Asian Journal of Management Cases 2007 Ghosh 5 25

http://ajc.sagepub.com/Asian Journal of Management Cases

http://ajc.sagepub.com/content/4/1/5The online version of this article can be found at:

DOI: 10.1177/097282010600400103

2007 4: 5Asian Journal of Management CasesPiyali Ghosh and Geetika

Recruitment Strategies: Exploring the Dimensions in the Indian Software Industry

Published by:

http://www.sagepublications.com

can be found at:Asian Journal of Management CasesAdditional services and information for

http://ajc.sagepub.com/cgi/alertsEmail Alerts:

http://ajc.sagepub.com/subscriptionsSubscriptions:

http://www.sagepub.com/journalsReprints.navReprints:

http://www.sagepub.com/journalsPermissions.navPermissions:

http://ajc.sagepub.com/content/4/1/5.refs.htmlCitations:

What is This?

- Jul 25, 2007Version of Record >>

at Alexandru Ioan Cuza on June 25, 2014ajc.sagepub.comDownloaded from at Alexandru Ioan Cuza on June 25, 2014ajc.sagepub.comDownloaded from

http://ajc.sagepub.com/

http://ajc.sagepub.com/content/4/1/5

http://www.sagepublications.com

http://ajc.sagepub.com/cgi/alerts

http://ajc.sagepub.com/subscriptions

http://www.sagepub.com/journalsReprints.nav

http://www.sagepub.com/journalsPermissions.nav

http://ajc.sagepub.com/content/4/1/5.refs.html

http://ajc.sagepub.com/content/4/1/5.full.pdf

http://online.sagepub.com/site/sphelp/vorhelp.xhtml



Lead Article

RECRUITMENT STRATEGIES: EXPLORING THE DIMENSIONS

IN THE INDIAN SOFTWARE INDUSTRY

Piyali Ghosh

Geetika

People’s skill sets rather than technology drive the growth and success of softwareorganizations, where ideas and information form the basis for profit generation andwealth accumulation. This article is an attempt to establish the significance of recruit-ment strategies, especially in the Indian software industry. The size of an organization,among various other factors, plays an important role in determining the type andshape of a strategy, including human resource strategies. This article aims to examinethe different strategies of recruitment by software organizations on the basis of size(in terms of number of employees) with the help of a survey. The findings corrobor-ate the proposition that recruitment strategies of such organizations vary with theirsize and that such strategies are focussed to meet short-term requirements.Keywords: Recruitment, strategies, software, dimensions, size

INTRODUCTION

The rapid diffusion of technological innovation all over the globe has dramatically accel-erated competition (Bettis and Hitt 1995; Friedman 1999) and organizations are experi-encing a shift in the source of competitive advantage from tangible resources to knowledgeand know-how (Buderi 2000; Quinn 1992). Strategists have found that a focus solely onphysical resources is shortsighted, as they cannot render sustained competitive advantagein the long run. Superior human resource, on the other hand, can help organizations at-tain such a competitive advantage. Any futuristic organization that has long-term visionwould thus set its corporate goals contingent upon accumulation of knowledge and talentinherent in quality human resource. This trend has led scholars to begin to study theknowledge creation capability, especially regarding how firms can develop this uniquecompetence (Grant 1996; Kogut and Zander 1992; Nahapiet and Ghoshal 1998).

Contemporary management practices indicate that many leading organizations haveadopted an investment perspective towards their human resource (HR). They are focusingon their workforce composition as an integral part of their human resource strategies.

ASIAN JOURNAL OF MANAGEMENT CASES, 4(1), 2007: 5–25

SAGE PUBLICATIONS LOS ANGELES/LONDON/NEW DELHI/SINGAPORE

DOI: 10.1177/097282010600400103

at Alexandru Ioan Cuza on June 25, 2014ajc.sagepub.comDownloaded from


6 PIYALI GHOSH AND GEETIKA


Here too one must look at the basics. The quality of human resource is to be ensured atthe time of recruitment; the most important way a company can ensure that it has theright type of people is by hiring the right type of people in the first place (Collins et al.2005). Getting the right number and right kind of people in the right places at the righttime, doing the things that benefit them as individuals and the organization as a whole, isgradually becoming an arduous and multi-faceted process. This, along with the changesin the external as well as internal environment of any organization, demand a morecomprehensive and more strategic outlook towards the recruitment of employees.

The purpose of this article is to conceptualize the different dimensions of recruitmentstrategies and examine the impact of organizational size on recruitment strategies. To sup-port and complement our argument, we studied these dimensions in the Indian softwareindustry. This article also attempts to highlight the popular measures in recruiting softwareprofessionals. The following sections develop the logic for these relationships in greaterdetail.

HUMAN RESOURCE STRATEGY AND DISTINCTIVE CAPABILITIES

HR strategy focuses on the development of workers central to a firm’s advantage. These‘gold collar workers’ (Huey 1998) have substantial autonomy in pursuing initiatives onwhich the firm is likely to build its future strategies. Strategic recruitment starts from thepremise that an organization’s workforce makes a significant contribution to its achieve-ment of strategic goals in the short and long runs. Recruitment strategies refer to its pro-cess of creating a strategic plan for the organization, having specific requirements foreach job and aligning them with the corporate and business strategies of the organization.They focus on the development of workers that are central to a firm’s advantage and alsoincorporate decisions about the balance and mix of different types of human capitalwithin the organization. At the same time, they are oriented towards preserving existingrelationships with employees, as well as making more use of a contingent workforce thatincludes part-timers and temporary workers.

The quality of workforce is a function of the recruitment and selection process (Evenden1993). Several specific practices have been shown to be effective. For example, recruitmentcan be enhanced through the use of multiple recruiting sources to build larger applicantpools (Koch and McGrath 1996). Firms requiring higher levels of employee education andexperience can use extensive recruiting and selective staffing practices as a means forimproving their human capital (Koch and McGrath 1996; Snell and Dean 1992). Becausecandidates with specialized knowledge, skills and abilities (KSAs) command a premiumin the labour market, above-market starting salaries and other recruitment inducements



RECRUITMENT STRATEGIES IN THE INDIAN SOFTWARE INDUSTRY 7


(e.g., signing bonuses) can attract higher levels of human capital (Snell and Dean 1992).In addition to recruitment, selective screening practices that increase the amount ofrelevant information gathered permit firms to identify and hire employees with strongerKSAs (Hunter, et al. 1982). In the area of employee staffing decisions Barney (1997), Wrightet al. (1994) and Snell et al. (1999) have applied the resource-based theory and have arguedthat organizations enhance their value by deciding which human resource capabilitiesremain within the firm (specific skills) and which are acquired in the market (generalskills). The knowledge, skills and abilities that contribute to a firm’s unique capabilitiesshould be developed within the firm and those that do not should be acquired on demandin the external labour market. Snell et al. (1999) suggest that human resource capabilitiescan be characterized by two dimensions: contribution to firm value and uniqueness ofhuman capital. Using this framework, they define four staffing options: develop internally;acquire externally and keep; out-source and partner. The two staffing options that are highon the value dimension (develop internally and acquire externally and keep) representhuman resource capabilities that should reside within the firm. These capabilities shouldbe developed by human resource practices emphasising what Tsui et al. (1997) refer to asa mutual investment, where both employer and employee make open-ended and long-term investments in each other. Recruitment strategies herein must incorporate decisionsabout the balance and mix of different types of human capital, the expectations placedupon them by the firm and the investments made in their development, etc.

The size of an organization, among various other factors, plays an important role indetermining the type and shape of a strategy, including human resource strategies. Alarge organization with a different vision and scope will look at the same aspect from dif-ferent dimensions compared to a small organization. In many large organizations, therecruitment strategy revolves around creating a competitive compensation and benefitspackage. However, smaller organizations consider attracting the best talent—a lost causefor them because they cannot offer the competitive compensation packages that their bigbrothers offer (Raju 2004). Companies reputed as top recruiters realize that the organiza-tional characteristic that their competitors can most easily duplicate is money (Brannick2001). Therefore non-monetary strategies are also widely used by companies to attract toptalent; the mix of monetary and non-monetary means for attracting workers may also varyacross organizations of different sizes. The difference in perspective among small, mediumand large organizations in a given environmental framework makes strategy formulation avery challenging task for them.

This backdrop prompted us to analyze the recruitment strategy dimensions and seetheir relationship with the size of the organization. Hence, first an attempt is made to





refine the concept of a recruitment strategy. It has been explained on the basis of threebasic dimensions, viz., whom, how and from where to recruit. Second, these dimensionswere studied by taking a sample survey of one of the most flourishing industries in India,i.e., the software industry. In order to systematically come to certain conclusions, a basicpremise is taken that strategy formulation is contingent upon the size of the organizationand that organizations with different sizes differ in their strategies. Thereby the samplecompanies are segregated into three categories, Large (L), Medium (M) and Small (S) onthe basis of number of employees. Then a number of hypotheses are proposed and testedon the basis of the survey.

DIMENSIONS OF RECRUITMENT STRATEGIES

Blending the facets of recruitment with strategic analysis is becoming an uphill task intoday’s dynamic environment and workforce fragmentation. Organizational responsesto specific human resource interventions place new demands on strategies of recruit-ment as a component of HR strategies, which now focus on fitting the job to the person(Collins et al. 2005), rather than the person to the job; fitting the person to the organizationrather than the job; and recruiting against core competencies or skills (Thornhill et al.2000). Carefully planned recruitment strategies help organizations by-pass sufferings ofover-endowment and mal-allocation of human resources. Such strategies may largely beinfluenced by factors like the strategy phase and planning horizon of the company andreconciliation of the supply and demand situations in the market. At the start-up stage,an organization may adopt external recruitment techniques, while during expansion itmay adopt strategies of succession planning, promotions and external recruitment. Adiversifying organization may go in for redeployment and retraining, apart from successionplanning, promotions and external recruitment. It may also go for lay-offs and retrench-ment during the turnaround period.

In our article we suggest the following dimensions of recruitment strategies of anyorganization:

i. Whom to recruitii. From where to recruitiii. How to recruit

i. Whom to recruit: Organizations must decide whether to hire less skilled employ-ees and invest on their training and education programmes, or to hire skilledlabour and professionals. Essentially this is the ‘make’ (hire less skilled workers)





or ‘buy’ (hire skilled workers and professionals) decision. If it is affordable to haveless skilled workers, such workers may be hired by offering them low wages. Thiswould save on the organizational wage bill at the cost of tolerating a high rate ofemployee turnover. At the other extreme, surveys show that firms are increasinglyhiring fully trained workers from their competitors rather than developing theminternally (Rynes et al. 1997); such professionals, if hired, may be offered suchlucrative packages that they may be willing to have a longer stay in any organization,but at the cost of a higher wage bill.

ii. From where to recruit: In order to reduce costs, organizations look into thoselabour markets that are most likely to offer the required job seekers (Aswathappa2002). Generally they look into the national and international markets for manager-ial and professional employees, regional or local markets for technical employeesand local markets for clerical and blue-collar employees.

iii. How to recruit: How to recruit refers to the methods of recruitment that may bebroadly categorized as internal and external. Internal recruitment may be by meansof promotion and transfers, job posting and succession planning. External recruit-ment may be by means of advertisements (including advertising on the Internet),campus recruitment, employment agencies, contingent workers, temporary helpagencies, job fairs or career days and headhunting.

INDIAN SOFTWARE INDUSTRY: THE CASE STUDY

Recruitment as a core human resource function has gained special dimensions in thesoftware industry. Unlike mass production, software organizations are service-oriented,rendering customized solutions to target markets. To add to this aspect is the high rate ofobsolescence of software skills. All these make software jobs less formalized and lessstandardized and recruitment of knowledge workers a specialized function.

With a dynamically changing and volatile demand-supply equation, especially againsterratic attrition trends and cut-throat competition (www.nasscom.org) no longer restrictedto local or regional boundaries, software the world over has been continually experiencinga need for strategizing and putting in place a robust mechanism for attracting and retainingtop talent. New career horizons within the industry have multiplied the prospects of mo-bility of software professionals across organizations; a growing number of such employeesno longer want to spend their career with the same employer or occupation (Das 1996).Professional loyalty has replaced the age-old concept of organizational loyalty (Das 1996).Moreover, since this industry is entirely knowledge-driven, its primary emphasis is moreon traits like innovativeness, dynamism, communication skills and teamwork and less





on qualifications. Search for software professionals is contingent upon skill sets commen-surate with the demand of the projects at hand. This industry still survives on projectsrather than on products. Such projects usually being of a short duration, software com-panies tend to pursue short-term, need-based recruitment strategies. All these factorshave rendered recruitment strategies in this industry a distinct identity and have madeit an area of introspective study.

Recruitment as a strategy in the software industry can be studied across distinct phasesof prosperity, recession and recovery of the life cycle of this industry.

Recruitment during prosperity: This period saw large-scale recruitment of profes-sionals, with their demand out-stripping their supply. From a base of 6,800 knowledgeworkers in 1985–86, growing to 280,000 employed in 1998–99, the number increased to522,000 software and services professionals by the end of 2001–02, of which, almost170,000 were estimated working in the IT software and services export industry; nearly106,000 in IT enabled services and over 220,000 in user organizations (www.nasscom.org).Quality standards were lowered and quality was virtually replaced by quantity; with theworking principle of recruiting being ‘Cage them at any cost, or simply lose them’(dataquest.ciol.com); even professionals with certifications could get a good job. NASSCOM’sManpower Resources Survey in 2001–02 on the IT workforce status revealed that the hir-ing of new IT professionals was the highest in south India at 41 per cent and lowest in theeastern region at 6 per cent. Multiple opportunities created a penchant among softwareprofessionals to switch jobs frequently, in search of greener pastures. All these were sup-plemented by an increasing tendency among companies to ‘buy in’ professionals fromcompeting firms; firms in Bangalore experienced very high turnover rates as their bestand more experienced personnel were ‘poached’ by other firms in Bangalore (http://www.exchange.usg.uu.nl).

Recruitment during recession: The scenario, however, was dramatically reversedwith the recession in the industry, mainly as a consequence of the US economic slowdownand the South East Asian crisis. Projects became few; funds dried up fast. An even greaterblow came with the dot com debacle. The overall ICT business was also affected by theglobal economic downturn, which lead to IT budget slashes among customers, and a lossin revenues for the worldwide software and services community. These setbacks provedto be a turning point for the domestic industry, which experienced oversupply of skillsets as compared to earlier years and a strategic shift in the recruitment policies of cor-porates (NASSCOM). Companies started issuing pink slips during the global economicdownturn (www.nasscom.org). Since the economy started its decline, companies increas-ingly turned to downsizing as a way to cut costs and remain competitive (www.nasscom.org).Mobility went down; recruitment was no longer the primary HR activity. Indian software





companies moved towards better management practices by optimally utilizing existingresources and hiring as per demand (www.nasscom.org). Companies resorted to retrench-ment of less productive professionals and retention of only selected performers.

Recruitment during recovery: The sector, which had managed to sustain growthduring the challenging 2000–02 period, built up steam once again, reverting gradually toits performance levels prior to the global economic recession (www.nasscom.org). Keyfindings of the NASSCOM Survey in 2004 revealed that the pace of recruitment has pickedup for IT services. The total direct employment in the Indian IT-ITES sector is estimatedto have grown by over a million, from 284,000 in FY 1999–2000 to a projected 1,287,000in the current fiscal (2005–06); companies in the IT software exports sector recruited75,000 professionals in 2004–05, compared to 65,000 professionals recruited in 2003–04.Lavish spending by companies to retain key performers has come to be replaced by‘intelligent’ spending, that would help in building a long-standing, stronger relationshipbetween the employer and the employees.

HYPOTHESES

Keeping the objective in perspective, we framed the following hypotheses to seek empiricalevidence of the three dimensions of recruitment from the software industry in India:

Dimension I: Whom to recruit

Hypothesis 1:

H0: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding recruitment of people with right skills.

H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding recruitment of people with right skills.

Dimension II: From where to recruit

Hypothesis 2:

H0: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding internal recruitment in the event of a vacancy.

H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding internal recruitment in the event of a vacancy.

Hypothesis 3:

H0: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding external recruitment in the event of a vacancy.





H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding external recruitment in the event of a vacancy.

Dimension III: How to recruit

Hypothesis 4:

H0: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding the strategy of succession planning.

H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding the strategy of succession planning.

Hypothesis 5:

Hi: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding identification of manpower requirements well in advance.

H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding identification of manpower requirements well in advance.

Hypothesis 6:

H0: There is no difference among the Large (L), Medium (M) and Small (S) organizationsregarding manpower planning done with 5 yearly projections.

H1: There is a difference among the Large (L), Medium (M) and Small (S) organizationsregarding manpower planning done with 5 yearly projections.

RESEARCH DESIGN

A good theory is one, which passes the test of application; this is especially relevant inthe context of management science because management theory must have a behaviouralorientation. The three dimensions of recruitment, discussed herein, have been testedtaking the case of the Indian software industry. The testing has been done by using stat-istical tools of analysis, sampling, questionnaire administration and data interpretation.The collected data have been analyzed to examine differences, if any, in recruitmentstrategies across different sizes of organizations.

Sampling

As mentioned earlier, the study was conducted on the Indian software industry; the mainreason being that in Indian corporate history this industry has introduced many innovativeand unconventional HR strategies. A sample of forty-three companies was selected from





among 950-odd NASSCOM-registered companies (NASSCOM is a quasi-governmentsoftware industry promotion organization).

The main proposition of the study being that recruitment strategies vary with the sizeof the organization, the study aimed to examine the different strategies of recruitmentby software organizations on the basis of size. They have accordingly been divided intothree groups: less than 200 employees categorized here as small (S), 201 to 1,000 employ-ees categorized here as medium (M) and 1,000 employees and more categorized here aslarge (L). Small organizations represent 25.88 per cent, medium organizations represent39.53 per cent and large organizations represent the remaining 34.88 per cent of the total43 organizations surveyed.

All of the forty-three organizations that participated in the survey are engaged in soft-ware development and all but two are organized as private limited. Other activities ofthese organizations range from software consultancy to web-based solutions (includingweb-designing and web hosting) to ERP services and database administration.

DATA COLLECTION

In order to ascertain the different strategies of recruitment in the software industry, aquestionnaire was designed with two parts: the first with a set of closed-ended questionsand the second with statements using the Likert Scale, ranging from ‘Strongly Agree’ to‘Strongly Disagree’ on such statements. Apart from information pertaining to recruitmentstrategies, the respondents were also asked about information on the year of inception ofthe organization, its locations, branches and size (in terms of number of employees). De-tailed explanations of the purpose of the study and a copy of the questionnaire for initialapproval were electronically mailed to the respondents. Some of the companies werepersonally visited while final questionnaire was sent to other companies via e-mail. Sincethe information to be collected pertained to the HR Department of any organization,the HR Manager of every respondent organization was contacted.

Variables

The research premises were examined on the basis of the following variables:

i. Internal Recruitment in the Event of a Vacancy (PRMT): In the modern cor-porate culture of quick career advancement and multiple job opportunities, mobilityamong knowledge workers is on the rise. Frequent job changes are no longer astigma, but they are becoming the norm (Kodwani and Kumar 2004). This is in the





face of stiff competition among organizations to attract the best talent, in order toattain a competitive advantage in the market. Ensuring a healthy team of committedand productive employees necessitates organizations to look for suitable employeesin-house, rather than opting for external sources. They may, as such, offer promo-tions to deserving employees as a motivational tool. The variable PRMT examinesthe tendency among software organizations to go for promotions and transfers. Therationale behind this is that such organizations usually have a high attrition rateand hence may not prefer to promote their existing employees to higher positions.

ii. External Recruitment in the Event of a Vacancy (EXTRNL): This variableexamines the tendency among software organizations to go for external sourcesfor any vacancy. The rationale behind this is that having a high employee turnover,organizations may not have competent internal staff to be promoted to higherpositions and may thus look for external sources.

iii. Recruitment of People with Right Skills (RTSKILL): Given the premise thatgetting the right number and right kind of people in the right places at the righttimes is a major concern for any organization, it is obvious that faulty recruit-ment may lead to a person-job misfit and would adversely affect the productivityof an organization. As such an attempt has been made to gauge whether softwareorganizations vouch for recruiting the right people every time. The variableRTSKILL tries to evaluate the premise: do software organizations always recruitpeople with the right skills?

iv. Strategy of Succession Planning (SPLNNG): Appropriate and well-designedcareer development opportunities may prove to be a vital tool to enhance the levelof motivation of the workforce. Succession planning may prove to be an internalmotivator that may help organizations attract and retain a quality workforce. Anattempt has been made to gauge whether software organizations plan for the suc-cession for their employees. The variable SPLNNG examines the tendency amongsoftware organizations to design succession plans for their existing staff. The ra-tionale behind this is that such organizations usually have a high attrition rate andhence may not plan for the succession of their existing employees.

v. Identification of Manpower Requirements in Advance (MPWR): Recognitionof manpower requirements becomes crucial in an industry like software, whichthrives on projects; planning becomes difficult in the face of uncertainty in projects,which may require specific skill sets. An attempt has been made to gauge whethersoftware organizations identify manpower requirements in advance. The variableMPWR examines whether software organizations identify manpower requirementspro-actively.





vi. Manpower Planning with 5 Yearly Projections (MPLNNG): Human resourceplanning helps to determine the number and type of employees needed by anorganization; effectiveness of such planning can play a major role in determiningthe resources that must be expended on other human resource activities and theirultimate success. Hence effective human resource planning can have a significantand positive impact on the organization, while poorly designed and executed plan-ning may bring both short- and long-term repercussions. An attempt has beenmade to gauge whether software organizations plan with 5 yearly projections. Thevariable examines the tendency among software organizations to go for need-basedmanpower strategies.

Tools of Analysis

In this survey we used an ordinal scale (Likert Scale), hence to report the findings, theproper statistic to use is the median for a measure of the central tendency (instead of themean). A typical question using a Likert Scale in this study poses a statement and asksthe respondents whether they Strongly Agree, Agree, Neither Agree nor Disagree, Disagreeor Strongly Disagree. The data collected are ordinal: they have an inherent order or se-quence, but one cannot assume that the respondent means that the difference betweenagreeing and strongly agreeing is the same as between agreeing and being undecided.Hence among the descriptive techniques we have summarized data using a median (nota mean). Hypotheses testing in this study has been done by analyzing the statements inthe questionnaire with the help of the Likert Scale. For this we have followed an iterativetwo-step procedure. In the first step we try to find out the Kolmogorov-Smirnov D value fora variable; if the critical value of D (Dcritical) is less than the calculated D (Dcal), we rejectthe null hypothesis and conclude that there exists a difference in ratings among therespondents with regard to the particular statement. In the next step, we move furtherand try to locate any difference in the average (here median) responses of the threegroups of respondents by using the Median Test. If χ2

cal > χ2critical, we reject the null hy-

pothesis. This implies that difference in median values between groups L, M and S regard-ing a particular variable is significant.

FINDINGS AND ANALYSIS

1. Selecting the Right People

H1: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding recruitment of people with right skills.





H1a: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding recruitment of people with right skills.

The Kolmogorov-Smirnov D value is 0.59 (Table 1). As the sample size in this case is43, D = 1.07/√43 = 0.163. Since Dcal> Dcritical, we reject the null hypothesis and concludethat there exists a difference in ratings among the respondents, with regard to recruitmentof people with the right skills.

On the basis of the Median Test, the value of χ2cal = 3.1 (Table 1). Since χ2

cal < χ2critical, we

cannot reject the null hypothesis. This implies that difference in median values be-tweengroups L, M and S in recruiting people with the right skills is significant.

Table 2 reveals that average response on RTSKILL is 5 (Strongly Agree) across all sizesof organizations. As such we may infer that software organizations of all sizes claim toalways recruit the right kind of people.

Table 1D and χ2 Values for Recruitment Strategy

Variables

Test Prmt Extrnl Rtskill Splnng Mpwr Mplnng

D 0.35 0.33 0.59 0.28 0.29 0.28χ2 5.25 3.26 3.1 4.857 0.676 2.103

Note: For a sample size of more than 35, the critical value of D at an α = 0.20 is 1.07/√N.For k-1= 2 df at 0.20 level of significance, χ2

critical = 3.219.

Table 2Median Values for Recruitment Strategy

Size Prmt Extrnl Rtskill Splnng Mpwr Mplnng

Large 4 3 5 4 4 2Medium 4 4 5 5 4 2Small 3 4 5 4 4 2

2. Mode of Recruitment

H2: There is no difference among the respondents from Large (L), Medium (M) and Small (S)organizations regarding internal recruitment in the event of a vacancy.

H2a: There is a difference in agreement ratings among the respondents (L, M and S groups)regarding internal recruitment in the event of a vacancy.





The Kolmogorov-Smirnov D value is 0.35 (Table 1). As the sample size in this case is43, D = 1.07/√43 = 0.163. Since Dcal > Dcritical, we reject the null hypothesis and concludethat there exists a difference in ratings among the respondents, with regard to internalrecruitment in the event of a vacancy.

On the basis of the Median Test, the value of χ2cal

= 5.25 (Table 1). Since χ2cal > χ2

critical,this implies that difference in median values between groups L, M and S with regard tointernal recruitment in the event of a vacancy is significant.

Table 2 reveals that average response on PRMT is 4 (Agree) for L and M, though S havean average response of 3 (Neither Agree or Disagree); this reveals a greater preferencefor internal sources among large and medium organizations than small ones. Betweengroups L, M and S there exists difference in median values. As such we may infer thatstrategy to recruit from internal sources may differ across different sizes of softwareorganizations.

H3: There is no difference among the respondents (L, M and S groups) regarding externalrecruitment in the event of a vacancy.

H3a: There is a difference among the respondents (L, M and S groups) regarding externalrecruitment in the event of a vacancy.

The Kolmogorov-Smirnov D value is 0.33 (Table 1). As sample size in this case is 42,D=1.07/√43 = 0.165. Since Dcal > Dcritical, we reject the null hypothesis and conclude thatthere exists a difference in ratings among the respondents with regard to externalrecruitment.

On the basis of the Median Test the value of χ2cal = 3.26 (Table 1). Since χ2

cal > χ2critical,

this implies that difference in median values between the groups L, M and S with regardto external recruitment is significant.

Table 2 reveals that the average response on EXTRNL is 3 (Neither Agree or Disagree)for L, though M and S have an average response of 4 (Agree); this reveals a greater pre-ference for external sources among medium and small organizations than large ones. Be-tween groups L, M and S there exists significant difference in median values. As such wemay infer that strategy to recruit from external sources may differ across different sizesof software organizations.

3. Human Resource Planning

H4: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding identification of manpower requirementswell in advance.





H4a: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding identification of manpower requirementswell in advance.

The Kolmogorov-Smirnov D value is 0.29 (Table 1). As one sample size in this case is43, D=1.07/√43 = 0.163. Since Dcal > Dcritical, we reject the null hypothesis and concludethat there exists a difference in ratings among the respondents, with regard to identificationof manpower requirements well in advance.

On the basis of the Median Test, the value of χ2cal

= 0.676 (Table 1). Since χ2cal < χ2

critical,we cannot reject the null hypothesis. This implies that difference in median values be-tween groups L, M and S with regard to identification of manpower requirements well inadvance is not significant.

Table 2 reveals that the average response on MPWR is 4 (Agree) across all sizes oforganizations; between groups L, M and S there is no significant difference in medianvalues. We may thus infer that software organizations of all sizes identify manpower re-quirements well in advance.

H5: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding the strategy of succession planning.

H5a: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding the strategy of succession planning.

The Kolmogorov-Smirnov D value is 0.28 (Table 1). As the sample size in this case is42, D=1.07/√42 = 0.165. Since Dcal > Dcritical, we reject the null hypothesis and concludethat there exists a difference in ratings among the respondents with regard to the strategyof succession planning.


cal > χ2critical,

we reject the null hypothesis. This implies that difference in median values betweengroups L, M and S with regard to the strategy of succession planning is significant.

Table 2 reveals that the average response on SPLNNG is 4 (Agree) for L and S, thoughM have an average response of 5 (Strongly Agree). Between groups L, M and S thereexists a significant difference in median values. As such we may infer that the strategy ofsuccession planning differs across different sizes of software organizations.

H6: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding manpower planning done with 5 yearlyprojections.





H6a: There is a difference in agreement ratings among the respondents from Large (L), Medium(M) and Small (S) organizations regarding manpower planning done with 5 yearlyprojections.

The Kolmogorov-Smirnov D value is 0.28 (Table 1). As the sample size in this case is42, D = 1.07/√42 = 0.165. Since Dcal > Dcritical, we reject the null hypothesis and concludethat there exists a difference in ratings among the respondents with regard to manpowerplanning done with 5 yearly projections.


cal < χ2critical,

we cannot reject the null hypothesis. This implies that difference in median valuesbetween groups L, M and S with regard to manpower planning done with 5 yearly projec-tions is not significant.

Table 2 further shows that the average response on MPLNNG is 2 (Disagree) across allsizes of organizations; between groups L, M and S there is no significant difference inmedian values. As such we may infer that software organizations, irrespective of theirsize, do not have manpower planning with 5 yearly projections.

ANALYSIS

Even though highly qualified talent is more readily available in India than it is in theUnited States, recruitment of software professionals seems to be a large issue facing soft-ware organizations. This study examined the differences in recruitment strategies acrossdifferent sizes of organizations in the software industry in India. For the variable organ-izational size (in terms of number of employees), we used various aspects of a recruitmentstrategy, and have analysed the data as:

Whom to recruit: In their decision to ‘make’ or ‘buy’ professionals, software organ-izations may opt for different qualification profiles of their employees, on the basis of anumber of factors like the size of the organization and requirements of skill sets (bothshort- and long-term). The organizations surveyed reveal a wide diversity with regard to‘whom to hire’; this is reflected in the varied proportions of different qualification profilesof employees across different sizes of organizations.

Qualification Profile of Software Employees

Professionals in the organizations surveyed have been categorized into five types: graduate(non-engineering+ IT certification), graduate (engineering), post-graduate (engineering),post-graduate (non-engineering) and others (including MBAs, Chartered Accountants,





Graphic Designers, diploma holders and administrative staff). These are further classifiedon the basis of the size of the organization (Table 3).

Table 3Qualification Profile of Employees

Qualifications Large (per cent) Medium (per cent) Small (per cent)

Graduate (Non-Engineering) 5.06 11.3 22.5Graduate (Engineering) 63.29 60.9 42.4PG (Engineering) 17.23 12.9 16.3PG (Non-Engineering) 11.18 6.6 7.9Others 3.23 8.2 10.9Total 99.99 99.9 100.0

Graduates (non-engineering) have the lowest presence in large organizations. Graduates(engineering), on the other hand, have the highest presence in large organizations andthe least in small organizations. Post-graduates (both engineering and non-engineering)have the highest presence in large organizations. ‘Others’ are most commonly found insmall organizations. It is evident from Table 3 that the percentage of graduates (non-engineering) follows a declining trend with an increase in the size of the organizationand the percentage of graduates (engineering) follows an increasing trend with an increasein the size of the organization. With regard to large organizations, the lowest presence ofgraduates (non-engineering) at 5 per cent may imply requirement of higher skill sets inthe different activities of such organizations. Relatively higher (more than one-fifth) is thepresence of post-graduates (non-engineering and engineering). This may be due to thefact that large organizations need to take care of other activities (like HR and marketing)apart from their core activities on a broader scale than the other two categories of organ-izations. The wider domain of such activities may compel these organizations to look forpeople with diversified skill sets. Hence there is greater variation in the qualificationprofiles of employees in large organizations.

Medium-sized organizations have a comparatively higher presence of graduates (non-engineering) and a lower presence of graduates (engineering) than large organizations.This may hint towards requirement of lower skill sets in such organizations and a tendencyof multi-tasking by employees. This would explain a lesser presence of post-graduates(non-engineering and engineering) than in large organizations.

Smaller organizations seem to stress more on core activities (here software develop-ment) and hence have a lesser presence of post-graduates (non-engineering) at around8 per cent. These organizations may also opt for multi-tasking of their employees andwould hence need less higher qualification in their employees.





Source and mode of recruitment: The organizations surveyed were asked about thedifferent external sources of recruitment, the primary ones in use being campus, place-ment agencies, advertisements, online and employee referrals. An attempt was also madeto capture the rates of change in such modes adopted by organizations before and afterthe software industry entered the period of maturity (after 2002). Hence the questionsreflect changes in the recruitment strategies of software organizations across this phaseand the reasons thereof.

In the phase after 2002, large organizations have shown an increase in the use of theonline mode, advertisements and employee referrals to recruit staff; the biggest increasebeing in the online mode (Figure 1). They revealed that they had kept the other twosources at the same levels. Medium-sized organizations opted for more campus recruitment;they also reported the highest increase in the online mode. But such an increase in all the

Figure 1

160

Change in Mode of Recruitment 2002 onwards

120

80

40Perc

enta

ge

–40

0

Large MediumSize of Organization

Small

16.6

7

50.0

0

50.0

0

–11.

11

66.6

7

14.2

9

62.5

0

15.3

8

–6.2

516.6

7

9.09

71.4

3

18.1

8

00

Campus

Employee Referrals

Placement Agency

Advertisements Online





other modes of recruitment in such organizations seems to be at the cost of hiring throughplacement agencies, which has suffered a fall of 6.25 per cent. The most remarkable in-crease in the use of the online mode was registered in this phase by small organizations;such organizations also went in for more campus recruitment.

It can thus be inferred that the phase of maturity has experienced an overall increasein the use of the online mode of recruitment and an average lowered use of placementagencies by software organizations. Campus recruitment, on the other hand, has increasedamong medium-sized and small organizations, the greater increase being in case of thelatter (by a remarkable 66.67 per cent). Recruitment by advertisements seems to havegained popularity among all the groups; the highest increase being over 50 per cent inthe case of small organizations. Employee referrals enjoyed an overall increase across allthe three categories, the highest being in case of small organizations.

Overall it can be inferred that except recruitment by campus and placement agencies(for large organizations) and placement agencies (for both medium and small organiza-tions), all the other modes have enjoyed an increase in usage 2002 onwards.

Change in existing strategy of recruitment: Reasons cited by large organizations inchanging their existing strategies of recruitment are dominated by focus on new skills,followed by plans for expansion. Only 20 per cent of such organizations stated changesin economic conditions as the driving cause (Table 4). An equal percentage of mediumsize organizations opted for plans for expansion and focus on new skills as the main rea-sons. Even in case of these organizations, the lowest percentage reveals economic condi-tions as the reason behind changing their strategies of recruitment. For small organizationsthe highest percentage reveals plans for expansion as the main reason. Surprisingly,changes in economic conditions have had no influence in this change. Of all the organiza-tions surveyed, 13.33, 23.53 and 45.45 per cent of large, medium and small organizationsrespectively, revealed no change in strategies of recruitment.

Table 4Reasons Behind Change in Existing Strategy of Recruitment

Reasons Large (per cent) Medium (per cent) Small (per cent)

Plans for Expansion 33.33 52.94 63.64Company Focus on New Skills 46.67 52.94 27.27Change in Economic Conditions 20.00 23.53 0.00Quality Consciousness 26.67 47.06 27.27No Change 13.33 23.53 45.45





CONCLUSION

To conclude, we can say that recruitment strategies do vary with the size of the organiza-tion in the software industry; in our study a majority of the dimensions of such strategiesshowed variance across different sizes of organizations. The qualification profile of know-ledge workers showed the major diversity: the percentage of employees with non-technicalbackground was seen to follow a declining trend with an increase in the size of the or-ganization, while the percentage of engineering graduates was seen to follow an increasingtrend with an increase in the size of the organization. Major differences were also perceivedin modes of recruitment used by different sizes of organizations. The modes used by theseorganizations include advertisements, placement consultants and recruiting on univer-sity and college campuses. Some of them claimed to pursue very stringent recruitmentcriteria. Except recruitment by campus and placement agencies (for large organizations)and placement agencies (for both medium and small organizations), all the other modesenjoyed an increase in usage ever since the industry entered the phase of maturity. On-line recruitment registered the highest rate of growth among all other ‘traditional’ modesof recruitment across all the three categories of organizations surveyed; small organizationscome up as the highest users of this mode. This spells out the gradual gaining of popularityof online recruitment over other modes of recruitment and affirms the fact that thismethod is affordable for even small organizations. The only aspect in which the softwareorganizations have shown similarity in this study is the strategy of manpower planning.

Today, decisions about what work should be kept internally; what should be out-sourced;the quality of incumbents and skill set requirements of the organization are as central torecruitment strategy, as they are to the human resource strategy in particular and thebusiness strategy in general. Organizations in the software industry encounter the twinproblems of recognizing the skill sets in demand in the industry and hunting for humanresource proficient in such skills at the right time and right place. Besides, recruitmentstrategies in such a dynamic industry also need to incorporate decisions about the balanceand mix of different types of human capital within a typical software organization.

In order to deal with so many dimensions in the recruitment of knowledge workers,software organizations must strive to set the right recruitment strategy with manifold ap-proaches. Organizations in this industry must realize that learning is a key area of theirconcern; hence they need to consider individual learning needs of employees and addressthem suitably by creating learning opportunities for them (Kodwani and Kumar 2004).Realizing that employees have definite career needs, organizations should not only chartdifferent career paths in accordance with such needs, but also make such paths known





to all the employees. Promotion routes within the organization should also be made pub-lic. Openness should be the hallmark of an effective organization in this area (Pattanayak2001). Besides, the bond between employees and their organization should be strengthenedby a number of factors like job scope, job challenge, occupational commitment, job involve-ment and job satisfaction, thus leading to organizational commitment. This will havemultiple advantages for the organization: one it will result in a lower turnover, contributeto greater productivity and will also attract prospective employees.

One caveat in this study is that we have focused on recruitment strategies with referenceto the size of the organization. We believe this is a reasonable strategy dimension. Yet, anexamination of the relationship between other business strategies and recruitment wouldbe beneficial. Another issue that needs to be addressed is the time period in which theresearch has been conducted. We collected data from 2003 to 2004, when the Indianeconomy and the software industry had started recovering from a recessionary trend.Although data relating to 2004–05 could have added more weight to the study, our datamay be considered to be relatively recent as compared with other studies. Besides, it doesnot affect the foundation of the study.

To conclude, our study confirms that strategy-size fit applies to organizations in thesoftware industry as well. Whatever be the industry, organizations should develop theirrecruitment strategies considering their size keeping in mind the critical place of recruit-ment in the overall strategic gamut.

REFERENCES

Aswathappa, K. 2002. Human Resource and Personnel Management, 3rd ed., New Delhi: Tata McGrawHill Publishing Company Ltd.

Barney, J. 1997. Gaining and Sustaining Competitive Advantages, Reading, MA: Addison-Wesley.Bettis, R.A. and M.A. Hitt. 1995. ‘The New Competitive Landscape’, Strategic Management Journal,

16, Speical Issue: Technological Transformation and the New Competitive Landscape (Summer,1995), pp. 7–19.

Brannick, Joan. 2001. ‘Seven Strategies for Retaining Top Talent’, Journal of Business Strategy, July/August 2001, 22(4): 28–31.

Buderi, R. 2000. Engines of Tomorrow: How the World’s Best Companies are Using their Research Labsto Win the Future. New York: Simon & Schuster.

Collins, C., J. Ericksen and M. Allen. 2005. Human Resource Management Practices, WorkforceAlignment, and Firm Performance. Working Paper Series 05–05, Available at: http://www.ilr.cornell.edu/cahrs.

Das, H. 1996. ‘Retention Policy: Whom to Retain Anyway?’, Indian Journal of Industrial Relations,32(2): 223–32.





Evenden, R. 1993. ‘The Strategic Management of Recruitment and Selection’, in R. Harrison (ed.),Human Resource Management: Issues and Strategy, pp. 219–45. Wokingham: Addison-Wesley.

Friedman, T.L. 1999. The Lexus and the Olive Tree: Understanding Globalization. New York: Farrar,Strauss and Giroux.

Grant, R.M. 1996. ‘Towards a Knowledge-based Theory of the Firm’, Strategic Management Journal,17 (Winter Special Issue): 108–22.

Huey, J.W., Jr. 1998. ‘Organization Man-not’, Fortune, 137(5): 16.Hunter, J.E., F.L. Schmidt and G.B. Jackson. 1982. Meta-analysis: Cumulating Research Findings

Across Studies. Beverly Hills, CA: Sage Publications.Koch, M.J. and R.G. McGrath. 1996. ‘Improving Labor Productivity: Human Resource Management

Policies Do Matter’, Strategic Management Journal, 17(5): 335–54.Kodwani, Amitabh and S. Senthil, Kumar. 2004. ‘Employee Retention: Issues and Challenges’, HRM

Review, 8: 15–20.Kogut, B. and U. Zander. 1992. ‘Knowledge of the Firm, Combination Capabilities, and the Replica-

tion of Technology’, Organization Science, 3(3): 383–97.NASSCOM. 2004. Manpower Resources Survey.Nahapiet, J. and S. Ghoshal. 1998. ‘Social Capital, Intellectual Capital and the Organizational Ad-

vantage’, Academy of Management Review, 23(2): 242–66.Pattanayak, B. 2001. Human Resource Development. New Delhi: Prentice Hall India.Quinn, J.B. 1992. Intelligent Enterprise. New York: Free Press.Raju, P.V.L. 2004. ‘Talent Magnet: How to Attract and Retain Star Employees’, HRM Review, 8: 11–13.Rynes, S.L., M.O. Orlitzky and R. Bretz. 1997. ‘Experienced Hiring Versus College Recruiting:

Practices and Emerging Trends’, Personnel Psychology, 50(2): 309–39.Snell, S.A. and J.W. Dean. 1992. ‘Integrated Manufacturing and Human Resource Management:

A Human Capital Perspective’, Academy of Management Journal, 35(3): 467–504.Snell, S.A., D.P. Lepak and M.A. Youndt. 1999. ‘Managing the Architecture of Intellectual Capital:

Implications for Strategic Human Resource Management’, in G.R. Ferris (ed.), Research inPersonnel and Human Resources Management, pp. 175–93. London: JAI Press.

Thornhill, A., P. Lewis, M. Millmore and M. Saunders. 2000. Managing Change: A Human ResourceStrategy Approach, London FT: Prentice Hall.

Tsui, A.S., J.L. Pearce, L.W. Porter and A.M Tripoli. 1997. ‘Alternative Approaches to the Employee-Organization Relationship: Does Investment in Employees Pay Off?’ Academy of ManagementJournal, 40(5): 1089–1121.

Wright, P.M., G.C. McMahan and A. McWilliams. 1994. ‘Human Resources and Sustained Compe-titive Advantage: A Resource-Based Perspective’, International Journal of Human Resource Man-agement, 5(2): 301–26, Available at: www.dataquest.ciol.com and www.exchange.usg.uu.nl.



Date post:	21-Jul-2016
Category:	Documents
Upload:	dana-livia
View:	8 times
Download:	0 times

Asian Journal of Management Cases 2007 Ghosh 5 25

Documents