Finding Work through Social Networks is Rational and Efficient - Literature review Example

Finding Work through Social Networks is Rational and Efficient Student name: Student number: Tutor: Date: Introduction Within the context of job search, social networking is described as a job seeker’s actions aimed at making contacts with relatives, acquaintances, and friends to whom one can refer to with the hope of acquiring information that leads to getting an employment. Baker et al (2011) define social networking as an interconnected formation of alliances through which information is passed, help obtained and actions taken to attain certain outcomes. Social networking is rationalized by a job seeker’s attempt to create and maintain relationship with influential individuals, with the potential to help them find a job or advance in their careers. Social networks allow job seekers to acquire reliable information on the availability and the description of the job (Caliendo et al 2010). Such informational advantage is crucial for job seekers to choose the right employers and employments. Based on this background, the essay argues that an employment found through social networking has greater potential of resulting to higher wages, higher satisfaction, and better match. These three desirable outcomes rationalize, as well as make social networks efficient for finding jobs. Background of social networks Broughton et al (2013) point out that understanding rationality and efficiency of social networks is possible by categorizing it into two major job search behaviours: formal and informal classification. Informal classification is a job search behaviour that defies the formal intermediaries. Instead, it relies on relatives, acquaintances and friends, or contacting the existing and former employees. On the other hand, formal job search utilized formal intermediaries intended principally for recruitment purposes, such as recruitment advertising agencies or employment agencies (Archana et al 2014). In this regards, a new strand of literature has explored the social networks and the employment outcomes. The researchers established that the efficiency and rationality of finding a job through social networks includes job match, job satisfaction, higher wages and professional brand development, cost-efficiency, and nurturing realistic expectations (Franzen and Hangartner 2006; Caliendo et al 2010; Broughton et al 2013). Rationality and efficiency of social networks Job match Regarding enabling job seekers to find an ideal job match, several studies have provided evidence to support this assumption. According to Caliendo et al (2010), social contacts play a significant role in finding matches, where the employees find their target employers, while employers locate their ideal candidates without prior search. This also means that job seekers are likely to get into employment in terms of their qualification and interests. An indicator of the quality of the match is how effectively an individual’s qualification and education fits the requirements of a job. Franzen and Hangartner (2006) refer to this as job’s educational adequacy. Social networks allow job seekers to acquire reliable information on the availability and the description of the job. Such informational advantage is crucial for job seekers to choose the right employers and employments, hence high potential of a job match. Social networks also enable the job seekers to acquire efficient information on the labour market. As stated by Franzen and Hangartner (2006), social networks is a significant source of information on the labour market for job seekers and a means of finding employment through family, relatives and friends. As established by an earlier research by German Research Foundation revealed that some 44 percent of jobseekers in the United States and 34 percent in Germany found employment through social networks (Broughton et al 2013). Better wages Regarding better wages, Cahuc and Fontaine (2002) established that job found through social networks is likely to lead to better pay and greater satisfaction. In a review of earlier works by Franzen and Hangartner (2006), the researchers established that 54 percent of job seekers who find employment through social networks were highly satisfied compared to 30 percent who found employment through formal means of employment. This shows that finding employment through the social media is rational to the employees as it provides the needed satisfaction (Broughton et al 2013). When it comes to enabling the job seekers to find employments that offer better wages, Cahuc and Fontaine (2002) points out that since individuals who are likely to be found by their employers have a greater bargaining power, they are likely to bargain for better wages. This implies that social networks provide an efficient and rational means of finding jobs with better pay. To take this argument further, researchers such as Franzen and Hangartner (2006) have held that better wages are direct effects of finding work through social networks. His works on the outcome of job seeking, through social networks, established that higher levels of social capital are linked to higher-income, and that use of social networks affected the wage level. Franzen and Hangartner (2006) used economic job-search theory to explain that apart from affecting the reservation wage, social networks have a direct impact through the strategies that job seekers use to search for jobs. The researchers explained that getting jobs from strong ties, or influential contacts, was likely to lead to higher wages. This, however, depends on whether the offer rate, offered through the social networks, is greater than that offered through the formal channels. Such an assumption is based on Franzen and Hangartner’s (2006) assumption that information on new job opportunities is efficiently passed through the social network ties compared to the formal methods. For instance, to find a job through the formal channels, an individual has to locate a job advertisement and to present a formal application. The process is lengthy, tedious and more costly compared to receiving the information through social network ties. Hence, it could be reasoned that more job seekers are likely to receive more offers efficiently and cost-effectively through the social networks than through the use of formal channels (Franzen and Hangartner 2006; Caliendo et al 2010; Broughton et al 2013). Professional brand development Franzen and Hangartner (2006) remarked that social networks also enable individuals to build their professional brand, or marketing of oneself. Hence, job seekers may take advantage of social networks to engage prospective employers on their ongoing projects. It also enables job seekers to access and reconnect with past acquaintances or explore inside connections while searching for a job. At the same time, individuals stand to benefit from fringe benefits, such as acquisition of advice on how to get the right opportunities through industry experts (Franzen and Hangartner 2006; Caliendo et al 2010; (Broughton et al 2013). Cost-efficiency Archana et al (2014) argues that job seekers use social networks to find jobs because it is cost-efficient. In view of these, organizations also use social networks since it is cost-efficient and targeting specific employers. The cost-efficient benefits have also been explored by Cahuc and Fontaine (2002). The researcher commented that social networks provide readily available information to the job seekers while incurring less cost. This is specifically advantageous to prospective employees who are able to examine a job seekers’ personality and character that may not be feasibly obtained through the formal channels (Cahuc & Fontaine 2002). Job seekers are also able to access a large pool of prospective employers, because of the capacity to contact them at minimal cost. Nurturing realistic expectations Social networks foster realistic expectations to the job seekers. This is since they create positive reactions to the potential employers. According to Caliendo et al (2010), social networks have long-term value to the employers by providing informal channels to convey their organisation’s values, as a result fostering organizational socialization. Additionally, social networks may shape the job seekers’ psychological contract. This also means that a job seeker gets to gain information on a potential employer through the social media or friends. In return, this enables job seekers to get the general feel of how they expect an organization to treat them once they are employed (Broughton et al 2013). In situations where they are not attracted to the work conditions in a particular organization, they can decide against applying. This may save them the likely frustrations and cost. An underlying assumption that rationalizes the use of social networks as an informal search channel is that the informal search contacts minimise informational asymmetry as they lower uncertainty regarding the quality of job match to the employers and employees. In respect to the outcomes of the labour market, social networking, as Caliendo et al (2010) found, leads to longer employments tenure and higher wages. Still, empirical findings are rather ambiguous. Among the clearer findings are those by Franzen and Hangartner (2006), which established that search success through social networks is linked to stability of employment. Problems for the human resources manager While social networks provide efficient and rational means to the job seekers to find a job, they present several challenges to a human resource manager. The first problem is the legal risk of social networking. While the human resource manager is provided with a means to request for an applicant’s background information without a job seeker’s consent, Franzen and Hangartner (2006) expressed concern that they are restrained from doing so because of the likely legal risks linked to infringement of privacy. The accuracy of information also presents a paradox to a human resource manager. Screening of the candidates using social networking channels, such as asking for information from friends or the social networking site is not a formalized means of recruitment process (Franzen and Hangartner 2006; Caliendo et al 2010). This also implies that verifying the information acquired regarding a candidate may be difficult. In this regards, Broughton et al (2013) explains that while relatives and friends may lie to give a candidate good rating, the information the human resource acquires from the social media may as well be inaccurate, since they are intended to market a candidate’s brand. These two aspects raise the question on whether social networks can be reliably used to screen the candidates. An additional potential problem linked to using social networks is the likelihood of making mistakes when using social networking tools, such as Facebook and Twitter. The posts that the likely candidates post on Facebook are done very fast, sometime giving the candidates little time to reflect (Baker et al 2011). Human resource managers who rely on the information posted are likely to make wrong inferences about certain candidates, especially when it comes to judging a potential employees’ character or associations. Related studies have also investigated the information quality exchanged through the network. According to Franzen and Hangartner (2006), the productivity of the network depends on the characteristics of people who make up the network. Broughton et al (2013) found that the people's employment status in a network relates to each other. The challenges regarding the diversity of social networks are also drawn into perspective by Broughton et al (2013). In their view, it is likely that gender, generational and racial gaps will exist during social networking. The demographic differences, such as age and race are likely to trigger certain biases, despite prospective employees’ qualifications (Broughton et al 2013). This implies that using social networks without traditional formal methods may be unhelpful to the organization since certain talents and expertise are likely to be missed. Conclusion An employment found through social networking has greater potential of resulting to higher wages, higher satisfaction, and better match. Social networks play a significant role in finding a job match, where the employee, find their target employers. Hence, job seekers are likely to get into an employment in terms of their qualification and interests. It also enables the job seekers to find employments that offer better wages. Job seekers are also able to access a large pool of prospective employers at a minimal cost. Social networks also provide job seekers with the general feel of how they expect an organization to treat them once they are employed. They also minimise informational asymmetry as they lower uncertainty regarding the quality of job match to the employers and employees. The problems presented to managers include legal risk of social networking, accuracy of information and challenges of diversity. Reference List Archana L, Nivya, V, Thankam, S 2014, "Recruitment through Social Media Area: Human Resource," IOSR Journal of Business and Management pp.37-41 Baker, D, Buoni, N, Fee, M & Vitale, C 2011, Social Networking and Its Effects on Companies and Their Employees, viewed 15 Jan 2015, Broughton, A, Foley, B, Ledermaier, S & Cox, A 2013, "The use of social media in the recruitment process," Acas Research and Evaluation programme - Research Paper Ref: 03/13 Cahuc, P & Fontaine, F 2002, “On the Efficiency of Job Search with Social Networks," Discussion Paper Series IZA DP No. 583 Caliendo, M, Schmidl, R & Uhlendorff, A 2010, “Social Networks, Job Search Methods and Reservation Wages: Evidence for Germany,” Discussion Paper No. 5165 September 2010 Franzen, A & Hangartner, D 2006, "Social Networks and Labour Market Outcomes: The Non-Monetary Benefits of Social Capital," European Sociological Review vol 22 no 4, pp.325-368 Read More