Sources of Recruitment: External and Internal Sources of Recruitment

A. Internal Sources:
1. Present Employees:
Promotions and transfers from among the present employees can be a good
source of recruitment. Promotion implies upgrading of an employee to a
higher position carrying higher status, pay and responsibilities. Promotion from
among the present employees is advantageous because the employees
promoted are well acquainted with the organisational culture, they get
motivated, and it is cheaper also.

Promotion from among present employees also reduces the requirement for
job training. However, the disadvantage lies in limiting the choice to a few
people and denying hiring of outsiders who may be better qualified and skilled.
Furthermore, promotion from among present employees also results in
inbreeding which creates frustration among those not promoted.

Transfer refers to shifting an employee from one job to another without any
change in the position/post, status and responsibilities. The need for transfer is
felt to provide employees a broader and varied base which is considered
necessary for promotions. Job rotation, involves transfer of employees from
one job to another on the lateral basis.

2. Former Employees:
Former employees are another source of applicants for vacancies to be filled
up in the organisation. Retired or retrenched employees may be interested to
come back to the company to work on a part-time basis. Similarly, some
former employees who left the organisation for any reason may again be
interested to come back to work. This source has the advantage of hiring
people whose performance is already known to the organisation.

3. Employee Referrals:
This is yet another internal source of recruitment. The existing employees refer
their family members, friends and relatives to the company as potential
candidates for the vacancies to be filled up in the organisation.

This source serves as one of the most effective methods of recruiting people in
the organisation because employees refer to those potential candidates who
meet the company requirements known to them from their own experience.
The referred individuals are expected to be similar in type in terms of race and
sex, for example, to those who are already working in the organisation.

4. Previous Applicants:
This is considered as internal source in the sense that applications from the
potential candidates are already lying with the organisation. Sometimes, the
organisations contact through mail or messenger these applicants to fill up the
vacancies particularly for unskilled or semi- skilled jobs.
Evaluation of Internal Source:
Let us try to evaluate the internal source of recruitment. Obviously, it can be
done in terms of its advantages and disadvantages. The same are spelled out
as follows:

Advantages:
The advantages of the internal source of recruitment include the following:

1. Familiarity with own employees:

The organisation has more knowledge and familiarity with the strengths and
weaknesses of its own employees than of strange and unknown outsiders.

2. Better use of the talent:

The policy of internal recruitment also provides an opportunity to the
organisation to make a better use of the talents internally available and to
develop them further and further.
3. Economical Recruitment:
In case of internal recruitment, the organisation does not need to spend much
money, time and effort to locate and attract the potential candidates. Thus,
internal recruitment proves to be economical, or say, inexpensive.

4. Improves Morale:
This method makes employees sure that they would be preferred over the
outsiders as and when vacancies will be filled up in their organisation.

5. A Motivator:
The promotion through internal recruitment serves as a source of motivation
for employees to improve their career and income. The employees feel that
organisation is a place where they can build up their life-long career. Besides,
internal recruitment also serves as a means of attracting and retaining
competent employees in the organisation.

Disadvantages:
The main drawbacks associated with internal recruitment are as follows:
1. Limited Choice:
Internal recruitment limits its choice to the talent available within the
organisation. Thus, it denies the tapping of talent available in the vast labour
market outside the organisation. Moreover, internal recruitment serves as a
means for “inbreeding”, which is never j healthy for the future of the
organisation.
2. Discourages Competition:
In this system, the internal candidates are protected from competition by not
giving opportunity to otherwise competent candidates from outside the
organisation. This, in turn, develops a tendency among the employees to take
promotion without showing extra performance.

3. Stagnation of Skills:
With the feeling that internal candidates will surely get promoted, their skill in
the long run may become stagnant or obsolete. If so, the productivity and
efficiency of the organisation, in turn, decreases.

4. Creates Conflicts:
Conflicts and controversies surface among the internal candidates, whether or
not they deserve promotion.

B. External Sources:
External sources of recruitment lie outside the organisation. These outnumber
internal sources.

The main ones are listed as follows:

1. Employment Exchanges:
The National Commission on Labour (1969) observed in its report that in the
pre-Independence era, the main source of labour was rural areas surrounding
the industries. Immediately after Independence, National Employment Service
was established to bring employers and job seekers together.

In response to it, the compulsory Notification of Vacancies Act of 1959

(commonly called Employment Exchange Act) was instituted which became
operative in 1960. Under Section 4 of the Act, it is obligatory for all industrial
establishments having 25 workers or more, to notify the nearest employment
exchange of vacancies (with certain exceptions) in them, before they are filled.

The main functions of these employment exchanges with their branches in

most cities are registration of job seekers and their placement in the notified
vacancies. It is obligatory for the employer to inform the outcome of selection
within 15 days to the employment exchange.

Employment exchanges are particularly useful in recruiting blue-collar, white-

collar and technical workers. A study conducted by Gopalji on 31 organisations
throughout the country also revealed that recruitment through employment
exchanges was most preferred for clerical personnel i.e., white-collar jobs.

2. Employment Agencies:
In addition to the government agencies, there are a number of private
employment agencies who register candidates for employment and furnish a
list of suitable candidates from their data bank as and when sought by the
prospective employers. ABC Consultants, Datamatics, Ferguson Associates, S B
Billimoria, etc. are the popular private employment agencies in our country.

Generally, these agencies select personnel for supervisory and higher levels.
The main function of these agencies is to invite applications and short list the
suitable candidates for the organisation. Of course, the final decision on
selection is taken by the representatives of the organisation. At best, the
representatives of the employment agencies may also sit on the panel for final
selection of the candidates.

The employer organisations derive several advantages through this source. For
example, this method proves cheaper than the one organisations recruiting
themselves. The time saved in this method can be better utilized elsewhere by
the organisation.
As the organisational identity remains unknown to the job seekers, it, thus,
avoids receiving letters and attempts to influence. However, there is always a
risk of loosing out in screening process done by the agencies, some applicants
whom the representatives of the organisation would have liked to meet and
select.

3. Advertisement:
Advertisement is perhaps the most widely used method for generating many
applications. This is because its reach is very high. This method of recruitment
can be used for jobs like clerical, technical and managerial. The higher the
position in the organisation, the more specialized the skills or the shorter the
supply of that resource in the labour market, the more widely dispersed the
advertisements is likely to be. For example, the search for a top executive
might include advertisements in a national daily like ‘The Hindu’.

Some employers / companies advertise their posts by giving a post box number
or the name of some recruiting agency This is done to particularly keep own
identity secret to avoid unnecessary correspondence with the applicants.
However, the disadvantage of this blind ad, i.e., post box number is that the
potential job seekers are hesitant to apply without knowing the image of the
organisation, on the one hand, and the bad image/reputation that blind ads
have received because of organisations that place such advertisements
without positions lying vacant just to know the supply of labour/workers in the
labour market, on the other.

While preparing advertisement, lot of care has to be taken to make it clear and
to the point. It must ensure that some self-selection among applicants takes
place and only qualified applicants respond to the advertisement. For this,
advertisement copy should be prepared by using a four-point guide called
AIDA. The letters in the acronym denote that advertisement should attract
Attention, gain Interest, arouse a Desire and result in Action.

However, not many organisations mention complete details about job

positions in their advertisements. What happens is that ambiguously worded
and broad-based advertisements may generate a lot of irrelevant applications
which would, by necessity, increase the cost of processing them. Here, the
findings of a study of 496 recruitment advertisements published in The Hindu
during 1981 seem worth mentioning. It was found that 33.6% of public sector
advertisements and 20.7% of private sector advertisements provided
necessary information about job possibilities, tasks and reporting relationships.

As far as compensation was concerned, more of the public sector organisations

provided information about pay packets rather than the private sector
organisations (71.2% as against 29.4%). Another interesting feature showed
that all public sector organisations provided information on minimum
qualifications while only 18.3% of private sector organisations offered this
information. Finally, only 5.6% of the public and 1.1% of the private
organisations provided information on selection process.

4. Professional Associations:
Very often, recruitment for certain professional and technical positions is made
through professional associations also called ‘ headhunters’. Institute of
Engineers, Indian Medical Association, All Indian Management Association,
etc., provide placement services for their members. For this, the professional
associations prepare either list of job seekers or publish or sponsor journals or
magazines containing advertisements for their members.

The professional associations are particularly useful for attracting highly skilled
and professional personnel. However, in India, this is not a very common
practice and those few that provide such kind of service have not been able to
generating a large number of applications.

5. Campus Recruitment:
This is another source of recruitment. Though campus recruitment is a
common phenomenon particularly in the American organisations, it has made
its mark rather recently Of late, some organisations such as HLL, HCL. L &T, Citi
Bank, ANZ Grindlays, Motorola, Reliance etc., in India have started visiting
educational and training institutes/campuses for recruitment purposes.

Examples of such campuses are the Indian Institutes of Management, Indian

Institutes of Technology and the University Departments of Business
Management. For this purpose, many institutes have regular placement
cells/offices to serve as liaison between the employers and the students.
Tezpur Central University has, for example, one Deputy Director (Training and
Placement) for the purposes of campus recruitment and placement.

The method of campus recruitment offers certain advantages to the employer

organisations. First, the most of the candidates are available at one place;
Second, the interviews are arranged at short notice; third, the teaching faculty
is also met; and Fourth, it gives them opportunity to sell the organisation to a
large student body who would be graduating subsequently. However, the
disadvantages of this type of recruitment are that organisations have to limit
their selection to only “entry” positions and they interview the candidates who
have similar education and experience, if at all.

6. Deputation:
Another source of recruitment is deputation, i.e., sending an employee to
another organisation for a short duration of two to three years. This method of
recruitment is practiced, in a pretty manner, in the Government Departments
and public sector organisations. Deputation is useful because it provides ready
expertise and the organisation does not have to incur the initial cost of
induction and training.

However, the disadvantage associated with deputation is that the deputation

period of two/three years is not long enough for the deputed employee to
prove his/her mettle, on the one hand, and develop commitment with the
organisation to become part of it, on the other.

7. Word-of-Mouth:
Some organisations in India also practice the ‘word-of-mouth’ method of
recruitment. In this method, the word is passed around the possible vacancies
or openings in the organisation. Another form of word-of-mouth method of
recruitment is “employee-pinching” i.e., the employees working in another
organisation are offered an attractive offer by the rival organisations. This
method is economic, both in terms of time and money.

Some organisations maintain a file of the applications and bio-data sent by job-
seekers. These files serve as very handy as and when there is vacancy in the
organisation. The advantage of this method is no cost involved in recruitment.
However, the drawbacks of this method of recruitment are non-availability of
the candidate when needed and the choice of candidates is restricted to a too
small number.

8. Raiding or Poaching:
Raiding or poaching is another method of recruitment whereby the rival firms
by offering better terms and conditions, try to attract qualified employees to
join them. This raiding is a common feature in the Indian organisations.

For example, several executives of HMT left to join Titan Watch Company, so
also exodus of pilots from the Indian Airlines to join private air taxi operators.
Whatever may be the means used to raid rival firms for potential candidates, it
is often seen as an unethical practice and not openly talked about. In fact,
raiding has become a challenge for the human resource manager. Besides
these, walk-ins, contractors, radio and television, acquisitions and mergers,
etc., are some other sources of recruitment used by organisations.

Evaluation of External Sources:

Like internal sources of recruitment, external sources are mixed of advantages
and disadvantages.

The following are the main advantages:

1. Open Process:
Being a more open process, it is likely to attract large number of applicants/
applications. This, in turn, widens its options of selection.

2. Availability of Talented Candidates:

With large pool of applicants, it becomes possible for the organisation to have
talented candidates from outside. Thus, it introduces new blood in the
organisation.

3. Opportunity to select the best candidates:

With large pool of applicants, the selection process becomes more
competitive. This increases prospects for selecting the best candidates.

4. Provides healthy competition:

As the external members are supposed to be more trained and efficient. With
such a background, they work with positive attitude and greater vigour. This
helps create healthy competition and conducive work environment in the
organisation.
However, the external sources of recruitment suffer from certain
disadvantages too:

These are:
1. Expensive and Time Consuming:
This method of recruitment is both expensive and time consuming. There is no
guarantee that organisation wall get good and suitable candidates.

2. Unfamiliarity with the Organisation:

As candidates come from outside the organisation, they are not familiar with
the tasks, job nature and the internal scenario of the organisation.

3. Discourages the Existing Employees:

Existing employees are not sure to get promotion. This discourages them to
work hard. This, in turn, boils down to decreasing productivity of the
organisation.

Now the question arises is: Where from can an organisation recruit potential
job seekers? Table 6.1 offers some guidance. The source that is used should
reflect the local labour market, the type or level of position, and the size of the
organisation.

Table 6.1: Major Sources of Potential Job Candidates