Employee Recruitment: Outsourcing Human Resources Function of Finding, Attracting and Hiring Capable and Qualified Employees - Research Paper Example

?Outsourcing HRM Functions: Recruitment and Selection Introduction In the recent past, the competitive environment for many organizations has changed, with the organizations having to operate in globally capitalized environments, rapid industrialization, and changing technology (Abraham, 1988). As a result, these organizations are constantly seeking new managerial methods, and of the most successful method is the outsourcing of business processes. One of the business processes that firms are constantly outsourcing is the HRM function of recruitment, selection and training of new employees. Some organizations delegate crucial human resource functions to outside firms as a means of utilizing available expertise, reducing expenses, and to be able to concentrate on important business activities (Abraham and Taylor, 1996). With the increasing levels of globalization, technological changes and the complexity of business functions, the current labor functions all influence an organization’s decision to get outside help in the core functions of HRM. The recruitment, selection and training of employees can be outsourced by an organization since it usually refines demand for the provision of products and services, helps in providing constant workflow, reduces labor commitments, and reduces administration functions to the important functions (Varadarajan, 2009). The use of external agencies also helps because they provide many benefits since they are specifically set up to handle the recruiting function. However, outsourcing crucial human resource functions may not be a simple decision for an organization to make. The main problem that an organization can face is when the organization fails to differentiate between recruitment outsourcing as a strategic or tactical decision (Gilley and Rasheed, 2000). The outsourcing firm can view the recruitment process as a step in building a business relationship with the client company and recruited employees. This would help the recruitment provider in having the continued business services of the client firm. However, with the current state of the economy and the need for cost-consciousness, outsourcing of employee recruitment is sometimes viewed as a tactical decision by the parent firm. However, the process can be potentially destructive to an organization’s culture, since the outsourcing firm is usually hinged on helping itself (Gilley and Rasheed, 2000). This means that the difference in organizational culture can be a potential drag in the culture of the recruited employees. Recruitment Outsourcing Organizations usually have to decide whether they will conduct the recruitment and selection process in-house or by buying the function from an external provider (Uttamkumar and Kinange, 2011). When a firm decides to outsource the business function of hiring, the process usually involves developing a relationship with another firm, which also involves the development of risk. In this case, it is important for a firm to distinguish between outsourcing the business process and contracting one aspect of the recruitment process. Since the outsourcing process is usually a long-term process, the parent firm usually enters into a long-term contract with the outsourcing specialist firm. Conversely, the process of contracting out the recruiting service is usually one-off, where the firm assigns individual business functions to an external; firm, which can be done on a job-by-job basis (Ogburn, 1994). Outsourcing the recruitment function has a number of benefits to the parent firm, but the main advocate of the process comes from the strategic and tactical advantage that the process offers to the firm (Alexander and Young, 1996). Strategic outsourcing of a firm’s functions is a process that seeks to develop a long-term relationship with a contraction firm, which will in turn help in the cost-reduction policies of an organization. This also helps in the development of credibility and trust by both parties to the agreement. This ensures that the services provided by the outsourcing firm actually serve the needs of the client firm. The tactical advantage of the outsourcing decision is usually witnessed in the formative years of the agreement, since the companies are usually in the process of reducing costs and developing a business relationship. Advantages of Outsourcing the Recruitment Function The main advantage of outsourcing the recruitment process is that an organization has the opportunity to focus on immediate business functions (Belcourt, 2006). The recruitment process is not a core business activity of the organization; therefore, the firm utilizes the expertise, resources, technology and talent of the eternal recruiting organization to find the best employees for particular functions. This serves as a two-pronged advantage, since the technology for recruitment that is not available in-house is received from the outsourcing firm, which ensures that the organization gets the best of both situations (Belcourt, 2006). The second advantage of outsourcing the recruitment process is that the organization gets to have greater cost efficiency and a greater leeway in allocating resources to other processes in the organization (Belcourt, 2006). For example, some firms decide that buying many HRM functions is more efficient than using in-house functionalities, which is based on the rationality of saving time and reducing costs. The recruitment process can be outsourced since the external firm usually has the expertise that the firm does not have. One of the aspects of the recruitment process is training employees for the functions that they will accomplish in the firm (Gilley, Greer and Rasheed, 2004). With this function, the organization is faced with the risk of financial loss when the training, to which the employees are subjected, becomes obsolete. As a result, the organization’s decision to outsource the whole recruitment process is an advantage, since it ensures that the firm does not lose money when the employee training becomes obsolete (Gilley, Greer and Rasheed, 2004). The financial investment that the organization makes in the employees’ training is secured when the organization outsources the recruitment and selection function, since they do not cater for the training costs. Therefore, this advantage can be summarized as risk avoidance and cost saving, since the external firm bears all the financial implications and risks of training and selecting the employees. The other advantage of outsourcing the primary functions of HRM is the timesaving factor, which is experienced since the outsourcing firm has the expertise and technology that the parent firm does not have (Abraham and Taylor, 1996). Therefore, the recruitment and selection process is done in a faster and more professional way, which helps in reducing cots. In instances where the old processes in the firm were old and obsolete, the outsourcing process helps to improve the way the process is delivered. The outsourcing of the recruitment process also helps the organization in finding flexible work arrangements with the outsourcing firm (Abraham and Taylor, 1996). In the organization, there are usually fluctuations in the labor needs, which are enhanced by absences of staff or increasing costs. As a result, the organization needs to find a firm that can supplement the labor requirements of the firm. This can be done by outsourcing or leasing employees for predetermined periods of time, which helps in increasing flexibility, competitive advantage, maximizing profits and taking advantage of economies of scale. As previously mentioned the outsourcing firm usually has more expertise and advanced technology with which to perform the recruitment process. This is an advantage to the client firm since they have a chance to get the best staff from the recruitment process, since the recruiting firm ensures that they get the best employees for the job required (Abraham and Taylor, 1996). The client firm also benefits since the administration requirements that have to be observed in the recruiting process are reduced. Some of the administration requirements include insurance services, worker compensation, and payroll functions. Disadvantages of Outsourcing the Recruitment and Selection Process As mentioned, one of the main advantages of outsourcing the recruitment process is the cost-saving factor. However, sometimes the cost associated with outsourcing the recruiting function can be more than the firm previously anticipated (Gilley and Rashid, 2000). One of the main advantages of outsourcing the recruitment function is the fact that the process could result in higher moving costs, managing outsourcing contracts and affecting the quality of service. The recruitment process is usually an employee’s first induction to a potential firm, and when the potential employee is introduced to the recruiting agency, the loyalty may be affected (Gilley and Rashid, 2000). In this case, the client organization might have to cede control of the employee to the recruiting firm, which in turn affects the processes that the firm engages in. The other advantage is that the firm might have increased costs or financial problems if they ever decide to return the outsourced functions in-house, which means that the reformation of the policies becomes hard. In this case, management will have to incur a lot of costs in resetting up the process in-house. For example, the firm would have to find the technology, hire new staff and find new resources to cover the function if they ever decide to bring back the function in-house. One of the major costs of outsourcing any function in the firm is that the existing employees will become obsolete (Gilley and Rashid, 2000). This means that the employees who are currently managing the function will have to endure labor cuts. The outsourcing of the recruitment function of HRM means that some employees in the HRM department will have to suffer labor cuts, which in turn serves to destroy employee morale. This disadvantage serves to encourage valuable staff to seek alternative employment, which means that the organization will lose more valuable employees than it gets from the recruiting process. This also serves to reduce the organization’s image if large numbers of employees are laid off or decide to move away from the firm in search of better employment. The costs associated with outsourcing this important HRM function is also a disadvantage to the firm (Gilley and Rashid, 2000). One of the costs associated with this function is that the recruiting firm specializes in this type of business, meaning that they are in the business to make profits. This means that the parent organization will have increased costs associated with providing revenues to the recruiting firm. Some recruiting firms also demand long-term contracts with the parent firm, as a means of stabilizing revenues. This means that the parent firm will have limited opportunities associated with the recruitment process. One of the major disadvantages of outsourcing is the quality of service provided (Gilley and Rashid, 2000). The costs associated with the process means that the parent firm usually has one opportunity to get the process right, and if the outsourcing firm does not have the correct technology, expertise or skills, the parent firm might get substandard employees. This factor is hinged on the fact that the organizational culture between the two firms is different, where the recruiting organization does not understand the type of employees needed. This means that the employees recruited might be substandard. Some organizations believe that the disadvantages faced when outsourcing the HRM function of recruiting can be avoided by performing the function completely in-house (Gilley and Rashid, 2000). From research, it is evident that the application of organizational policies is better done when the recruitment process is done in-house. The workers found from external recruiting firms might be less committed to the firm, perhaps because their loyalty is not inculcated in them from the beginning. As a result, the supervisors in the firm mistrust the employees from the recruiting firms, assign them to lower caliber jobs and rate them not as effective as existing employees. In this case, the new employees never get a chance to blend into the organization, which results in their marginalization. The employees from outsourcing firms do not understand employee policies and practices, since their training is usually done by the outside firm. Because of this, work spill-overs might result, since existing employees have to increase their job to include managing inexperienced employees and teaching them existing firm policies and practices (Gilley and Rashid, 2000). The employees tasked with this duty might display higher turnover, negative relations and create an ineffective organizational environment. Adoption of HRM Outsourcing The HRM function of recruitment is not only focused on the actual selection of employees; it encompasses the training and provision of benefits to the employees (Belcourt, 2006). The process of outsourcing the business function of recruitment and selection should be used since it provides a platform for training and giving employee benefits. In addition to the advantages of outsourcing mentioned above, the two added benefits of outsourcing this critical business function help management in making the decision. The training process in any firm is usually hampered by the changing organizational needs, where the firm has to cope with issues like violence and sexual harassment in the organization (Belcourt, 2006). The presence of a diverse workforce in big organizations provides the human resource department with an unprecedented challenge, one which can be outcome by using an outsourcing firm. An organization that uses in-house HRM functions would need to have a workforce capable of mastering the changing needs of training, which can be met by a well-organized outsourcing firm. As previously mentioned, outsourcing firms usually have the expertise and technology to address all aspects of the recruitment process; therefore, the firm would not be troubled with providing changing training needs. The HRM process of recruitment and selection should also be outsourced, since the outsourcing process ensures that the firm gets the added benefits. From research, it is evident that some outsourcing firms offer their clients added services like health and dental care and included benefits (Burke and Eddy, 2006). This reduces the costs incurred by the client firms. Another factor is that the longevity of clients to an outsourcing firm results in greater discounts, which also serves to reduce the costs incurred by the firm. One of the main issues that affect the outsourcing process is finding the correct contractual and legal issue that affects employees (Burke and Eddy, 2006). One of the disadvantages of using employees from external recruiting firms is the fact that they may not be of the quality desired by the firm, maybe due to insufficient training by the recruiting firm or due to an oversight in the recruitment process. In this case, the employer is faced with the problem of lost costs and inefficient employees (Burke and Eddy, 2006). The legal issue in this case is a contractual obligation with the outsourcing firm; the agreement on the standard of employees from the outsourcing firm and the issues that would merit rejection. If this issue is resolved, the process of recruitment would be solved. Conclusion Outsourcing has grown to become one of the biggest processes that a firm can engage in and with the capability of the firm to outsource different HRM functions, the advantages are numerous. The process of outsourcing the recruitment and selection process is beneficial to the organization since it is a way of cutting down costs and includes the advantages discussed above. However, the process also has its disadvantages and risks, which the firm has to establish before the decision to outsource is finalized. Most firms should adopt the process of outsourcing the HRM function of recruitment and selection, since the advantages outweigh the disadvantages, and with careful monitoring, the firm can eliminate the disadvantages. The main issue involved in the outsourcing process is the assurance of quality work, and with the provision of a good contractual agreement, this issue can be resolved. Therefore, it is evident that the recruiting and selection process should be outsourced by a firm, which in turn helps the firm in a myriad of ways. 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