ACCA F1 Accountant in Business - 2010 - Study text

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Chapter 10: Recruitment and selection

A shamrock organisation is an organisation with three types of person working for

it. Handy used as a comparison a shamrock with three leaves, each leaf representing

a different type of worker.

 The first leaf represents core workers.

 The second leaf represents a flexible work force of ‘in-sourced workers’.

 The third leaf represents individuals who do work for an entity as outsourced

sub-contractors.

Core full-time workers

Handy suggested that an organisation needs a core of full-time professionals,

technicians and managers to deal with the general day-to-day running of

operations. The core workers are essential, because they have a detailed knowledge

and understanding of the organisation, its aims, objectives, policies and procedures.

They are paid a high salary and other rewards, but in return are expected to commit

themselves to the organisation, and often work long hours.

Handy suggested that the size of the core work force is shrinking, and employers

are increasingly using the other two types of workers. This is partly because

employers continually seek to reduce costs, and shedding full-time jobs is often an

effective method of cost-cutting because cheaper alternative sources of labour exist.

Flexible workers: temporary and part-time workers

The second ‘leaf’ in Handy’s shamrock organisation consists of flexible workers,

who are either part-time workers or temporary workers. They do work for the

employer when the work is required, and are not paid at other times. They might be

on permanent employment contracts (as part-time employees) or on fixed-term

contracts, so they are not independent of the employer organisation.

Outsourcing: sub-contractors

The third ‘leaf’ in the shamrock organisation consists of independent sub-

contractors or entities that provide services on an outsourcing basis. Many activities

can be outsourced – advertising, research and development, IT services, building

management (cleaning and security), vehicle fleet management, delivery services,

payroll administration, and so on.

Sub-contractors are paid fees, and fees are negotiated on the basis of results

achieved (‘outputs’) rather than time worked.

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Selection methods

 Alternative methods of selection

 Application forms

 Interviews

 Tests

 Group selection methods

 Usefulness and weaknesses of selection methods

6 Selection methods

6.1 Alternative methods of selection

Selection is the process of identifying the best candidate to fill a job vacancy, from

among all those who have applied.

Sometimes, selection may involve identifying several suitable candidates to fill a job

vacancy and offering the job to the ‘best’ of the suitable candidates. If the individual

who is offered the job rejects the offer, the ‘next best’ candidate on the list is offered

the job. The job is offered to each suitable candidate, in order of preference, until one

of the candidates accepts the offer of the job.

There are various methods of selection. You may be familiar with some or all of

them from your own personal experience.

6.2 Application forms

Application forms and references were described in the previous chapter, in the

context of recruitment. Application forms are used by applicants to apply for a job

vacancy, and in doing so to provide some information about themselves. They may

be submitted in paper form or electronically, via e-mail or the employer’s web site.

The forms are used in the selection process.

 Application forms can be used in a ‘first screening’ process, to make an initial

assessment of the applicants and their suitability for the job.

- When there are more applicants for a job than the employer is able to

interview, the application forms can be used to classify the applicants into

separate categories, such as ‘definitely to interview’, ‘possibly to interview’

and ‘definitely not to interview’.

- The application forms can be used to identify applicants who are clearly

unsuitable for the job. The decision is therefore to take the application no further,

and to notify the applicant that his or her application has been rejected.

 Application forms can be used in selection interviews. The information provided

by the applicant on the form can be used as a basis for asking further questions

in the interview.

Chapter 10: Recruitment and selection

As explained in the previous chapter, if an applicant is offered the job, and accepts,

the offer should be subject to satisfactory references. The individuals to approach

for a reference are identified on the application form.

Letters of application

Instead of using application forms, an employer may ask applicants for a job to

submit a letter of application, written in the applicant’s own words. The purpose of

asking the applicant to write his or her own application letter (or a covering letter to

an application form) is to obtain an insight into his or her character.

Application forms provide factual information. Application letters reveal more

about the personality of the applicant, his or her reason for wanting the job, and

his/her ability to express himself/herself and communicate in writing.

6.3 Interviews

Applicants who get through the first screening process may be invited to a selection

interview. A selection interview is a face-to-face interview at which the applicant is

asked a number of questions, and is assessed by the quality of his or her answers.

Face-to-face interviews can take different forms:

 The applicants may be interviewed by one person, such as the manager or

supervisor with authority over the work group where the vacancy exists.

 The applicants may be interviewed by an ‘interview panel’ of two or more

people. Interview panels may consist of six, seven or even more interviewers.

However, applicants are often intimidated by large interview panels, and it is

good practice to keep an interview panel fairly small

 The applicants might go through a succession of face-to-face interviews, each

with a different person.

Interviews may be conducted in either an informal setting, or in a very formal

setting. An informal setting should help to put the applicants at their ease.

However, if the employer wants to observe the applicants under pressure, the

setting might be very formal, with an interview panel sitting behind a large table

and the interviewee sitting on a chair facing the panel.

Stress interviews

A stress interview is a type of face-to-face selection interview, where the

interviewers deliberately put the applicant under stress, for example by asking

questions in an aggressive manner and criticising the applicant’s answers. Stress

interviews may be used to interview applicants for a senior management position,

in the belief that it will show how well each applicant stands up to stress, aggression

and criticism. However, they are of doubtful value: it is not necessary to be

aggressive to obtain useful information about a candidate for a job. A major

disadvantage of stress interviews is that they might put off good applicants from

wanting to take the job even if they are offered it.

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Problem-solving interviews

A problem-solving interview is another particular type of face-to-face interview.

The applicant for the job is given a hypothetical problem by the interviewer and

asked to solve it. For example, the interviewer might ask a question: ‘What would

you do in the following situation…?’

A difficulty with this type of interview is that it may be difficult to assess and

compare the answers of the applicants, and decide which applicant has given the

best answer.

6.4 Tests

An employer may require applicants for a job to take a test or series of tests. Testing

could be used as another stage of screening, to eliminate unsuitable candidates

before interview. Alternatively, tests may be used in addition to an interview.

The purpose of tests is to learn something about the applicants for the job. The type

of test that is used depends on the type of information the employer is looking for.

There are four main types of selection test:

 Intelligence tests

 Aptitude tests

 Competence tests

 Personality tests (psychometric testing).

Intelligence tests

These are tests (such as a general IQ test) to establish the general level of intelligence

of the job applicants. They may also test the problem-solving skills of the job

applicants, and their speed of thought. Candidates are usually required to complete

the test, or as many questions in the test as possible, within a limited amount of

time.

Aptitude tests

These are tests designed to establish a particular aptitude or ability of the job

applicants. For example, an aptitude test might test the mathematical ability, or

manual dexterity, or artistic ability of the candidates.

Competence tests

A test of competence is a test to establish whether the candidate has reached a

certain level of competence in a specific area. It tests what the candidates have

learned in the past. For example, an applicant for a job in word processing might be

given a competence test to establish his or her level of skill and ability in word

processing. A candidate will not be considered for a job vacancy unless he or she

has reached a minimum level of competence.

Chapter 10: Recruitment and selection

Personality tests or psychometric tests

There are tests designed to analyse personality and character. A test is commonly in

the form of a series of multiple choice questions. Candidates are asked in each

question about their likes and dislikes, what they would do in a particular situation,

their preferences and attitudes, and so on. The purpose of a personality test is to

identify candidates who have suitable personality characteristics for the job.

6.5 Group selection methods

Group selection is an alternative method of selection that can be used either:

 instead of individual interviews and testing, or

 in addition to individual interviews and testing.

In a group selection process, a number of people from the organisation observe a

number of applicants for a job as they go through a series of specially-designed

activities. The activities may include role play, where each applicant is required to

perform a particular role in a work-related scenario.

The candidates are observed, and compared with each other. The tests provide

useful comparisons of ability, and supporters of group selection methods argue that

the best applicants for a job can often display their greater ability and potential in

work-related scenarios.

6.6 Usefulness and weaknesses of selection methods

Each of the main selection methods has some usefulness and value, but also some

weaknesses. These are summarised briefly below.

Application forms

Usefulness Weakness

Useful as a first screening process in

selection, to eliminate applicants who

are clearly unsuitable.

The information provided on an

application form is not enough (except

perhaps for very junior or low-level

jobs) to make a selection decision.

Individual interviews

Usefulness Weaknesses

Interviews give the employer an

opportunity to see and listen to the

applicants.

Not all interviewers have the skills to

conduct a good interview. Poor

interviewing technique leads to poor

selection decisions.

Interviews, if well-conducted, should

reveal more about each applicant than

testing can reveal.

Some individuals are good

‘professional interviewees’, who can

perform well in interviews (they can

‘talk the talk’) but they cannot actually

perform well in a job. The interviewer

might be fooled and misled.

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It is unusual to offer a job of any

importance to an applicant without first

having an interview.

Interviewers might be biased

(consciously or unconsciously) against

or in favour of particular candidates.

Tests

Usefulness Weaknesses

Tests are precise and can be used to

obtain measurable or quantifiable

information about job applicants.

It is not clear that the test results will

show which candidates are best-suited to

the job. A clear link between good test

results and ability in the job has not been

clearly proved.

Tests should be objective, and free

from bias (unlike interviews)

Although tests should be objective, it is

often impossible to exclude bias entirely

from the testing process. Some types of

individual perform better than others in

particular types of test.

Tests can be administered to

applicants in groups, and so the

testing process is quicker than

interviews.

It might be possible for candidates to

improve their test scores by coaching

and practice before the formal test. (For

example, individuals may be coached in

IQ tests.)

Test conditions are artificial, and might

not give candidates an opportunity to

demonstrate their ability in an actual

working environment.

Candidates might guess the correct

answer to some questions. A test should

be designed with in-built checks: for

example there may be two or more

similar questions, and if the candidate

has not used guesswork, all the answers

should be consistent with each other.

Even so, it is often possible to identify

the correct answer to a multiple choice

question by using common sense.

The results of tests often need experts to

interpret their meaning.

Tests can also be expensive to administer:

the costs include preparing the tests or

hiring external experts, arranging and

carrying out the tests, and arranging the

marking and analysis of results.

Chapter 10: Recruitment and selection

Group selection methods

Usefulness Weaknesses

They provide the employer with an

opportunity to compare the

candidates directly.

They are expensive to administer and

time-consuming. Group selection

methods are generally only appropriate

when the employer is trying to fill

several similar and senior vacancies. For

example, group selection is often used to

select individuals for a trainee

management programme.

They can be used to study the

candidates in work-related scenarios.

Paper F1: Accountant in business

The selection decision

 Involvement in the selection decision

 Skills in selection

 The importance of good selection

 The offer of employment

 Obtaining references

7 The selection decision

7.1 Involvement in the selection decision

The selection decision is made by either:

 the manager with authority over the job where the vacancy exists

 staff in the human relations (HR) department

 a committee of individuals, possibly a mixture of line management and HR staff

experts.

There are no rules about who should make the selection decision, but as a general

guide:

 If the vacancy is for a low-level job and there are only limited prospects of career

development, the selection decision will be taken by a manager with direct

authority over the job.

 If the vacancy is for a job where the successful candidate will have good career

development prospects, the HR department should be involved in the selection

decision. This is because the selection decision will affect the long-term human

resources plan of the organisation.

 External experts, such as recruitment consultants or a ‘head hunting’ agency,

might offer advice on selection. However, the actual decision should be taken by

the organisation’s own managers.

7.2 Skills in selection

Individuals involved in the selection process need to possess the relevant skills for

identifying suitable candidates for a job vacancy.

An organisation may therefore need to give individuals training in selection skills,

before they are actually involved in selection.

An organisation may also employ individuals in the HR department (human

relations department) who have been trained in recruitment and selection.

Note: The skills required to conduct successful selection interviews are described

later.

Chapter 10: Recruitment and selection

7.3 The importance of good selection

Good selection decisions improve the quality of employees within the organisation.

When an organisation has high-quality employees, it should perform better. Good

selection is therefore an important factor in improving the assets of the organisation

(employee quality) and helping the organisation to be more successful in achieving

its objectives.

Poor selection decisions have the opposite effect:

 The individuals offered employment are not the best people available. After

their appointment, they might perform badly in their job, or might need training

to bring them up to an acceptable level of competence.

 The capabilities of the organisation will be less than if better people had been

selected. Development of the business will be slower. Competitor organisations

with high-quality employees might perform much better.

 The individuals given the jobs might be disappointed with the work, which does

not live up to the expectations they were given during their interview.

 Because the individuals who are selected either perform badly or are

disappointed with their job, labour turnover might be high. If individuals leave

their job soon after their appointment, the expensive and time-consuming

process of recruitment and selection must be undertaken again.

 It might become necessary to dismiss some employees for incompetence. The

performance of poor-quality new recruits may have to be monitored closely, to

decide if (and when) dismissal is the most appropriate option.

 Poor selection decisions could affect the long-term human resources plan of the

organisation, because fewer employees than expected develop their careers and

progress to more senior management positions.

 Difficulties with selection might take up significant amounts of senior

management time and attention.

7.4 The offer of employment

The selection process ends with an offer of employment and acceptance of the offer

by the chosen applicant.

The employer may not be sure whether or not the individual who is offered the job

will accept it. It is therefore prudent to identify a short-list of acceptable applicants,

listed in order of preference. If the candidate at the top of the list refuses the job, the

next person on the list can be made an offer, and so on until someone in the list

accepts the offer of the job.

When the job has been accepted, the arrangement should be confirmed in writing

(subject to satisfactory references), and accepted by the successful applicant in

writing. Employment legislation might require that the new employee should be

given a formal written contract of employment.

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In addition to offering the job to the successful applicant, the employer should also

contact the unsuccessful applicants, usually in writing. The unsuccessful applicants

should be thanked for their interest in the job, and for their application.

7.5 Obtaining references

As mentioned earlier, it is common practice to ask every applicant for a job to

provide the names and addresses of two referees, who will be asked to provide a

reference if the applicant is offered the job. At least one referee should be a former

employer or manager of the applicant. If the applicant is young and has not had a

job before, a reference may be required from his or her former school or university.

There are problems with references. The referee is unlikely to write anything

harmful or damaging about the applicant, except perhaps in unusual circumstances.

References therefore cannot be relied on to give an indication of the successful

applicant’s suitability for the job.

However, references are necessary. Their greatest value should be to provide the

employer with some evidence that the applicant has given honest information about

himself or herself. Unless references are obtained, it could be very easy for ‘bogus’

applicants for a job to get away with telling lies.

A reference from a former employer provides evidence that the applicant did (or

does) actually work for that employer, and:

 earns the salary that he or she claims to earn

 has worked or did work for that employer for the length of time that the

applicant stated on the application form for the job.

ACCA F1 Accountant in Business - 2010 - Study text - Emile Woolf Publishing

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