HSB) This thesis has not been submitted for a higher degree to any other University or Institution

In order to finish this project successfully, I have received many helps, supports and guidance from many people who I would like to thank sincerely

First of all, I would like to thank all the professors of MBA program, especially Dr Trinh Ngoc Huy – my suporvisor Then I would like to thank deeply the respondents and interviewees who allowed me to gather enough data for this research Finally, I would like to express my thanks to my family, my colleges and

my fellow friends who created convenient conditions and give me encouragement and understanding for me to complete this degree

I sincerely thank you!

Hanoi, date of …… / …… /……

MỤC LỤC

ABBREVIATION i

LIST OF FIGURES ii

LIST OF TABLES iii

INTRODUCTION 1

1 Rationale 1

2 Aims of research 3

3 Objects of research 3

4 Scope of research 3

5 Research methodology 3

6 Thesis structure 6

CHAPTER I THEORETICAL BACKGROUND ON RECRUITMENT AND SELECTION 7

1.1 Literature review of recruitment and selection in SMEs 7

1.2 Small and medium sized enterprises 10

1.3 Employee Recruitment 12

1.4 Recruitment process 14

1.4.1 Employee recruitment 15

1.4.2 Employee selection 26

1.5 Recruitment in small and medium enterprises 30

1.5.1 Limited resources 31

1.5.2 Formality of HRM 32

1.5.3 Source of candidate 33

1.5.4 Selection practices 33

1.5.5 Challenges facing SMEs in recruitment and selection 34

1.6 Impact of recruitment and selection 34

1.6.1 Positive impacts of recruitment and selection practices 34

1.6.2 Negative impacts of poor recruitment practices 36

1.7 Proposed model 37

CHAPTER 2: RECRUITMENT AND SELECTION PRACTICE IN SMALL AND MEDIUM SIZED ENTERPRISES 39

2.1 Overview of SME in Vietnam 39

2.2 Description of data 44

2.2.1 Survey methodology 44

2.2.2 Description of sample 45

2.3 Recruitment practices in SMEs 47

2.3.1 Human resource planning and recruitment policy 47

2.3.2 The use of job analysis 49

2.3.3 Multiple source of candidates 53

2.4 Selection practices in SMEs 55

2.4.1 The use of application screening and preliminary interviews 55

2.4.2 Use of selection tests 57

2.4.3 The use of interviews 60

2.4.4 Reference check 62

2.5 The impact of recruitment practice on employees attitude and performance 64

2.5.1 Reliability analysis of dependent variables 64

2.5.2 Reliability analysis of recruitment and selection variables 66

2.5.3 Multiple regression analysis 67

CHAPTER 3: IMPLICATIONS AND SUGGESTIONS TO IMPROVE RECRUITMENT AND SELECTION PRACTICES IN VIETNAM SMEs 72

3.1 The role of small and medium sized enterprise in Vietnam 75

3.2 Human Resource Challenges facing SMEs in Vietnam 76

3.2.1 Human Resource Planning 76

3.2.2 Job analysis 77

3.2.3 Recruitment and selection 77

3.3 Summary of research findings 78

3.3.1 Human resource planning 78

3.3.2 Job analysis 79

3.3.3 Sources of candidates 79

3.3.4 Use of preliminary screening 80

3.3.5 Use of delection test 80

3.3.6 Use of interviews 80

3.3.7 Reference check 81

3.4 Suggesttions for SMEs in improving recruitment and selection practices 81

3.4.1 More attention should be paid on HR planning 81

3.4.2 Establish recruitment policy 82

3.4.3 Conduct thorough job analysis 86

3.4.4 Ultilize multiple sources of candidates 89

3.4.5 Conduct effective selection interview 92

3.4.6 Doing proper reference check 94

3.5 Limitations 96

CONCLUSTION 97

REFERENCE 98

APPENDIX QUESTIONNAIRE IN VIETNAME 106

ABBREVIATION

SME Small and medium sized enterprise

HRM Human Resource Management

GSO General Statistical Office

WTO World Trade Organization

TPP Trans-Pacific Partnership

GDP Gross Domestic Product

LIST OF FIGURES

Figure 1.1 Recruitment and selection process 14

Figure 1.2 Research model 37

Figure 2.1 Size of enterprises in Vietnam 40

Figure 2.2 Total number of SMEs by year 41

Figure 2.3 Allocation of SMEs in Vietnam by industry 42

Figure 2.4 Size of the enterprises in the sample 45

Figure 2.5 Types of the firms in the sample by ownership 46

Figure 2.6 Distribution of firms in the sample by industry 46

Figure 2.7 The implementation of HR planning by SMEs 48

Figure 2.8 How often does your company use formal job analysis 49

Figure 2.9 The availability of job descriptions and job specification 50

Figure 2.10 The use of job descriptions and job specifications for recruitment and selection 52

Figure 2.11 The use of multiple source of candidates 53

Figure 2.12 Uses of preliminary screening by SMEs 56

Figure 2.13 Use of reference check with candidate-nominated referees 63

Figure 2.14 Use of reference check with candidate-nominated referees 64

Figure 3.1 Link between HR planning and organization‟s mission 82

LIST OF TABLES

Table 2.1 Presents details of the average income of workers in SMEs by type of

ownership and economic activity 42

Table 2.2 The availability of recruitment and selection policy 48

Table 2.3 ANOVA with firm characteristics as factors and dependent variable: How often does your company use formal job analysis 50

Table 2.4 ANOVA with firm characteristics as factors dependent variable: the availability of job descriptions and job specifications 51

Table 2.5 ANOVA with firm characteristics as factors and dependent variable use of JD and JS for selection and recruitment 52

Table 2.6 ANOVA of dependent variables with firm characteristics as factors 54

Table 2.7 Adoption of selection tests by SMEs 58

Table 2.8 ANOVA of dependent variables with firm characteristics as factors 58

Table 2.9 Adoption of selection interview by SMEs 60

Table 2.10 Reliability of dependent variables 65

Table 2.11 Reliability analysis of independent variables 66

Table 2.12 Results of regression analysis 67

Table 2.13 Results of regression analysis 68

Table 2.14 Results of regression analysis 69

INTRODUCTION

1 Rationale

Small and medium enterprises (SMEs) typically account for a large proportion (about 90% numbers of enterprises) worldwide In Vietnam, this rate at about 98% so SMEs play a very important role in national economy While big enterprises are often located in the economic centers of the country, the SMEs are present in all locals, regions… and contribute a great deal to government budget, generate mass of local jobs, and significantly contribute to the national GDP in value According to Vietnam General Statistic Office (GSO, 2016), small and medium enterprises employ 51% social workers and contribute over 40% of GDP for the country

In the status of national economic renovation and international integration, (especially while Vietnam was official member of WTO (2007), TPP (2016) and lots of important free trade agreements - FTA), Vietnam‟s enterprises (especially SMEs) catch up several big business opportunities and enormously challenges, vice versa Economic researchers and experts affirm that the key visible challenge for domestic enterprises is the competitive pressure from multinational corporations and international groups Under this pressure, SMEs is the mostvulnerable Because SMEs are in lack of finance, naturally, have less ability in capital mobilization, and possess not-good-enough human resource and technology for survival

Once again, the shortage of highly qualified personnel and skilled workers are the most worrying problems of SMEs In addition, the experience of international market access and understanding of the common conventions and international charters of SMEs is also very limited Therefore, innovation and improvement of business capacities are imperative requirement for SMEs to seek a position in the market in the current period.The task of innovation and improvement

of business capacities of SMEs are not only focused on the issue of organizational structure, financial, technical infrastructure but also towards the content of human resources in business Especially when the competitiveness in finance, technology

cannot be easily changed, the problem of human resources is the most important requirements and able to change than other factors

SMEs are having many difficulties in both recruitment and maintainance high quality workforce throughout the whole their business process One part due to restrictive in the ability to pay for high-quality employment of SMEs is not possible due to financial constraints, another because these businesses do not have effective strategies in labor recruitment.In order to maximize the human resources, SMEs must pay attention to recruitment of employees to attract a qualified and qualified workforce in line with the objectives, work nature work position

This requires SMEs need to build their own suitable recruitment policy because a suitable recruitment policy will be an important material for good human resource In fact, most ofSMEs now are facing with many difficulties in the recruitment of human resources

Hanoi is the capital city of Vietnam and is one of the most improtant drivers

of the country‟s economic development As a result, there have been dramatic development in the number of of enterprises including SMEs While there were about 69,000 enterprises in Hanoi in 2008, the total number of enterprises in Ha Noi was 142,000 by 2014 (GSO, 2015) A very large proportion of SMEs in Hanoi operate in the field of services and construction and therefore they mostly employ skilled workers Because there are also many FDIs and other large enterprises in the area of Hanoi, many of the SMEs find it difficult to find qualified candidates because of fierce competitions Results from a survey by CIEM (2016) indiacted that 79% of SMEs face difficulties with recruitment The main reasons included low pay, poor working conditions and lack of career advancement opportunity From

that actual situation, the author decides to choose the theme "The personnel

recruitment of small and medium enterprises in Ha Noi area in the international integration period" to complete the master thesis

With research content as above, the author poses research questions for his topic as follows:

- How is the current status of recruitment and selection practice among SMEs

Location scope: This study will be carried out at level of SMEs in Hanoi area

- Scope of contents: the current study only focuses on recruitment and selection practices of SMEs but not on other aspects of human resource management

- Scope of space: The research focuses on SMEs in Hanoi Metropolitan areas and not all SMEs in Vietnam

- Scope of time: the data were collected from 8/2017 to 9/2017, the analysis was based on current data Suggestions are valid until 2020

Research methodology

Data collection method

* Secondary Data Collection: Secondary data will be collected through the

GSO, and data from previous research on HRM and SMEs In addition, the thesis will use some documents as well as information about SMEs and recruitment & selections from books, dissertations, magazines, internet

* Primary data collection: Primary data collection methods are

questionnaires surveys, expert indepth-interviews In addition, synthetic analytical methods will be applied

The questionnaire survey is the most important method in the study, which is described in detail as follows:

- Sampling:

 Sample size: 150 by random sampling

 Sampling objects: SMEs located in the areas on Hanoi Name and address as well as telephone numbers of the SMEs were collected from enterprises database extracted from the website thongtindoanhnghiep.co

- Design of questionnaires: Questionnaires are designed to be in line with the objectives of the thesis and theoretical framework in a clear and concise manner To ensure accuracy, the questionnaire will be designed according to the following process:

 Based on research objectives and frameworks to identify the information needed: factors, variables and metrics;

 Determine the type of question;

 Determine the content of each question;

 Determine the terms used for each question;

 Determine the logic of the questions;

 Draft questionnaire;

 Submit a questionnaire to the instructor;

 Carry out pilot survey to receive feedback on questionnaires

 Review and finalize questionnaires;

Data analysis method

The dissertation uses two methods of data analysis: qualitative and qualitative

Oneway Anova Analysis

Assumptions for one-way analysis of variance (One-Way Anova):

- Comparative groups should be independent and randomly selected

- Comparative groups must have standard distribution: use the Smirnov test

Kolmogorov The variance of the groups should be the same: use the Levene test to look

at the equality of variance The Levene test was conducted with the hypothesis H0 that the variance of the groups were the same, if the test result for the significance level was less than 0.05 then rejected the Hypothesis H0

If one of the above assumptions does not meet, the Kruskal-Wallis parametric test will be used instead of ANOVA Hypothesis:

non H0: There is no difference between the mean of the groups classified by variables

- H1: There is a difference between the mean of the groups classified by variables

If:

+ Sig (2-tailed)> 0.05 is not sufficient basis to reject the Hypothesis H0 should accept Hypothesis H0, which means that the average value is different from the test value

+ Sig (2-tailed) <0.05 is sufficient basis to reject Hypothesis H0 and accept Hypothesis H1, meaning that the mean is different from the test value

* Qualitative method: regression method

In statistics, regression analysis is a statistical tool for the investigation of the relationships between variables It includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables More specifically, regression analysis helps one understand how the typical value of the dependent variable (or 'criterion variable') changes when any one of the independent variables

is varied, while the other independent variables are held fixed The investigator assembles data on the underlying variables of interest and employs regression to estimate the quantitative effect of the causal variables upon the variable they influence The investigator also typically assesses the “statiscal significance” of the estimated relationships, that is, the degree of confidence that the true relationship is close to the estimated relationship

5 Thesis structure

In addition to the introduction, conclusion, references, appendixes; the contents of the dissertation is divided into three chapters:

Chapter 1: Theoretical background on recruitment and selection

Chapter 2: Recruitment and selection practice in small and medium sized enterprises

Chapter 3: Implications and suggestions to improve recruitment and selection practices in SMEs

CHAPTER I THEORETICAL BACKGROUND ON RECRUITMENT AND

SELECTION 1.1 Literature review of recruitment and selection in SMEs

Ravi and SantoshKumar (2015) explore the relationship between human resource management measures and SME financial results in Mysore and Bangalore, India Human resource management practices used by research firms include recruitment and selection, training, performance appraisal, remuneration and bonus, and welfare The financial results are also measured based on the subjective assessment of the participating companies The results show the positive relationship between the five measures of human resource management practices and the financial results of enterprises including recruitment and selection, training, performance based pay

The research by Kauanui, Dang Ngoc Su and Ashley-Cotleur (2005) explores the relationship between three aspects of human resource management including training, performance appraisal, and incentive pay The authors collected data from 200 SMEs in Hanoi for analysis Results of the study show that the positive relationship between the control measures and the results of enterprises in which the incentive fee has the greatest impact

Nguyen Tung (2014) in his article on "Human Resource Management Practices and Performance of Small and Medium Enterprises in Vietnam" has identified five human resource management teams to be used, including (i) personnel recruitment channel, (ii) personnel selection, (iii) remuneration and compensation, (iv) personnel training and development, and (v) personnel assessment The results of the standard survey used for the study included 96 randomized enterprises in nine northern provinces, including Hanoi The total number of formal employees in each surveyed enterprise was no more than 300 The author's conclusion is that the application of professional business management practices in small and medium enterprises in Vietnam is limited to all operations related to personnel recruitment channels, personnel selection, compensation and

training, human resources development and training, and personnel assessment There are a number of human resource management practices that are new or are not / are rarely applied in businesses such as recruitment through job fairs (recruitment channels), psychological tests (selection of candidates), the program encourages groups and individuals to work, share profits, supplement financial benefits (compensation and benefits); training programs by outsourced trainers, the use of formal training programs, management development training (personnel development and training) and personnel assessment criteria (personnel assessment)

Le Thi Kim Anh (2013) in the thesis on the impact of human resource management on production and business activities of small and medium enterprises

in Thai Nguyen province, has achieved specific results Firstly, the thesis proposed methods, analytical tools and questionnaire system to assess the impact of human resource management practices on small and medium enterprises' production and business activities Secondly, the thesis has shown that the good practice of human resource management will help small and medium enterprises improve their profitability as well as business efficiency Third, the thesis indicates that the training programs of small and medium enterprises based on the needs assessment, the evaluation of the work of employees, the direct application to the work of the staff will bring the impact on the efficiency of production and business activities Fourth, the thesis has pointed out the human resource management factors affecting production and business activities: (1) Recruitment and selection; (2) training and development; (3) professional planning system; (4) Participation and companionship; (5) Compensation for damages and benefits; (6) Performance evaluation Finally, the thesis proposes the necessary solutions to improve the efficiency of production and business activities by improving the efficiency of human resource management, namely: (1) recruitment and selection: transparent system should be applied through the assessment of individual capacities; (2) The training program should continuously update the new skills required for production

and business activities to meet the challenges of modern competition; (3) In order to improve the efficiency of production and business activities, small and medium enterprises should have appropriate career planning systems for employees and workers; (4) The compensation and reward system for workers should be based on market prices, which will help retain more qualified employees in the business

Cuc (2016) studied HRM at small and medium sized enterprises in Vietnam and found that HRM in these enterprises was still weak and underdevelped She found that there are few SMEs planning human resources in the long run According to statistics, 85% of total enterprises forecast demand based on the number of employees to replace, only about 15% is based on changes in science, technology, demand products and services, scale capital Even more, many Vietnamese SME owners have not identified the need for human resources in the short term Only medium-sized enterprises (50-300 employees) are interested in and set up a human resource management strategy However, human resource training and development strategies are not closely linked to vision and objectives Human resources management, due to the lack of interest in development, in SMEs are not effective The author also cited from survey that most Vietnamese SMEs now carry out job analysis, however, this work is only carried out when there are recruitment needs in the enterprise For recruiting staff, the source from the training institute and mass media play an important part to ensure that the company recruited the right people to work However, this form of recruitment is mainly applied in medium-sized enterprises, as the human resources of small and medium enterprises are small, the advantage for recruiting through training institutions and mass media is not much According to statistics, 25% of enterprises recruited through mass media, this number is low compared to developed countries as well as some countries in the region As for recruitment, each SME has its own way of recruiting, but the whole process is done through the following steps: receiving dossiers and research; Select qualified candidates for interview Candidates who pass the interview will be admitted to the trial within 3-6 months, then the company will sign official contract

However, the reality is that many small and medium-sized enterprises have limited awareness about the need for assessing recruitment practice Only about one-fourth

of the SEMs evaluate the effectiveness of selection Most SMEs use the point-based methodology, however, the criteria are often subjective but not based on the job descriptions

1.2 Small and medium sized enterprises

The definition of small and medium sized enterprises varies across countries

In Japan, the criteria for small and medium sized enterprises are different between manfacturing and non-manufacturing sectors In manufacturing sectors, SMEs are those which employee less than 300 employees and have capital of less than 300 million Yen While in non-manufacturing sector, SMES are enterprises with less than 100 employees and capital of less than 100 million Yen Similarly, in Taiwan a firm with less than 200 employees is classified as SMEs if it is operating in manufacturing sector, in non-manufacturing sector, however, the total number of employees less than 50 is the threshold In the United State of America, the only criterion for SMEs is that the total of employees less than 500

In Vietnam, there have been many different concepts of small and medium enterprises However, since the issuance of Decree No 90/2001/NĐ-CP dated 23 November 2001 on SME development assistance, the definition of SMEs has been understood as follows: "Small and medium enterprises are independent business establishments, having registered business under the current law, with the registered capital of not more than 10 billion or average number of employees does not exceed

300 employees per year

Thus, the criteria for determining SME are:

+ Registered capital of less than VND 10 billion (approximately USD 650,000), or

+ Having a workforce of less than 300 people

According to Article 4: "This Decree applies to SMEs, including: Enterprises established and operating under the Enterprise Law, Enterprises established and

operating under the Law on State-owned Enterprises; and operate under the Law on Cooperatives; Individual business households registered under the Government's Decree No 02/2000/ ND-CP of February 3, 2000 "(This Decree is replaced by Decree 109 / 2004 / ND-CP)

According to Vietnam Chamber of Commerce and Industry:"Small and micro enterprises are production and business establishments with fewer than 50 employees Enterprises with 10 to 49 employees are small enterprises, enterprises with 1 to 9 employees are considered as very small enterprises

With this concept, medium enterprises are the remaining enterprises in the concept of Decree No 90, which means that enterprises have between 50 and 299 employees However, over the past seven years, the SME concept of Decree No 90 has revealed unreasonable points "There are enterprises with a workforce that exceeds 300 (500-600 employees), but because the registered capital is less than 10 billion VND, so it is still considered SMEs In contrast, there are enterprises with hundreds of billions of VND registered capital but the number of regular employees less than 300 is also classified as a SME

Therefore, the Government has issued the new SME definition in Decree 56/2009 / NĐ-CP dated June 30, 2009 on support for development of small and medium enterprises According to this Decree, SMEs are classified by business sector and have specific classification for microenterprise, small business and medium enterprise

"Small-and medium-sized enterprises are business establishments which have registered their business according to law provisions, divided into three levels: micro, small and medium, depending on the total capital source (total capital equivalent to total assets as defined in the enterprise's balance sheet) or average number of employees (total capital is a priority criterion), as follows:

Table 1.1 Vietnam’s definition of SME

According to Costello (2006) recruitment is described as “the set of activities and processes used to legally obtain a sufficient number of qualified people at the right place and time so that the people and the organization can select each other in their own best short and long term interests”

Jovanovic (2004) said “recruitment is a process of attracting a pool of high quality applicants so as to select the best among them” For this reason, top performing companies devoted considerable resources and energy to creating high quality selection systems Due to the fact that organizations are always fortified by

information technology to be more competitive, it is natural to also consider utilizing this technology to re-organize the traditional recruitment and selection process through proper decision techniques, with that both the effectiveness and the efficiency of the processes can be increased and the quality of the recruitment and selection decision improved

Parry & Wilson (2009) stated that “recruitment includes those practices and activities carried out by the organization with the primary purpose of identifying and attracting potential employees” As success of service sector as in case of civil aviation industry depends upon the human capital, recruitment & selection of the right people into the service business is crucial to achieve organizational success (Zheng, 2009)

Raymond J Stone (2005) defines recruitment as the “process of „seeking and attracting a pool of applicants from which qualified candidates for job vacancies within an organization can be selected.‟

According to Edwin B Flippo (1979), “Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization” Recruitment is the process of attracting individuals within and outside the organization who are eligible to participate in the selection process to select qualified applicants who meet the requirements of the organization Then orient, and guide new employees to integrate with the organization ' environment

Recruitment is an activity that links the employers and the job seekers So we can say that recruitment is a process of finding and attracting capable applicants for employment The process begins when new recruits are sought and ends when their applications are submitted The result is a pool of applications from which new employees are selected

In simple terms, recruitment is understood as the process of searching for and obtaining applicants for jobs, from among whom the right people can be selected

Though, theoretically, recruitment process is said to end with the receipt of applications, in practice the activity extends to the screening of applications so as to eliminate those who are not qualified for the job

1.4 Recruitment process

For Bratton and Gold (2007), recruitment and selection practices involve two interrelated processes Recruitment is the process of generating a pool of capable people to apply for employment to an organisation whiles selection is the process by which specific instruments are employed to choose from a pool of applicants‟ most suitable for the job taking into consideration, management goals and legal requirements Recruitment therefore provides the organisation with a pool of potentially qualified candidates from which selection can be made to fill job openings Recruitment and selection are therefore a crucial part of organisational success Spencer (2004) mentioned that effective recruitment and selection are strategically important to any firm Recruiting and selecting the wrong candidates can have extensive negative cost implications, while effective processes can contribute to a reduction in turnover and therefore increase in productivity

Figure 1.1 Recruitment and selection process

Source: Gary Dessler (2010)

As stated earlier, recruitment refers to the process of identifying and attracting job seekers so as to build a pool of qualified job applicants The process comprises of five interrelated stages: (i) planning, (ii) strategy development, (iii) searching, (iv) screening, and (v) Evaluation and control The ideal recruitment program is the one that attracts a relatively large number of qualified applicants who will survive the screening process and accept positions with the organization when offered Recruitment program can miss the ideal in many ways: by failing to attract

an adequate applicant pool, by under/over selling the organization, or by inadequately screening applicants before they enter the selection process (Heneman, 1986; Tran Xuan Cau & Mai Quoc Chanh, 2008) Thus, to approach the ideal, individuals responsible for recruitment process must know how many and what types of employees are needed, where and how to look for individuals with the appropriate qualifications and interests, what inducements to use or avoid for various types of applicants groups, how to distinguish applicants who are underqualified from those who have a reasonable chance of success, and how to evaluate their work

1.4.1 Employee recruitment

1.4.1.1 Recruitment Planning

The first stage in recruitment process is planning Planning involves the

translation of likely job vacancies and information about the nature of these jobs into a set of objectives or targets that specify the (i) number and (ii) type of applicants to be contacted

+ Number of Contacts

Organizations, plan to attract more applicants than they will hire Some of those contacted will be uninterested, unqualified or both Each time a recruitment program is contemplated, one task is to estimate the number of applicants necessary

to fill all vacancies with qualified people (Heneman, 1986)

Companies calculate yield ratios (yRs) which express the relationship of applicant inputs to outputs at various decision points The yRs must be used with circumspection No yRs will be available for recruiting employees for the first time,

or for recruiting sources or method that have not yet been tried Recruiters in such cases have to depend upon their counterparts in other organizations or make their own guesses (Heneman, 1986)

+ Type of Contacts

This refers to the type of people to be informed about job openings The type

of people depends upon the tasks and responsibilities involved and the qualifications and experience expected These details are available through job description and job specification

+ „Make‟ or „Buy‟

Organizations must decide whether to hire less skilled employees and invest

in training and education programs or they can hire skilled labour and professionals Essentially, this is the „make‟ (hire less skilled worker) or „buy‟ (hire skilled workers and professionals) decision Organizations that hire skilled labour and professionals have to pay more for these employees

„Buying‟ employees has an advantage in the sense that the skilled labour and professionals can begin the work immediately and little training may be needed But the high remuneration that the skilled workers and professional demand may outweigh the benefits

+ Technological Sophistication

The second decision in strategy development relates to the methods used in recruitment and selection This decision is mainly influenced by the available technology The advent of computer has made it possible for employers to scan national and international applicant qualifications Although impersonal, computers have given employers and job seekers a wider scope of options in the initial screening.Technological advancement has made it possible for job seekers to gain

better access They have begun sending their CVs by email to number of organizations without wasting time and without spending money on travel

1.4.1.2 Job Analysis

Once the Human Resource manager has identified that the organisation needs new staff it is important for them to conduct a job analysis in order to identify the job design so they can recruit a person who is suitable for the position Froschheiser (2008) highlights the fact that following national survey results it was found that “over 30% of CEO‟s said that up to half of their employees are a poor fit for their job” (2008)

In order to prevent this the HR manager must know what is entailed to do the job successfully, without knowing exactly what is required the wrong candidate could easily get the job Pilbeam & Corbridge (2006) define job analysis as the

“systematic process of collecting information about the tasks, responsibilities and contexts of the job” Many researchers including McMahon & O‟Carroll (1999) and Pilbeam & Corbridge (2006) have agreed that there are many functions to a successful job analysis- it can be used not only in “recruitment but also selection, performance appraisal, training and development, job evaluation and health and safety” (McMahon & O'Carroll, 1999, p 117)

When a person actually carries out a job analysis they are essentially doing a form of research as they must collect many pieces of data so they can identify exactly what skills, knowledge and capabilities are required to do the job effectively The job analysis can be carried out independently or jointly by a HR manager or a general manager, this will all depend on how complex the job is, and what way the job analysis is going to be undertaken No matter who it is carrying out the analysis there are many different ways a person can collect the information they need- they can speak to and/or observe the person doing the job, talk to supervisors or managers and also conduct exit interviews when people leave The manufacturing company this researcher is working with have not carried

out a job analysis in six years, yet they have continued recruiting and are aware that

the job has changed during this period due to advances in technology

Following the job analysis, the job description should essentially be “a broad statement of the purpose, scope, duties and responsibilities that are attached to the job and as such is the basis for the contract of employment” (Gunnigle, et al., 2011) Through doing a job analysis and creating a job description it will be clear exactly what the new employee would be needed for- through this the management can assess whether there is a need for a new employee or whether a current employee could do this job or if a current employee is supposed to be doing this job Gunnigle

et al, (2011) says there are roughly 10 aspects to a job description:

10 Reward and Conditions

The next section of the job analysis is to conduct a person specification- this will provide the organisation with list of skills, knowledge and capabilities the candidates will need in order to do the job as effectively and efficiently as possible Two authors who have developed fairly similar frameworks to help assist recruiters

to find the best candidates are Rodger (1952) and Munro-Fraser (1954)

Rogers (1952) seven point plan is made up of the following components:

1 Physical make up: health, appearance, bearing and speech

2 Attainments: education, qualifications, experience

3 General intelligence: intellectual capacity

4 Special aptitudes: mechanical, manual dexterity, facility in use of words and figures

5 Interests: intellectual, practical, constructional, physically active, social, artistic

6 Disposition: acceptability, influence over others, steadiness, dependability, self-reliance

7 Circumstances: any special demands of the job

1.4.1.3 Recruitment sources

+ Internal Sources of recruitment

Internal sources refer to recruiting employees from within the organization

In deciding requirement of employees, initial consideration should be given to a company's current employees, which is concerned with internal recruitment (Duong Thi Kim Chung, 2007) They include those who are already available on the pay roll of the company This is important source of recruitment as it provides opportunities for better development and utilization of existing human resources in the organization Armstrong (2000a), proposed that first consideration should be given to internal candidates, although some organizations with powerful equal opportunity policies (often local authorities) insist that all internal candidates should apply for vacancies on the same footing as external candidates

- Present employee

Promotions and transfers from among the present employees can be a good source of recruitment Promotion to higher positions has several advantages They are – (i) it is good public relations; (ii) it builds morale; (iii) it encourages competent individuals who are ambitious; (iv) it improves the probability of a good selection, since information on the individual‟s performance is readily available; (v) it is cheaper than going outside to recruit; (vi) those chosen internally are familiar with the organization; and (vii) when carefully planned, promoting from within can also act as a training device for developing middle level and top level managers (DeCenzo& Robbins, 1989)

- Employee Referrals

The recruitment efforts of an organization can be greatly aided by employee referrals, or recommendations from the firm‟s current employees about potential candidates In fact, word-of-mouth recommendations are the way most job positions are filled Managers have found that the quality of employee-referred applicants is normally quite high, since employees are generally hesitant to recommend individuals who might not perform well Certain organizations also pay their employees for helping them acquire vibrant and hardworking candidates Hr executives also believe that by rewarding employees who bring in their friends actually costs less than recruiting procedure and often attract better workers (Snell, 2012) Employees can develop good prospects for their families and friends by acquainting them with the advantages of a job with the company, furnishing cards of introduction, and even encouraging them to apply This source is usually one of the most effective methods of recruiting because many qualified people are reached at a very low cost

to the company

- Former Employees

Formal employees are also an internal source of applicants Some retired employees may be willing to come back to work on a part time basis or may recommend someone who would be interested in working for the company Sometimes, people who have left the company for some reason or the other are willing to come back and work Individuals who left for other jobs, might be willing to come back for higher emoluments An advantage with this source is that the performance of these people is already known (Mathis& Jackson, 1982)

- Previous Applicants

Although not truly an internal source, those who have previously applied for the jobs can be contacted by e-mail, a quick and inexpensive way to fill an unexpected opening Although „walk-ins‟ are likely to be more suitable for filling

unskilled and semi-skilled jobs, some professional openings can be filled by applicants to previous jobs (Mathis, 1982)

+ Advantages in using internal recruitment

- Labour Turnover: The turnover of valuable employees is reduced through internal placement Here, star employees within the company can be reassigned to

an area within the organization where the need is greater Restricting the vacancy to internal candidate can also help retain employees who might otherwise have left the organisation (Sunderland & Canwell, 2008)

- Performance: Internal recruitment might offer cost saving in the human resource management process because of the record of performance available to recruiters An internal candidate has developed a record of accomplishment of performance during employment that provides the most accurate assessment of her

on the job professional skills and experience If the company conducts formal performance reviews, the employee performance and goal-setting information will give valuable insight to recruiters when assessing internal candidates (Keshav, 2013)

- Time Value: When qualified candidates exist internally, recruiting candidates internally can decrease the time it takes to fill a position This is particularly useful in a tight job market, when the number of external candidates applying for a given job opening can become astronomical In such cases, selecting among qualified internal candidates may be efficient because it offers costs savings, such as those associated with advertising and from using staffing resources to interview numerous external candidates (Keshav, 2013)

- Corporate Culture: Corporate culture might formally relate to the goals and objectives of the company as articulated in its vision and mission statement It informally includes the business attitude, customs and etiquette An external candidate that fulfills the experience and skills needed for a position might not fit into the organizational culture Internal candidates are already familiar with the company's culture, policies and procedures For example, this might manifest itself

in how meetings are conducted, projects are organized or the use of consensus building in the decision-making process (Keshav, 2013)

+ Disadvantages of using internal recruitment

- Limited Choice: Internal recruitment provides limited choice of talent available in the organization as it avoids the arrival of fresh candidates Internal recruitment does not tap any candidate from outside the organization; hence, the number of potential candidates for the post is limited to those from within the organisation There may be far better external candidates who have more experience and better qualifications (Sunderland & Canwell, 2008)

- Implementation of Traditional System: Internal recruitment requires the implementation of traditional form, system, process and procedures In addition, this limits the scope of fresh talent in the organization (Keshav, 2013)

- Position: In using internal recruitment, existing employees, whether competent or not, will feel that they have an automatic right to be given a more senior post (Sunderland & Canwell, 2008)

- Costly: Taking into consideration that when an employee is promoted, instantly vacancy instantly arises In this regard, another employee is to be recruited

to fill that position, which may be costly affair (Sunderland & Canwell, 2008)

- Limited Internal Sources: The source of supply of manpower is limited in internal recruitment method When an employee is promoted, his/her previous position will be vacant and another personnel is to be recruited to fill that vacant position (Keshav, 2013)

+ External Sources of recruitment

External sources of recruitment refer to attracting applicants from outside a particular organization to fill vacant positions Like internal sources, they are useful

to attracting competent applicants to apply for advertised positions in various organizations( Nguyen Thi Van Diem & Nguyen Ngoc Quan, 2008) Broad varieties of methods are available for external recruiting Organizations should fully assess the kinds of positions they want to fill and select the recruiting methods that

are likely to reduce the best results External source of recruitment include advertisement, e-recruitment, employment agencies, labour office, education and training establishment (Beardwell, 2007; Cober & Brown, 2006) Details of these sources are discussed in this section

- Professional or Trade Associations

Many associations provide placement services for their members These services may consist of compiling job seekers‟ lists and providing access to members during regional or national conventions Further, many associations publish or sponsor trade journals or magazines for their members These publications often carry classified advertisements from employers interested in recruiting their members Professional or trade associations are particularly useful for attracting highly educated, experienced or skilled personnel Another advantage of these sources is that recruiters can zero in on specific job seekers, especially for hard-to-fill technical posts (Leap, 1990)

- Advertisement: is the most common form of external sources of recruitment Organizations advertise vacant position on both electronic print and media to access a larger pool of applicants As cited by Nel et al (2009:226), an advertisement has communication as its basic underlying principle and it should be worded in a manner that triggers responses from job seekers Recruiters should formulate the wording of advertisements in a manner that is not discriminatory Advertisements are expensive but attract a larger pool of applicants than internal recruitment processes It is, however, more difficult to evaluate external applicant than those that are already employed within the organizations

- E-Recruitment: or online recruitment uses web-based tools such as a firm‟s public internet site or its own intranet to recruit staff The processes of e-recruitment consist of attracting, screening and tracking applicants, selecting, and offering jobs

or rejecting candidates Cappelli (2001), has estimated it that it costs only about one-twentieth, as much to hire someone online The internet has become a way for employers to display company image and advantages over competitors (Rotella,

2000) Many internet users know the difficulty, frustration and inefficiencies of sorting through information to find applicable and useful material However, many companies find it difficult to integrate the Internet with their existing systems (Brake & Lawrence 2000)

- Employee Referrals: An employee referral program is a system where existing employees recommend prospective candidates for the job offered, and in some organizations if the suggested candidate is hired, the employee receives a cash bonus Under this method, a candidate is appointed on the recommendation of some currently working employees Hence, the HR managers of various companies depend on the present employees for reference of the candidates for various jobs This source reduces the costand time required for recruitment Further, this source enhances the effectiveness of recruitment HR managers offer various incentives/rewards including cash incentives to the current employees for referring the best candidates (Rajarao, 2010)

- Employment Agencies: Employment agencies, sometimes referred to as labour brokers, even though they can face criticism from labour unions in Ghana, tend to be fast and efficient in recruiting applicants for specialized positions For a fee collected from either the employee or the employer, usually the employer, these agencies do some preliminary screening for the organization and put that organization in touch with applicants Private employment agencies differ considerably in the level of service, costs, policies, and types of applicants they provide Employers can reduce the range of possible problems from these sources

by giving a precise definition of the position to be filled (Sims, 2002)

- Labour Offices: are sources of certain types of workers In some industries, such as construction, unions have traditionally supplied workers to employers A labor pool is generally available through a union, and workers can be dispatched to particular jobs to meet the needs of the employers In some instances, the union can control or influence recruiting and staffing needs An organization with a strong union may have less flexibility than a nonunion company in deciding who will be

hired and where that person will be placed Unions also can work to an employer‟s advantage through cooperative staffing programs, as they do in the building and printing industries (Keshav, 2013)

- Educational and Training Establishments: Managers of organizations may visit educational institutions such as universities and colleges to attract top students, especially during their final years of study to apply for vacant positions This method of recruitmentis also referred to as campus recruiting and is one of the cheapest methods of recruitment It introduces final year students to the institution The recruiter normally makes a presentation to final year students and invites desirable students to visit public institutions exposing them to different areas within the organization (Nel et al., 2009:227)

+ Advantages of using external recruitment

- When an organization recruits externally, it opens the organization up to a larger pool of applicants, which increases its chance to find the right person for the job Looking outside the organization also allows a company to target the key players that may make its competition successful Hiring a candidate with a proven record of accomplishment for the competition allows the company to get an insider's view as to what the competition is doing to be successful This gives the organization a chance to stay a step ahead of the competition

- External recruitment provides an opportunity for a fresh outlook on the industry that a company may need to stay competitive.Bringing in fresh talent from the outside can help motivate the current employees to produce and achieve more in hopes of obtaining the next promotional opportunity

- Hiring an external candidate also opens up many opportunities to find experienced and highly qualified and skilled candidates who will help a company meet its diversity requirements

- The biggest advantage of external recruitment is that the company has no limited supply of candidates and can choose employees all over the world

+ Disadvantages of using external recruitment

- External recruitment requires an employee to adapt to the new environment and if the new recruit is in management, the employees may tend to resist change that he or she tries to implement because these changes may work against the organizational culture

- This method of recruitment can indicate that the management of the organization fails to train or motivate their staff through promotion opportunities and career advancement

- In addition, external recruitment can lead to a high rate of labor turn over when employees realize that there is no room for career advancement in the organization

1.4.2 Employee selection

Selection is the process of picking individuals (out of the pool of job applicants) with requisite qualifications and competence to fill jobs in the organization Selection is the process of differentiating between applicants in order

to identify (and hire) those with a greater likelihood of success in a job (Stone, 1989) Selection is a long process, commencing from the preliminary interview of the applicants and ending with the contract of employment However, the process differs among organizations and between two different jobs within the same organization

1.4.2.1 Application screening

Most organizations require application forms to be completed because they provide a fairly quick and systematic means of obtaining a variety of information about the applicant Application forms should therefore be developed with great care and revised as often as necessary (Snell et al, 2012)

Application forms serve several purposes They provide information for deciding whether an applicant meets the minimum requirements for experience, education and so on They provide a basis for questions the interviewer will ask

about the applicant‟s background They also offer sources for reference checks (Snell et al, 2012)

1.4.2.2 Preliminary Interview

The applications received from job seekers would be subject to scrutiny so as

to eliminate unqualified applicants as a part of recruitment This is usually followed

by a preliminary interview the purpose of which is more or less the same as scrutiny

of applications Scrutiny enables the HR specialists to eliminate unqualified job seekers based on the information supplied in their application form Preliminary interview, on the other hand, helps reject misfits for reasons which did not appear in the application forms Besides, preliminary interview, often called “courtesy interview”, is a good public relations exercise

1.4.2.3 Selection Tests

Selection tests are also called Employment Tests Job seekers who pass the screening and the preliminary interview are called for tests Different types of tests may be administered, depending on the job and the organization Generally tests are used to determine the applicant‟s ability, aptitude and personality The employment test is an objective and standardized measure of a sample of behavior that is used to gauge a person‟s knowledge, skills, abilities and other characteristics (KSAOs) in relation toother individuals.Ability Tests assist in determining how well an individual can perform tasks related to the job An aptitude test helps determine a person‟s potential to learn in a given area

1.4.2.4 Employment Interview

The next step in the selection process is employment interview An interview

is conducted at the beginning and at the end of the selection process The emphasis here is on later

Interview is a formal, in-depth conversation conducted to evaluate the applicant‟s acceptability It is considered to be an excellent selection devise Its popularity stems from its flexibility Interview can be adapted to unskilled, skilled, managerial and professional employees It allows a two way exchange of

information, theinterviewers learn about the applicant, and the applicant learns about the employer (Werther& Davis, 1993)

However, interviews do have shortcomings Absence of reliability is one limitation No two interviewers offer similar scoring after interviewing an applicant

A methodological analysis of personnel selection was developed in a quantitative interview rating form The use of this technique in a variety of industrial selection situations had shown increased reliability and statistical control of errors of judgement

Lack of validity is another limitation This is because few departments use standardized questions upon which validation studies can be conducted Ash and Krocker (1975) have reported that the validity of interview was highest under conditions of “good interviewer training and the imposition of structure via guidelines and rating scales” Finally, biases of interviewers may cloud the objectivity of interviews Kinicki and Lockwood (1985) have suggested that the validity of selection procedures could be enhanced by identifying the relevant skills, abilities and personal characteristics necessary for performing the job and evaluating the relationship between interviewer assessments and subsequent employee performance Ghiselli (1966) concluded that the validity of ordinary personnel interviews could be at least be equal to, if not greater than, the validity of tests as the interviewers were better educated and had greater experience and knowledge of individual differences

The employment interviews can be (i) one-to-one, (ii) sequential, (iii) panel

- In one-to-one interview, there are only two participants: the interviewer and the interviewee This is the preliminary interview

- The sequential interview takes one-to-one a step further and involves a series of interviews, usually utilizing the strengths and knowledge base of each interviewer, so that each interviewer can ask questions in relation to his/her subject area of each candidate, as the candidate moves from room to room

- The panel interview consists of two or more interviewers and the figure may go up to as many as 15 Any panel interview is less intimate and more formal than the one-to-one, but if handled and organized well, it can provide a wealth of information If not handled carefully, the panel interview can make the candidate feel ill at ease and confused about whose question to answer and whom to address Interviewers themselves are likely to experience nightmare, not knowing who will ask which question and in what order (Beardewell, 1996)

Types of Interviews:

Interviews can be of different types like structured, unstructured, mixed, behavioral, and stress-producing Few other types of interviews include Behavioral Description Interview (BDI), Panel Interview, Computer Interview and Video Interview (Snell, 2012)

- In a structured interview, the interviewer uses preset standardized questions which are put to all the interviewees It has an established set of answers against which applicant responses can be rated, it provides a more consistent basis for evaluating job candidates This interview is also called „guided‟ or „patterned‟ interview A structured interview is more likely to provide the type of information needed for making sound decisions According to a report by the US Merit Systems Protection Board, a quasi-judicial agency that serves as the guardian of federal merit systems, structured interviews are twice as likely as non-directive interviews to predict on-the-job performance Structured interviews are also les likely than non-directive interviews to be attacked in court(Lavigna, 2004)

- In an unstructured interview, also known as „unguided‟, „non-directive‟ or

„unpatterned‟ interview, the interview is largely unplanned and the interviewee does most of the talking The interviewer carefully refrains from influencing the applicant‟s remarks The applicant is allowed the maximum amount of freedom in determining the course of the discussion The interviewer asks open-ended, broad questions Non-directive interview is advantageous in as much as it leads to a friendly conversation between the interviewer and the interviewee and in the

process, the latter reveals more of his/her desires and problems But unstructured interview lacks uniformity and worse, this approach may overlook key areas of the applicant‟s skills or background (Snell, 2012)

- In practice, a blend of structured and unstructured questions is used by the interviewer while interviewing the job seekers This approach is called the mixed interview The structured questions provide a base of information that allows comparisons between candidates But the unstructured questions make the interview more conventional and permits greater insights into the unique differences between applicants (Werther, 1993)

- Behavioral interviewing focuses on a problem or a hypothetical situation that the applicant is expected to solve Often, these are hypothetical situations, and the applicant is asked what he/she would do in the given circumstances This interview technique has a limited scope It primarily reveals the applicant‟s ability

to solve the types of problems presented Validity is more likely if the hypothetical situations match those found on the jobs (Werther, 1993)

- When the job involves more stress, stress interview attempts to learn how the applicant would respond to the pressure This technique is more relevant in jobs involving stress as in case of commercial pilots Since stressful situations are usually only a part of the job, this technique should be used along with other approaches (Werther, 1993)

1.5 Recruitment in small and medium enterprises

Some writers suggest that the size of a firm will have a major impact upon its recruitment activities (Le Thi Kim Anh, 2015) For example, Barber et al (1999) suggest that organisational theory identifies two major factors that surround recruitment strategies in larger firms Firstly, by searching internally for workers to fill vacancies, larger organisations are able to reduce costs, becoming more cost-effective as repeated recruitment is more cost effective This is in line with the

„efficiency imperative‟ (Williamson, 1975) Secondly, larger firms develop more