Ch. 5: Talent Acquisition

Learning outcomes

1. Discuss why human resource needs must be forecast and which techniques are used.
2. Explain the steps to an effective recruitment strategy.
3. Develop a job analysis and job description.
4. Explain the different strategies available for recruitment.
5. Name and discuss the steps in the selection process.
6. Explain why developing criteria matters in the selection process.
7. Apply examples of the kinds of criteria that can be set.
8. Describe the pros and cons of internal versus external candidates.
9. Explain the various types of interviews and interview questions.
10. Explain which kinds of tests can be given during the selection process.
11. Discuss the kinds of selection models and the errors made in selection.

5.1 The recruitment process

Recruitment and selection together cover attracting, screening and choosing qualified people for jobs. The chapter treats them as one continuum: recruitment is searching for the right candidate, selection is choosing the right candidate from a shortlist of applicants.

Why recruitment matters. Recruitment affects an organization's competitive success. Hiring the wrong person is costly, while highly talented and motivated employees are a source of competitive advantage: a firm's ability to add value through its assets (including its human resources) and to lower its costs. Poorly hired employees with the wrong skills or experience put the company's success at risk.

Diversity. Employers recognize that a diverse workforce contributes to success. Some introduce employment equity programs to correct imbalances. HR monitors recruitment plans to proactively widen the pool with workers from different cultures, religions, genders and abilities. A diverse applicant pool expands the talent available, gives more choice and improves the employer's image as credible and diverse. HR should therefore be part of the (strategic or capital) planning process.

Human resource (capital) plan: six steps

Getting the right talent in the right place at the right time needs extensive planning. A human resource plan has six main steps:

1. Evaluate the goals of the organization: growth plans, new offices or retail locations, a larger sales force, extra customer service or internal support.
2. Identify factors that might affect the plan: sources such as the NOC and O*Net Online, local chambers of commerce, business publications and industry associations help predict market developments (e.g. new businesses or large employers hiring or laying off).
3. Establish the current talent landscape: a complete picture of the current workforce, for example with a detailed organizational chart showing jobs, skills and competencies.
4. Trend analysis: take into account turnover, investment in new technology, the economy, unemployment and competitors (poaching), and predict labour needs using historical data.
5. Conduct a gap analysis: the difference between future needs and the current landscape becomes the target for recruitment.
6. Develop a recruitment plan (see the following sections).

Trend analysis

How useful a trend analysis is depends on which operational factor is selected.

• Moving company: history shows 3 movers per $5,000 in sales. Planned weekly sales of $50,000 gives 50,000 / 5,000 x 3 = 30 movers.
• Hospital in the pandemic: normally 0.2 nurses per ICU patient per day; with COVID protection measures this rises to 0.8. With about 50 expected COVID patients: 50 x 0.8 = 40 nurses instead of the normal 50 x 0.2 = 10.

Recruitment pipeline

Recruitment takes more time and resources than people expect. On average it takes about 40 days from posting an ad on the company website to a signed employment contract, and about six months until the new employee meets minimal performance requirements. HR must therefore be proactive: hire not only for open positions but for positions likely to open in the future. Tracking recruiting pipelines with analytical tools (applicant pipeline metrics) makes recruitment more efficient.

Yield ratio

Example: 100 resumes, 30 invited to interview, gives a yield of 30%. The yield ratio shows the efficiency of a recruiting method, so HR can compare sources: if LinkedIn yields 25% interviewees and Indeed 20% at equal posting cost, LinkedIn is the better investment. The book's recruitment yield pyramid: 240 applications, 120 pass resume screening, 30 get an assignment, 15 are interviewed, 5 go to an executive interview, 1 receives an offer.

5.2 Recruitment plan: internal and external

A key decision is whether candidates are sourced internally, externally or both. Some organizations have no real choice: the military recruits internally for higher ranks, a small business must usually go external.

Internal recruitment. Once the job analysis and job description are done, the organization can start by considering internal candidates (current staff). A suitable internal candidate might be invited to apply, and the vacancy might never be advertised. Many organizations use formal job posting procedures and job bidding systems, for example vacancies emailed to an internal list or posted on an intranet page.

External recruitment. For a high-level executive an outside head-hunting firm may be used; for an entry-level job, social networking sites may be best. An understanding of the labour market is essential. The pandemic sharply raised Canadian unemployment within months, roughly doubling available talent, while demand for talent also shifted. General unemployment figures need a finer-grained analysis: there were shortages in healthcare and agriculture but a surplus of workers in hospitality.

The choice depends on the situation (labour market, availability of internal talent, budget) and the company's objectives.

5.3 The law and recruitment and selection

Recruitment can look passive (a job is posted and people respond), yet the ad has to reflect the job and the candidate requirements accurately. Stating the desired KSAOs (knowledge, skills, abilities, others) may exclude applicants without saying so. When criteria hit protected groups disproportionately, they have to be shown to be job related. Recruitment and selection are closely tied to human rights, labour relations, employment equity, diversity, working conditions and wages. Five laws are named in the book (Ontario context):

5.4 Application forms

A resume is a summary of a person's experience, background, personal information and education. HR reviews it to decide whether the person deserves an interview. Larger companies use tracking systems (applicant tracking software) that scan resumes electronically and score them on key factors from the job description and job specification.

The job application form may look like duplication, but it collects information consistent with the employer's needs, fills gaps the applicant left out and can require more detail than a resume. Forms are customized per employer and are often online. Typical content:

• Personal information: name, address, phone, email. Employers may not ask about marital status, birthplace, place of origin, sex, race or religion; that would be discrimination.
• Employment status: employment goals, willingness to work shifts or weekends, salary expectations, full or part time, current employer and whether it may be contacted.
• Education: formal and informal education, certifications, diplomas.
• Work history: employers, dates, reasons for leaving, duties, job title, starting and ending pay, supervisor's name and contact details.
• References: from past employers or personal references.
• Other information: sometimes criminal record, credit history, family or friends already working for the employer.
• Applicant signature: confirms the information is true and accurate (with date) and permits the employer to check references or other records (e.g. a criminal record check for a bank job).

5.5 Recruitment strategies

Recruiting borrows from marketing: the goal is to generate as many quality applications as possible. A recruiting campaign needs a clearly defined audience (future employees), high-quality, creative and easy-to-share content (job postings, company videos), multiple content channels (company website, LinkedIn) and rigorous analysis and reporting.

Branding is a marketing concept about how organizations differentiate themselves (logo, name, messaging). It is now also crucial in the competition for talent. Social media increase HR's role in managing the company's public image: on Glassdoor current and former employees anonymously review companies and share salaries, and most job seekers aged 18 to 44 read these reviews before accepting an offer. The book shows a Canadian Tire recruitment video as an example of creative employer branding.

Recruiting strategies

Professional recruiters. Recruiters are strong networkers who attend events and keep a constant pipeline of candidates. Three main types:

1. Corporate recruiter: an employee of the company who focuses entirely on recruiting for that company, sometimes on a specific area such as technical recruiting.
2. Temporary recruitment or staffing firm: supplies qualified candidates for shorter contracts (e.g. to replace a receptionist on medical leave). The firm usually pays the worker's salary and the company pays the firm, so the person is not on the company payroll; a good temp may be offered a permanent job.
3. Executive search firm: focuses on high-level positions (director, VP, CEO). Typically charges 10 to 20 percent of the first-year salary, so it is expensive, but it does much upfront work and presents pre-screened, interviewed shortlist candidates.

Job websites.

• Job Bank: the government job database. Employers notify Employment and Social Development Canada (ESDC) of job requirements, which are posted online for thousands of job seekers.
• Internet job sites (Monster, Indeed, Workopolis): many inexpensive options, but a huge number of resumes of mixed quality; organizations use keyword search software to cope.
• Company job sites: career pages are a source of pride; layout, design and messaging are used to attract the right talent (examples: Verizon Media, Spotify, Square).

Social media (Facebook, Twitter, LinkedIn, YouTube): creating a buzz, sharing success stories and showing an interesting culture. Relatively inexpensive, even small companies can post openings as status updates; the challenge is to show the employer's personality early and not cast too wide a net.

Campus recruiting and events: colleges and universities are good sources of entry-level talent, including technical colleges with specialized training. Many organizations use campus programs to onboard talent that later grows into management. It requires relationships with campus career services and time for events such as job fairs.

Professional associations: usually nonprofits that further a profession (e.g. the Ontario Association of Social Workers posts jobs and career resources). Usually there is a fee and membership may be required to post.

Referrals: current employees recommend candidates. Quality is usually high, since people rarely recommend someone incapable. Incentives are common: Groupe Dynamite (Montreal fashion retailer) pays referral bonuses up to $2,500.

Realistic job preview (RJP)

Recruiting and marketing differ in one area: communicating the less favourable characteristics. A pick-up truck ad stresses horsepower and cargo space, not fuel consumption. Recruiting must be balanced and transparent.

Costs of recruitment

Recruitment requires careful budgeting. Book example: three positions (one temporary), advertising $400, temporary agency about $700 for the month, and one expected referral bonus of $500. Total recruitment cost = 400 + 700 + 500 = $1,600, so the cost per hire = total cost / number of hires = 1,600 / 3 = about $533.

Cost projections should be combined with yield ratio experience. Example: 200 resumes from a professional association ad, 52 reach the interview stage: yield = 52 / 200 = 26%. Yields vary per job, and a higher yield must be weighed against cost: for an entry-level job, corporate recruiters may give a better yield than social media but at a much higher cost per hire. After recruitment, selection starts.

5.6 An interview story

The book walks through an interview from the candidate's side (the waiting room, first impressions, "Tell me about yourself", a cognitive test, reference checks) to show the effort involved. Ahead of the interview, the hiring manager may have gone through hundreds of resumes, drawn up selection criteria, set a timeline and a compensation package, recruited fellow interviewers and held phone screens. Hiring done properly is time-consuming and precise: the questions are drafted beforehand, and the interviewer also has to be prepared to sell the organization to the applicant.

5.7 The selection process

Selection is also expensive: time to review resumes and interview takes people away from other priorities, and testing and travel for interviews cost money. The process has six steps:

1. Criteria development: plan the process; decide which characteristics are sought and how they will be assessed, based on the job analysis and job specifications. Doing this before reviewing resumes keeps the process fair, because the HR manager is not yet influenced by applications. Possibly develop an application form or biographical information sheet. Identify and weight the selection criteria at this stage.
2. Application and resume review: increasingly with automated keyword screening software.
3. Interviewing: candidates meeting the minimum criteria are narrowed to a shortlist, typically 3 to 5 candidates for a final round.
4. Test administration: drug tests, physical fitness, personality or cognitive tests; increasingly also social media checks to see whether the resume matches what is online and how the applicant presents themselves publicly.
5. Selection: all information is reviewed and a decision is made; some organizations then do reference and credit checks.
6. Making the offer: a formal offer by email or letter, carefully stating all elements and conditions, including compensation, benefits and legal considerations.

5.8 Criteria for interviews: principles of selection

Before reviewing applications, the company must know which education, skills and abilities it wants and how each will be assessed. Three principles:

1. Sequencing based on cost. Some KSAOs are objective and cheap to check (a biology degree, a truck driver's licence: visible on the resume). Others, such as being a team player or handling stress, need costly methods like interviews or simulations. So HR screens first on objective, easy-to-assess KSAOs and leaves expensive tests and checks for later in the process.

2. Validity and reliability, the two most important characteristics of an assessment procedure.

An example of an unreliable method is reference checks: candidates rarely list someone who would give a poor review. To compensate, organizations ask for 3 to 5 references including at least one direct report, one or two immediate supervisors and a colleague.

3. Organizational fit. Fit means not only the right technical expertise, education, experience and KSAOs from the job analysis, but also fit with the company culture and the team culture. Examples: Facebook selects engineers on willingness to take risks and a "hacker" personality (someone who finds ways around a system's constraints); Amazon values developing leaders who grow with the organization, so a candidate without interest in long-term growth may not fit; Microsoft works in multidisciplinary teams on one product and therefore also selects on fit with team members.

5.9 Application and resume review

Selection has evolved greatly through technology and psychology, but two elements have stayed stable: the resume (or CV) and the interview.

• Applications: formerly the job application form was standard practice, with or without a resume. More recently the resume has replaced the formal application form in many organizations. ("Resume" is French for summary; "curriculum vitae" is Latin for course of life.)
• Resumes: the key document for selecting candidates, summarizing education, work experience and skills. Candidates should always have an up-to-date resume ready.

5.10 Interview bias

Interviews give first-hand contact with candidates but are relatively expensive (mostly interviewer time), so they are usually placed toward the end of the selection sequence. Their major downside is subjectivity and bias, conscious and unconscious; different interviewers often reach diverging assessments. Two solutions make interviews more reliable and valid: interviewer training and structuring the interview.

Interviewer training is a very effective way to reduce bias (Posthuma et al., 2002). Unconscious biases are greatly reduced simply by being aware of them. Common biases:

5.11 Interview structures

Besides training, the second way to reduce bias is to structure the interview and treat it like a standardized test instead of a free-flowing conversation.

Types of structured questions:

• Situational questions: hypothetical, job-specific scenarios that assess cognitive ability and judgment in cases similar to the actual job. Example: "Suppose you led the accounting team: how would you handle their daily workload?"
• Behavioural questions: ask how the applicant dealt with difficult situations in earlier jobs, on the assumption that past performance is the best predictor of future performance. The answers are concrete. Example: "Describe a risky decision you took in a previous job that turned out well."
• Personality-based questions: learn about the applicant as a person, such as hobbies, interests, what drives and excites them and their professional or personal passions, so these can be matched with the work. Example: "What was the most exciting and successful experience in an earlier job, one that really motivated you?"

5.12 Interview types

1. Traditional interview: in the office, interviewer and candidate, a series of questions asked and answered.
2. Telephone/video interview: quick, inexpensive prescreening before a traditional interview, e.g. to check salary requirements; candidates can disqualify themselves. Example: 200 resumes narrowed to 25, then phone interviews bring it down to about 10 in-person interviews.
3. Panel interview: several interviewers with one candidate at the same time; stressful for the candidate but an efficient use of time when three or four people must interview.
4. Group interview: two or more candidates interviewed together; shows how they relate to others and team dynamics, useful when hiring more than one person from the group.
5. Company tour / meal or cocktail interview: a more casual setting that reveals manners, social skills and treatment of wait staff; common in finance, accounting and client relations. It resembles an unstructured interview, but organizations try to structure it with detailed assessment sheets completed afterwards.

Most organizations combine several interviews, e.g. phone screen, then meal interview, then traditional interview.

5.13 Test administration

Structured interviews measure many KSAs but are costly and remain somewhat subjective. Standardized testing is a relatively inexpensive and much more objective complement.

Psychological tests:

• Cognitive ability tests measure intelligence. Most common: IQ tests of general mental ability; others test verbal ability, math, spatial perception or inductive and deductive reasoning. Example: the GMAT for MBA admission.
• Aptitude tests measure abilities such as mechanical or clerical aptitude (typing speed, using a program), with questions tied to job requirements. Example: the RCMP Police Aptitude Test measures memory, spatial ability, prioritization, multitasking, decision-making and listening.
• Personality tests. Personality = patterns of individual differences in thinking, feeling and behaving that are relatively stable across situations and over time, so traits will show at work. The Big Five is the most used model for employment decisions (the Myers-Briggs test is also mentioned as widely used).

Honesty and integrity tests gauge the tendency toward unwanted behaviour like lying, theft, illegal drug use or alcohol abuse, and they are used more as ethics and reputation gain importance. There are two kinds: overt integrity tests ask directly about honesty and views on theft, while personality-oriented (covert) tests rely on traits like dependability and respect for authority. Critics point to invasion of privacy and self-incrimination, and note that candidates may see through the purpose and answer in a politically correct way. Even so, retailers especially rely on them, since theft by staff can do real damage to the bottom line.

Physical ability tests (e.g. carrying 100 pounds up three flights of stairs for a fire department; the Alberta Wildfire fitness test). Key: set a minimum standard directly related to job requirements. They risk discriminating against women or people with physical disabilities, so they must show a direct correlation with job duties.

Job knowledge tests measure understanding of a particular job, e.g. writing or debugging code in a set time, or solving a business case.

Work sample tests: candidates show earlier work or produce a new sample, e.g. a design portfolio, past project plans or budgets, or a pharmaceutical rep's "brag book" (recommendation letters, awards, achievements). Criteria must be set before viewing samples so everyone is judged fairly.

Final steps: checks.

• Reference checking: verifies the candidate's background and that abilities match what was said. Many previous employers only confirm dates and job titles because of privacy laws. Written consent is needed before contacting references.
• Criminal background checks: for positions of trust or work with vulnerable groups (young, old, disabled). They can easily breach human rights and privacy law, so the employer should show a bona fide occupational requirement and must obtain written consent.
• Social media checks: 70% of employers screen profiles (CareerBuilder). They look for information supporting qualifications (61%), whether there is a professional online persona (50%), what others post about the candidate (37%) and any reason not to hire (24%).

5.14 Combining the test results information

HR and the hiring manager must combine results from multiple tools into one decision. Approaches:

Clinical approach: decision makers review all information and choose the best candidate based on their judgment. Because interviewers perceive strengths differently, there is room for error and a risk of disparate treatment (biases leading to not hiring someone because of age, race or gender).

Statistical approach: a selection model assigns scores and weights to factors (e.g. teamwork weighted higher in one job, knowledge of a program in another). More objective than the clinical approach. Three variants:

Compensatory model example (table 5.14.1). The team uses job analysis and description to set criteria, assigns each a weight (1 to 5, 5 = most important) and rates candidates (1 to 5). Total per criterion = rating x weight. Example: dress 4 x 1 = 4; personality 2 x 5 = 10; leadership example 3 x 3 = 9; giving bad news 0 x 5 = 0; teamwork 5 x 4 = 20; cognitive ability test score 78 x 5 = 390 (meets the minimum of 70). Grand total: 433 for the listed items (the book's table prints 458). Hiring managers compare candidates' scores per area.

Combining the information ends in a discussion and selection, usually by HR and the hiring manager.

5.15 Selection offers and errors

Making the offer is neither easy nor unimportant. The written offer is usually preceded by discussions confirming: total compensation, start date, probationary period, vacation, special accommodations, incentives (signing bonus and claw-backs), relocation expenses and legal agreements (non-compete, confidentiality, parachute clause). The offer should state a timeframe for acceptance. It is customary not to notify the other shortlisted candidates yet, to keep a backup if the first choice declines. Negotiation is common; much of it can be avoided by setting expectations early (e.g. salary expectations far outside the range). The offer stage should be positive and efficient so the company makes a good impression and does not lose the candidate or have them start with doubts.

Selection errors. Selection is predicting future performance, which is difficult because people are complex. Errors fall into two types:

The two errors are negatively related. NASA's extremely rigorous system minimizes Type I errors but inevitably creates many Type II errors (screening out strong candidates). An organization that wants to avoid missing "diamonds in the rough" will make more Type I errors. One type is always inevitable; the aim is to minimize them, or at least make fewer errors than competitors.

Key terms (5.16)

Branding, competitive advantage, internal candidates, organizational fit, recruitment, resume, selection process, structured interview, tracking systems, traditional interview, trend analysis, unstructured interview, yield ratio. All are explained in the sections above.

Summary (5.17)

HR needs a recruiting strategy before posting any job: where to post, how to manage candidate materials and the expected cost. Options include external recruiters (executive search for senior roles, temporary staffing firms for temporary roles), corporate recruiters within HR, campus recruiting for entry-level jobs (requires relationships with colleges), professional associations for targeted jobs, company career pages and job sites, social media, job fairs and events, and employee referrals with incentives. Recruitment effectiveness is judged by costs and yield ratios, comparing total spending with the number of hires. Selection then follows six steps from criteria development to the offer, uses valid and reliable tools (structured interviews, tests, checks), combines results clinically or statistically, and always involves a trade-off between Type I and Type II errors.