Recruitment | ICSE Class 10 Commercial Studies Notes

This note covers recruitment in human resource management: its meaning and importance, the difference between recruitment and selection, the internal and external sources of recruitment, the advantages and disadvantages of each source, and the methods a business uses to fill a vacancy.

What is recruitment?

Recruitment is the process of searching for and attracting a pool of suitable candidates to apply for a job in an organisation. It is the positive, inviting step of staffing: the firm tells the labour market that a post is open and invites people to offer themselves for it.

Definition: recruitment. Recruitment is the process of identifying the sources of manpower, attracting suitable candidates and stimulating them to apply for jobs in the organisation.

Recruitment begins after the firm has decided that a vacancy exists and has prepared a job description (what the work involves) and a job specification (the qualifications, skills and experience the person must have). It ends when a reasonable number of applications has been received. Choosing one person from that pool is selection, a separate and later step.

Recruitment is important because it brings the firm a wide choice of candidates, helps it find people with the right skills, reduces the risk of a costly wrong appointment, and builds a good image as an employer. A firm that recruits well usually selects well.

In a small firm the owner may recruit by asking around; in a large firm a whole department may do nothing else. In every case the purpose is the same: to make the vacancy known and to draw in enough good applicants for the next stage to work on.

Recruitment is not the same as employment. It stops at the point where applications have been gathered. The firm has not yet promised anyone a job, and no candidate has yet accepted one. That exchange belongs to selection and to the appointment that follows it.

How is recruitment different from selection?

Recruitment and selection are often spoken of together, but they are two distinct stages. Recruitment is a positive process: it encourages as many suitable people as possible to apply. Selection is a negative process: it rejects the unsuitable and keeps only the best. Recruitment comes first and creates the pool; selection comes second and narrows the pool to one.

The two stages work together. A weak recruitment effort gives selection very little to choose from, however careful the selection. A strong recruitment effort gives a rich field, so the final appointment is more likely to be right.

Selection itself uses tools such as application forms, written tests, group discussions and interviews, and it ends with a medical check and a reference check in many firms. None of these tools belongs to recruitment. Recruitment's only job is to make sure that the tools of selection have enough material to work on.

It helps to remember the direction of each stage. Recruitment moves outward, from the firm to the labour market, carrying an invitation. Selection moves inward, from the market back to the firm, carrying a decision. One opens the door; the other decides who walks through it.

What are the sources of recruitment?

A source of recruitment is the place from which a firm draws its applicants. Sources fall into two broad groups. Internal sources are found inside the organisation, among people already working there. External sources are found outside the organisation, in the labour market. A firm usually tries internal sources first and turns to external sources when no suitable person is available inside.

Definition: internal source. An internal source of recruitment fills a vacancy from among the existing employees of the organisation, by promotion or by transfer.

Definition: external source. An external source of recruitment fills a vacancy by attracting candidates from outside the organisation, such as through advertisements, employment exchanges or campus interviews.

The two groups differ in where the candidates come from, what the search costs, how long it takes, how much choice it gives and how it affects the staff already at work. The sections below take each group in turn, then compare them.

Neither group is right for every post. A firm that never looks outside grows stale; a firm that never looks inside wastes the talent it has already trained and paid for. The skill of good staffing lies in knowing which source suits which vacancy, and in using both in a sensible order.

What are the internal sources of recruitment?

Internal recruitment draws on the firm's own staff. The two main methods are promotion and transfer.

Promotion

Promotion means moving an employee to a higher post carrying more responsibility, higher status and higher pay. When a senior post falls vacant, a junior employee who has the required ability and experience may be promoted into it. Promotion is the most common internal source for higher-level posts.

Transfer

Transfer means moving an employee from one post to another at the same or a similar level, usually from one department or branch to another. A transfer does not raise status or pay, but it can fill a vacancy where a person with the needed skills already works in the firm.

Other internal methods

Some firms also use internal notifications, circulating news of a vacancy to all departments so that interested employees can apply, and employee recommendations, where present staff suggest colleagues from within the firm for a post. These methods keep the search inside the organisation.

Internal recruitment works best where the firm has a clear record of each employee's performance, so that the choice between two candidates can be defended on evidence rather than on favour. It also works best where the firm has trained its staff in advance, so that a junior is ready to step up when the senior post falls vacant.

What are the advantages and disadvantages of internal sources?

Internal recruitment has real merits, which is why firms try it first. It also has clear limitations, which is why firms cannot rely on it alone.

Advantages of internal sources

• Cheaper and quicker: no advertisement, agency fee or long search is needed, so the cost and time of filling the post are low.
• Known ability: the firm already has records of the employee's work, conduct and skills, so it can judge suitability with confidence.
• Morale and motivation: the chance of promotion encourages employees to work hard and stay with the firm, which reduces labour turnover.
• Less training needed: the person already knows the firm's products, rules and ways of working.
• Loyalty and security: employees feel the firm rewards loyal service, which builds a sense of belonging.

Disadvantages of internal sources

• Limited choice: only the present staff can be considered, so the best person in the market may be missed.
• No fresh ideas: promoting from within can breed insularity, as the firm keeps repeating its own ways of thinking.
• Inbreeding and rivalry: internal promotion can cause jealousy and conflict among employees who were not chosen.
• Vacancy chain: filling one post internally leaves another post vacant, which must then be filled.
• Unsuitable promotion: a good worker in a junior post may not make a good manager, and the firm may promote out of habit rather than merit.

The vacancy chain deserves a second look. If a supervisor is promoted to manager, the supervisor's post falls empty, and if that post is filled by a clerk, the clerk's post falls empty too. One internal promotion can set off a series of moves, each of which must be arranged and each of which leaves a gap at the bottom of the chain.

What are the external sources of recruitment?

External recruitment brings in people from outside the firm. It is the main route for new posts, for specialist skills the firm lacks, and for entry-level jobs. The common external sources are described below.

Direct recruitment

In direct recruitment the firm puts up a notice at its gate or factory and invites passers-by and casual workers to apply, often for unskilled or semi-skilled jobs. It is quick and cheap but attracts only local, often unskilled, applicants.

Casual callers and unsolicited applications

Some people call at the office or send in applications without being asked. The firm keeps these on file and may draw on them when a vacancy arises. This costs almost nothing but gives no control over the quality of applicants.

Advertisement

Advertisement means placing a notice of the vacancy in newspapers, trade journals, radio, television or on websites. It reaches a wide audience and lets the firm state exactly what it wants, but it is costly and can bring a flood of unsuitable applications.

Employment exchanges

Employment exchanges are government offices that keep registers of job seekers and match them with employers. They are useful for unskilled and semi-skilled posts and are cheap, but the registers may not include the highly skilled.

Placement agencies and private consultants

Placement agencies and private consultants specialise in finding candidates, often for managerial and technical posts. They save the firm time and can supply specialist staff, but they charge a fee, usually a percentage of the salary.

Campus recruitment

Campus recruitment means visiting schools, colleges and institutes to interview students before they graduate. It brings in young, trained people with fresh ideas, but the firm must then train them in the ways of the business.

Recommendations and word of mouth

Present employees, friends and business contacts may recommend candidates. This is cheap and quick, but it can lead to favouritism and a narrow choice.

Labour contractors

Firms may engage labour contractors to supply workers, usually for casual or seasonal work. The contractor handles recruitment and payment, but the firm has less control over who is sent and may face legal duties towards contract labour.

What are the advantages and disadvantages of external sources?

External recruitment widens the field and brings new blood. It also costs more and carries more risk than internal recruitment.

Advantages of external sources

• Wider choice: the firm can consider the whole labour market and pick the best available person.
• Fresh ideas and skills: new people bring new methods, experience and outlook, which can improve the business.
• Specialist talent: the firm can hire experts it does not have and cannot easily train.
• No rivalry: an outsider's appointment does not cause jealousy among existing staff in the way an internal promotion can.
• New enterprise: a new branch, a new product or a new market can be staffed with people chosen for the purpose.

Disadvantages of external sources

• Higher cost: advertising, agency fees, campus visits and selection tests all add to the expense.
• Longer time: searching, advertising and interviewing take time, so the post stays vacant longer.
• Risk of a wrong choice: the firm knows little about an outsider, so the chance of a poor appointment is greater.
• Training needed: the newcomer must learn the firm's products, rules and culture.
• Lower morale: existing staff may feel blocked from promotion, which can reduce loyalty and effort.

The cost of a wrong external choice is not only the salary paid to the wrong person. It includes the cost of the search that found them, the cost of the training given, the cost of the work they did badly, and the cost of searching again. This is why firms take references and run tests before appointing an outsider.

How does a firm choose between internal and external sources?

The choice depends on the post, the firm and the market. A simple rule of thumb is to look inside first and outside second.

1. Identify the vacancy and prepare the job description and job specification.
2. Check whether a present employee has the required qualifications, experience and record.
3. If a suitable person exists inside, use promotion or transfer, which is cheaper and quicker.
4. If no suitable person exists inside, or the post needs new or specialist skills, turn to external sources.
5. Choose the external method that fits the post: advertisement for a wide field, campus recruitment for young trainees, consultants for senior posts.
6. Collect applications and pass them to the selection stage.

Note: a balanced policy. Most firms use both sources. They promote from within where they can, to reward loyalty and keep morale high, and recruit from outside where they must, to bring in new skills and fresh thinking.

The order of the steps matters. A firm that advertises before it has written the job specification will receive applications it cannot judge fairly. A firm that checks its own staff only after it has already advertised will waste money on an advertisement it did not need.

Glossary

• Recruitment: the process of searching for and attracting suitable candidates to apply for a job in an organisation.
• Selection: the process of choosing the most suitable candidate from among those who applied.
• Internal source: a source of recruitment found among the existing employees of the firm.
• External source: a source of recruitment found outside the firm, in the labour market.
• Promotion: moving an employee to a higher post with more responsibility, status and pay.
• Transfer: moving an employee to another post at the same or a similar level.
• Job description: a statement of the duties, responsibilities and working conditions of a post.
• Job specification: a statement of the qualifications, skills and experience a post requires.
• Employment exchange: a government office that registers job seekers and matches them with employers.
• Campus recruitment: recruiting students directly from schools, colleges and institutes before they graduate.
• Placement agency: a private firm that finds suitable candidates for employers, usually for a fee.
• Labour contractor: a person who supplies workers to a firm, usually for casual or seasonal work.

Common errors and misconceptions

• Misconception: recruitment and selection are the same thing. Correct: recruitment attracts applications and is positive; selection chooses one person and is negative. Recruitment comes first.
• Misconception: internal recruitment is always better because it is cheaper. Correct: it is cheaper and quicker, but it gives a limited choice and no fresh ideas, so firms also use external sources.
• Misconception: a transfer is a promotion. Correct: a transfer moves a person to a post at the same or a similar level, with no rise in status or pay; a promotion raises both.
• Misconception: external recruitment guarantees a better appointment. Correct: it widens the choice but costs more, takes longer and carries a greater risk of a wrong choice.
• Misconception: employment exchanges are for senior managers. Correct: they are mainly useful for unskilled and semi-skilled posts; senior posts usually go through consultants or advertisement.
• Misconception: recruitment ends when the best candidate is chosen. Correct: recruitment ends when enough applications are received; choosing the best candidate is the selection stage.

Exam-style questions with model answers

Q1. Define recruitment. [2 marks]

1. Recruitment is the process of searching for and attracting suitable candidates to apply for a job in an organisation.
2. It creates a pool of applicants from which the firm later selects the best person.

Q2. State any two differences between recruitment and selection. [2 marks]

1. Recruitment is a positive process that invites applications, while selection is a negative process that rejects unsuitable applicants.
2. Recruitment comes first and creates a pool of applicants, while selection comes later and chooses one person from that pool.

Q3. Explain any three advantages of internal sources of recruitment. [3 marks]

1. It is cheaper and quicker, because no advertisement or agency fee is needed and the employee is already known to the firm.
2. It raises morale and motivation, because the chance of promotion encourages employees to work hard and stay with the firm.
3. It needs less training, because the person already knows the firm's products, rules and ways of working.

Q4. Explain any three disadvantages of external sources of recruitment. [3 marks]

1. It is costly, because advertising, agency fees, campus visits and selection tests all add to the expense of filling the post.
2. It takes longer, because searching, advertising and interviewing keep the post vacant for more time.
3. It carries a greater risk of a wrong choice, because the firm knows little about an outsider's work and conduct before appointing them.

Q5. Distinguish between internal and external sources of recruitment on any four bases. [4 marks]

1. Origin: internal sources draw on existing employees, while external sources draw on people outside the firm.
2. Cost and time: internal recruitment is cheaper and quicker, while external recruitment is costlier and slower.
3. Choice and ideas: internal recruitment gives a limited choice and few new ideas, while external recruitment gives a wide choice and fresh ideas.
4. Risk and morale: internal recruitment carries a low risk of a wrong choice and raises staff morale, while external recruitment carries a higher risk and may lower morale if staff feel blocked from promotion.

Q6. A firm has a vacancy for a senior manager. Explain how it should decide between internal and external sources. [5 marks]

1. The firm should first prepare a job description and job specification for the post.
2. It should then check whether a present employee has the required qualifications, experience and record.
3. If a suitable person exists inside, it should use promotion, which is cheaper, quicker and good for morale.
4. If no suitable person exists inside, or the post needs new or specialist skills, it should turn to external sources such as advertisement or consultants.
5. For a senior manager, the firm may prefer an outsider when it needs fresh ideas or skills its own staff lack, and an insider when loyalty, knowledge of the firm and staff morale matter more; it should then collect applications and pass them to the selection stage.

Q7. Explain any four external sources of recruitment. [4 marks]

1. Advertisement: placing a notice of the vacancy in newspapers, journals or websites, which reaches a wide audience but is costly.
2. Employment exchanges: government offices that register job seekers and match them with employers, useful for unskilled and semi-skilled posts.
3. Campus recruitment: visiting schools and colleges to interview students before they graduate, which brings in young, trained people.
4. Placement agencies and consultants: private firms that find candidates, often for managerial and technical posts, for a fee.

Key takeaways

• Recruitment searches for and attracts suitable candidates; selection then chooses one of them.
• Recruitment is a positive process and comes first; selection is negative and comes later.
• Internal sources are promotion and transfer; external sources include advertisement, exchanges and campus recruitment.
• Internal recruitment is cheaper, quicker and good for morale, but it gives a limited choice.
• External recruitment widens the choice and brings fresh ideas, but it costs more and carries more risk.
• Most firms look inside first and outside second, using both sources together.
• A transfer is not a promotion: it keeps the same level, status and pay.
• Employment exchanges suit unskilled and semi-skilled posts, while placement agencies and consultants suit senior and specialist posts.

Test yourself

What is recruitment?

Recruitment is the process of searching for and attracting suitable candidates to apply for a job in an organisation, creating a pool of applicants for selection.

Name the two main internal sources of recruitment.

Promotion and transfer.

Why is recruitment called a positive process?

Because it invites and encourages as many suitable people as possible to apply, rather than rejecting anyone.

What is campus recruitment?

It is recruiting students directly from schools, colleges and institutes before they graduate, which brings in young, trained people with fresh ideas.

Give one disadvantage of internal recruitment.

It gives a limited choice, because only present employees can be considered, so the best person in the market may be missed.

Which external source is a government office?

An employment exchange, which registers job seekers and matches them with employers.

What is a transfer?

A transfer moves an employee to another post at the same or a similar level, usually in another department or branch, with no rise in status or pay.