Chapter 6: Recruiting and Labor Markets
Chapter 6
Recruiting and Labor Markets
Learning Objectives
After students have read this chapter, they should be able to:
• List different ways in which labor markets can be identified and approached.
• Discuss the strategic decisions covering recruiting image, outsourcing, and other
related areas.
Chapter Overview
Recruiting is the process of generating a pool of qualified candidates from which
satisfactory employees can be selected on a timely basis. Key components of strategic
recruiting are presented followed by a discussion of the important of training for recruiters
and managers. The chapter then discusses the nature of labor markets and three labor
market components—the labor force population, applicant population, and applicant pool.
To determine which labor markets to recruit in organizations consider unemployment rates,
industry/occupation, education/technical, geographic, and global labor markets.
Chapter 6: Recruiting and Labor Markets
The recruiting methods used to tap external and internal applicant sources are explored
with attention given to the relative benefits and limitations of each method. External
recruiting sources for job applicants are discussed. These include media sources,
competitive sources, employment agencies, labor unions, job fairs, creative recruiting
methods, and educational institutions. Next, common internal recruiting methods are
explored including internal recruiting databases, job posting, and employee-focused
recruiting such as employee referrals.
Chapter Outline
The staffing process used by an employer is based on HR planning and retention and must
include both successful recruiting and selection efforts. Recruiting is the process of
HR Headline: Getting Creative to Recruit College Students
Many organizations are developing creative strategies to attract younger talent
coming out of college.
Chapter 6: Recruiting and Labor Markets
generating a pool of qualified applicants for organizational jobs. If the number of available
candidates equals the number of people to be hired, no real selection is required—the
choice has already been made. The organization must either leave some openings unfilled
or take all the candidates. It is important to view recruiting broadly as a key part of
staffing, and not just as a collection of administrative and operational activities.
I. Recruiting
Recruiting is becoming more important as labor markets shift. Although recruiting can be
expensive, an offsetting concept that must be considered is the cost of unfilled jobs.
A. Strategic Recruiting and Human Resources Planning
It is important that recruiting be treated as a part of strategic HR planning because it is a
key mechanism for filling the positions necessary to complete work. Recruiting requires
an employer to:
• Know the industry and where to successfully recruit qualified employees
• Identify keys to success in the labor market, including competitors’ recruiting
efforts
B. Training of Recruiters and Managers
Training on recruiting-related activities, communications skills, and knowledge of job-
specific details are common. Also, those involved in recruiting should learn the types of
actions that might violate equal employment opportunity (EEO regulations) and how to
be sensitive to diversity issues with applicants. Such training issues often include
appropriate language to use with applicants so that racist, sexist, and other inappropriate
Chapter 6: Recruiting and Labor Markets
II. Labor Markets
Labor markets are the external supply pool from which employers attract employees. To
understand where recruiting takes place, one can think of the sources of employees as a
funnel, in which the broad scope of labor markets narrows progressively to the point of
selection and job offers (Figure 6-2). If the selected candidates reject the offers, then HR
staff members must move back up the funnel to the applicant pool for other candidates,
and in extreme cases may need to reopen the recruiting process.
A. Labor Market Components
The applicant population is a subset of the labor force population that is available for
selection if a particular recruiting approach is used. This population can be broad or
narrow depending on the jobs needing to be filled and the approaches used by the
employer. Figure 6-3 illustrates some common considerations for determining applicant
populations.
Unemployment Rates and Application Population
Chapter 6: Recruiting and Labor Markets
When the unemployment rate is high in a given market, many people are looking for
jobs. When the unemployment rate is low, there are fewer applicants. Unemployment
rates vary with business cycles and present very different challenges for recruiting at
B. Different Labor Markets and Recruiting
The supply of workers in various labor markets differs substantially and affects staffing.
Organizations recruit in many labor markets, including industry-specific markets and
occupational, educational and technical, and geographic markets. Labor markets can be
viewed in several ways to provide information that is useful for recruiting. These labor
markets can include both internal and external sources.
Industry and Occupational Labor Markets
Educational and Technical Labor Markets
Another way to look at labor markets is by considering the education and technical
qualifications that define the people being recruited. Employers may need
individuals with specific licenses, certifications, or educational backgrounds. For
is bilingual/multilingual employees, particularly those individuals who can speak
Chapter 6: Recruiting and Labor Markets
Spanish or Chinese. With some research showing a lack of motivation among
workers to learn these languages, this educational/technical area should be in high
demand with good work opportunities. Similarly, third-culture children, or
individuals who have spent a considerable part of their childhood in geographic
regions different from those where their parents originated, will also be in demand
because of their knowledge of diverse cultural environments.
Geographic Labor Markets
One common way to classify labor markets is based on geographic location. Markets
can be local, area or regional, national, or international. Local and area labor markets
Global Labor Markets
Employers in the United States are tapping global labor markets when necessary and
expanding export work to overseas labor markets when doing so is advantageous.
Firms in different industries are expanding in India, China, Indonesia, Romania,
Poland, and other countries. This expansion has caused an increase in the number of
host country nationals hired to fill positions in foreign offices.
Chapter 6: Recruiting and Labor Markets
III. Strategic Recruiting Decisions
When there are economic declines in certain geographic areas and occupations, many
talented recruits become available, and recruiting costs can be lower. But whether recruits
are plentiful or scarce, employers must decide on several recruiting issues.
A. Recruiting Presence and Image
Intensive recruiting may take the form of a vigorous recruiting campaign aimed at hiring
a given number of employees, usually within a short period of time. Sometimes such
efforts are the result of unforeseeable changes in external factors, but they also can
result from a failure in the HR planning system to identify needs in advance or to
anticipate drastic changes in workforce needs.
Employment Branding and Image
The employment brand or image of an organization is the view both employees and
outsiders have of it. Organizations that are seen as desirable employers are better
Companies can spend considerable effort and money establishing brand images for
their products, and the same attention must be spent on developing employer brands
on the basis of the many opportunities afforded to employees. These brands convey
to potential job candidates the benefits of working for particular organizations, and
Chapter 6: Recruiting and Labor Markets
company’s commitment to employee excellence and development. The company
brand can help generate more recruits through applicant self-selection because it
affects whether individuals ever consider a firm and submit applications. Recruiting
and employer branding should be seen as part of organizational marketing efforts and
linked to the overall image and reputation of the organization and its industry.
B. Organization-Based versus Outsourced Recruiting
A basic decision that needs to be made is whether the recruiting will be done by the
employer or outsourced to someone else. In most organizations, HR staff members
handle many of the recruiting efforts. However, because recruiting can be a time-
consuming process and HR staff and managers in organizations have many other
HR Skills and Applications: Recruiting Employees at McDonald’s with
Positive Branding
Successful companies often use branding to improve the perceptions people have
about organizations. Besides enhancing what people think, positive branding can
enhance the ability of companies to recruit and retain outstanding employees by
increasing the number of candidates who apply for jobs and decreasing the desire
to quit.
Chapter 6: Recruiting and Labor Markets
advertisements, initial screening of résumés, and initial telephone contacts with
potential applicants.
Professional Employer Organizations and Employee Leasing
A specific type of outsourcing uses professional employer organizations (PEOs) and
the employee leasing process. The employee leasing process is simple—an employer
signs an agreement with the PEO, after which the staff is hired by the leasing firm
and leased back to the company for a fee. In turn, the leasing firm writes the
paychecks, pays taxes, prepares and implements HR policies, and keeps all the
required records for the employer.
C. Regular versus Flexible Staffing
Another strategic decision affects how much recruiting will be done to fill staffing
needs with regular full-time and part-time employees. Decisions as to who should be
recruited hinge on whether to seek regular employees or to use more flexible
approaches, which might include temporaries or independent contractors. Many
employers have decided that the cost of keeping a regular workforce has become
excessive and is growing worse because of economic, competitive, and governmental
considerations. However, not just money is at issue. The large number of employment
regulations also constrains the employment relationship, making many employers
reluctant to hire new regular full-time employees.
Chapter 6: Recruiting and Labor Markets
Temporary Workers
Employers who use temporary employees can hire their own temporary staff
members or contract with agencies supplying temporary workers on a rate-per-day or
rate-per-week basis. Originally developed to provide clerical and office workers to
employers, temporary workers in professional, technical, and even managerial jobs
are becoming more common. This reality is driven by the many benefits that these
workers provide organizations.
Independent Contractors
Some firms employ independent contractors as workers who perform specific
services on a contract basis. These workers must be truly independent as determined
by the U.S. Internal Revenue Service and the U.S. Department of Labor. Independent
D. Recruiting and EEO: Diversity Considerations
Recruiters must consider EEO and diversity factors for several reasons, and Figure 6-5
provides an overview of some of these factors.
EEO and Recruiting Efforts
Recruiting as a key employment-related activity is subject to various considerations,
especially equal employment laws and regulations. As part of legal compliance in the
Chapter 6: Recruiting and Labor Markets
recruiting process, organizations must work to reduce external disparate impact, or
underrepresentation of protected-class members compared to the labor markets
utilized by the employer. If disparate impact exists, then the employer may need to
make special efforts to persuade protected-class individuals to apply for jobs. For
Recruiting Diversity
A broad range of factors applies to recruiting diversity. Many employers have
expanded efforts to recruit workers from what, for some, are nontraditional labor
pools. Nontraditional diverse recruitees for certain jobs may include the following:
• Persons with different racial/ethnic backgrounds
The growth in racial/ethnic workforce diversity means that a wider range of potential
employment sources should be utilized. Changes in diversity also need to be
monitored and evaluated to ensure that the workplace, through properly managed
recruiting strategies, is representative of these population dynamics. Other potential
Chapter 6: Recruiting and Labor Markets
E. Realistic Job Previews
Providing a balanced view of the advantages, demands, expectations, and challenges
may help attract employees with more realistic expectations and reduce the number of
employees who quit a few months after being hired because the “reality” they discover
does not match what they expected. Recruiting efforts can benefit from realistic job
previews (RJPs), but their usage must be monitored.
F. Recruiting Source Choices: Internal versus External
Most employers combine the use of internal and external recruiting sources. Both
promoting from within the organization (internal recruitment) and hiring from outside
the organization (external recruitment) come with advantages and disadvantages.
HR Skills and Applications: Realistic Job Previews Showcase Work
Many employers utilize realistic job previews as a basis to more effectively recruit
good employees. Companies that utilize such previews provide a better snapshot of the
jobs being staffed, which ultimately enhances retention, mainly because individuals
feel more informed about the expectations associated with work. In fact, realistic job
The recruitment of housekeeping staff in the franchised properties of Hilton and Aloft
BWI Airport has been greatly enhanced by using different worker exercises that
determine good job fit. The convenience store chain Sheetz uses a series of video-
Chapter 6: Recruiting and Labor Markets
suitable. Recent evidence suggests that internal recruiting might produce the best results
overall because existing employees who are given new work opportunities tend to
perform considerably better than external hires, at least in the first three years of
employment in a new job. Once the various recruiting policy decisions have been
addressed, the actual recruiting methods can be identified and used for both internal and
external recruiting.
IV. Internet Recruiting
The Internet has become the primary means for many employers to search for job
candidates and for applicants to look for jobs. The growth in Internet use is a key reason
that the following employer actions occur:
A. E-Recruiting Means
The growth in the Internet has led both employers and employees to use Internet
recruiting tools. Internet links, Web 2.0 sites, blogs, tweets, and other types of
Internet Job Boards
Numerous Internet job boards, such as Monster, Yahoo!, and HotJobs provide places
for employers to post jobs or search for candidates. Job boards offer access to
numerous candidates. Some Internet locations allow individuals to search one
Professional/Career Websites
Many professional associations have employment sections at their websites. As
Chapter 6: Recruiting and Labor Markets
maintain specialized career or industry websites to focus on IT, telecommunications,
engineering, medicine, and other areas. Use of these targeted websites may slightly
limit recruiters’ search time and efforts. Also, posting jobs on such websites is likely
to target applicants specifically interested in the job field and may reduce the number
of applications from less-qualified applicants.
Employer Websites
Despite the popularity of job boards and association job sites, many employers have
learned that their own company websites can be very effective and efficient when
recruiting candidates. Employers include employment and career information on
B. Recruiting and Internet Social Networking
The Internet has led to social networking of individuals on blogs, tweets, and a range of
websites. Many people initially use the social media more than job board sites. Internet
connections often include people who work together as well as past personal contacts
and friends. Evidence suggests that many graduates are using social media and the
Internet to locate work opportunities, and many companies are utilizing technology to
more extensively identify and attract talent.
Chapter 6: Recruiting and Labor Markets
can make contact online. Often those doing recruiting can send individuals to the
company website and then process candidates using electronic résumés or completed
online applications.
Job Applicants and Social Network Sites
Many individuals see social media and networking websites as a key part of online
C. Recruiting Using Special Technology Means
Chapter 6: Recruiting and Labor Markets
Several special Internet tools that can be used as part of recruiting efforts are blogs, e-
videos, and tweets.
Blogs and Recruiting
Both employers and individuals have used blogs as part of recruiting to fill jobs. For
E-Video and Recruiting
With video capabilities of all types available, employers are using videos in several
ways. Some firms use videos to describe their company characteristics, job
Recruiting through Twitter
Twitter can be used for many purposes, including personal, social, legal, and
employment-related messages. The Twitter system limits messages to 140 specific
D. Legal Issues in Internet Recruiting
With Internet recruiting expanding, new and different concerns have arisen. Several of
these issues have ethical and moral as well as legal implications. The following
examples illustrate some of these concerns:
• When companies use screening software to avoid looking at the thousands of
résumés they receive, are rejections really based on the qualifications needed for
the job?
• How can a person’s protected-category and other information be collected and
Chapter 6: Recruiting and Labor Markets
analyzed for reports?
• Are too many individuals in protected categories being excluded from the later
phases of the Internet recruiting process?
• Which applicants really want jobs? If someone has accessed a job board and sent
an e-mail asking an employer about a job opening, does the person actually want
to be an applicant?
• What are the implications of Internet recruiting in terms of confidentiality and
privacy?
Loss of privacy is a potential disadvantage with Internet recruiting. Sharing information
gleaned from people who apply to job boards or even company websites has become
Chapter 6: Recruiting and Labor Markets
E. Advantages of Internet Recruiting
Employers have found many advantages to using Internet recruiting. A primary one is
that many employers have saved money using Internet recruiting versus other recruiting
methods such as newspaper advertising, employment agencies, and search firms, all of
which can cost substantially more. Another major advantage is that, by reaching out to
so many people potentially representing diverse backgrounds and regions, a very large
pool of applicants can be generated using Internet recruiting.
HR Ethics: The Ethics of Hiring through Social Media
The use of social media such as You Tube, Facebook, Twitter, and other online groups
to recruit employees has become commonplace in organizations. Even though social
networking can be a useful approach for identifying good talent, there are some
business.
The following list provides a summary of several key guidelines that should be
considered when using social media as a tool for getting good employees:
• HR professionals should conduct social media Internet searches rather than
hiring managers so that these background checks are conducted in an unbiased
manner.
Chapter 6: Recruiting and Labor Markets
not list themselves on job boards, but they might visit a company website for other
reasons and check out the careers or employment section. A well-designed corporate
website can help stimulate interest in some passive job seekers, as well as other
potential candidates.
F. Disadvantages of Internet Recruiting
Because of broader exposure, Internet recruiting often creates additional work for HR
staff members and others internally. More online job postings must be sent; many more
résumés must be reviewed; more e-mails, blogs, and tweets need to be dealt with; and
expensive specialized software may be needed to handle the increased number of
Another issue with Internet recruiting is that some applicants may have limited Internet
access, especially individuals from lower socioeconomic groups and from certain
racial/ethnic groups, raising issues of fairness in hiring. In addition, access Internet
recruiting sources, but not all are actively looking for new jobs.
V. External Recruiting Sources
Even when the overall unemployment rate increases, numerous jobs and/or employers still
face recruiting challenges. External recruiting is part of effective HR staffing. Regardless
of the methods used, external recruiting involves some common advantages and
disadvantages, which are highlighted in Figure 6-6.
A. Media Sources
Media sources such as newspapers, magazines, television, radio, and billboards