Recruitment & selection: Recruitment & selection: Hiring the right workers Hiring the right workers 1. The supply side of the labour 1. The supply side of the labour market market 2. Screening: Hiring the right workers 2. Screening: Hiring the right workers 3. The availability of workers 3. The availability of workers 4. Staffing policy in international 4. Staffing policy in international businesses businesses
20
Embed
Recruitment & selection: Hiring the right workers 1. The supply side of the labour market 1. The supply side of the labour market 2. Screening: Hiring.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Recruitment & selection: Hiring the Recruitment & selection: Hiring the right workersright workers
1. The supply side of the labour market1. The supply side of the labour market
2. Screening: Hiring the right workers2. Screening: Hiring the right workers
3. The availability of workers3. The availability of workers 4. Staffing policy in international businesses4. Staffing policy in international businesses
MotivationMotivation
Recruitment & selectionRecruitment & selection ‘…‘…organisations now appreciate that their survival organisations now appreciate that their survival
depends on the quality of their people..’depends on the quality of their people..’
Search & selection are costly Search & selection are costly Direct costsDirect costs Indirect costsIndirect costs
The supply sideThe supply side
1. Human capital model1. Human capital model– Understanding the educational (& training) Understanding the educational (& training)
investmentinvestment decisions of workers (& firms) decisions of workers (& firms)– Costs & benefits arise over timeCosts & benefits arise over time
– Incremental decision over Incremental decision over timetime – Decision rule: invest if expected discounted Decision rule: invest if expected discounted
future stream of benefits > …costs future stream of benefits > …costs
W
W(T)e f
d c
ba
gW(M)
W(O)Kt
0
Age (time)
Fig 1 Investment, income streams & the rate of return
t0t1 t2
Figure 2 Actual rates of returnFigure 2 Actual rates of return
Social rates ofSocial rates of ReturnReturn Private rates Private rates Of returnOf return
Why don’t all workers invest in a high level Why don’t all workers invest in a high level of education?of education?
Evidence: HC versus screening – ability Evidence: HC versus screening – ability biasbias– (a) include IQ and schooling in wage equation(a) include IQ and schooling in wage equation– (b) analysis of identical (monozygotic) twins(b) analysis of identical (monozygotic) twins– (c) instrumental variables(c) instrumental variables– (d) analysis of the self employed(d) analysis of the self employed
3. Screening: Hiring the right workers3. Screening: Hiring the right workers
Empirical support for Human capital modelEmpirical support for Human capital model
Firms: Selecting skill standards Firms: Selecting skill standards – General principle General principle
Hiring standardsHiring standards
Thus:Thus:
Alternatively:Alternatively:
h
g
h
g
W
W
Q
Q
g
g
h
h
Q
W
Q
W
The production technologyThe production technology
1. Production is independent across workers1. Production is independent across workers
2. Workers’ productivity depends on the 2. Workers’ productivity depends on the skills of other workersskills of other workers
How many workers to hire?How many workers to hire?– ‘‘The firm should continue to hire workers so long as the The firm should continue to hire workers so long as the
increment to profit brought about by hiring the worker is increment to profit brought about by hiring the worker is positive.’positive.’
Should firms hire Should firms hire riskyrisky workers? workers?– If they have the same expected valueIf they have the same expected value– If expected value is lessIf expected value is less
2. The availability of labour2. The availability of labour
Search process- See FigureSearch process- See Figure Agents have imperfect informationAgents have imperfect information
quality of jobs (w)quality of jobs (w) locationlocation
Information on a workerInformation on a worker InspectionInspection ExperienceExperience
DecisionsDecisions
(i) Choice of search technology(i) Choice of search technology internal v. external sourcinginternal v. external sourcing
(ii) Choice of search intensity(ii) Choice of search intensity no. of applicants to interviewno. of applicants to interview time - interviewing, testing, etc.time - interviewing, testing, etc.
Z*Z* = = Z*(c, Z*(c, f f \ r, q + p - w)\ r, q + p - w)
Firms are more selective ifFirms are more selective if applicant arrival rate increasesapplicant arrival rate increases costs of search decreasecosts of search decrease quality of match increasesquality of match increases
4. Staffing policy in international 4. Staffing policy in international businessesbusinesses
Types of policyTypes of policy– (a) Ethnocentric policy – key management positions (a) Ethnocentric policy – key management positions
filled by parent-country nationalsfilled by parent-country nationals E.g. Procter & Gamble, Philips, Matsushita, ToyotaE.g. Procter & Gamble, Philips, Matsushita, Toyota