You are on page 1of 17

1. Introduction Recruitment refers to the process of attracting, screening, and selecting qualified people for a job.

The main sources of external recruitment include e-recruitment, advertising, employment agencies, "headhunters" for executive and professional recruitment, niche agencies which specialize in a particular area of staffing and outsourcing. Internal recruitment methods include rehiring, job posting, job bidding, intranet, and employee referrals. There are many factors that influence recruitment. There are external and internal factors. The external factors include supply and demand, labour market conditions, organizational reputation, government laws and regulations, unemployment rate and competitors. The internal factors include recruitment policy, human resource planning, cost of recruitment, growth and expansion, recruitment objective and size of an organization. The importance of recruitment is that it provides an organization with a pool of prospective qualified candidates for an organizations selection of best candidates. This is also a process which links employers to employees. Recruitment also results in greater employee satisfaction and organization effectiveness. Recruitment is also important in ensuring employment of loyal employees who are committed to long term innovation activities of organization. The objective of this assignment is to study about importance of recruitment in Human Resource Management. We also aim to discuss the current issues of recruitment in Malaysia Manufacturing Industry and factors which affects the recruitment process.

2. Literature Review
1

There are some factors which influence recruitment and there are organizational reputation, attractiveness of the job, and cost of recruiting, recruiting goals and recruiting philosophy. For organizational reputation, Generation X and Y employees were highly mobile and sought after companies seeking to expand their businesses. (McClatchy, 2011)

Besides that, for attractiveness of the job, Reward schemes and differentiated performance remuneration are also given. (McClatchy, 2011) In work-related components, pay is a significant predictor of employee satisfaction and retention. (Okpara, 2004) Furthermore, they also benchmark their pay scales to market rates to remain competitive and attractive as the employer of choice. (McClatchy, 2011) Employee prefers challenging task because easy and routine work will make them boring and frustrated. (McClatchy, 2011) Employers who offer interesting work, regular recognition, rewards, and opportunities for quick advancement are the most popular targets for job seekers. (Ryan, 2011) Besides that, challenging and interesting work is the most important characteristic that job seekers look for in prospective employers. The potential for recognition and reward for their accomplishments was close. (Ryan, 2011) The top five characteristics of greatest interest to job seekers were opportunities for fast career growth, employer is well established and will have long-term prosperity, and a company has a particular focus on its people. (Ryan, 2011) For Malaysian worker, they place great importance on the family unit than their company. (Lai, 2008) In cost of recruiting, routine work due to limited job rotation and a tendency for specialization of jobs or skills encourages job hopping. (Lai, 2008) Manufacturing companies was under pressure to reduce cost due to the recent global economic meltdown. As a result, many companies cut their cost of recruitment through downsizing and hiring contingent workers. As a result, workers' long-term commitments necessary for innovative activities are likely to disappear. (Ling & Nasurdin, 2010).

For recruiting goals, hiring new graduates from colleges and universities each year is the main source of new labor. Companies build up their relationships with colleges and universities, maintaining close ties with their alma maters and pushing hard
2

to recruit students in each year. (Lai, 2008) Besides that, employers preferred graduates who were willing to work with an emphasis on employing the established university graduates who held membership of sport clubs teams. Employers assumed these graduates were smart as well as trained in vertical personal relationships. (Kishita, 2006) Therefore, intelligent and hardworking graduates, especially those who have had experience with school sports club activities, are highly appreciated. (Lai, 2008) Hiring new college graduates, enthusiasm and ambition are very important points, general common knowledge, good education, cooperative spirit and sense of balance, technical knowledge and skills and drive and executive ability. (Lai, 2008) However, attitude, competency, fundamental ability and aptitude were considered important for humanitiesrelated jobs, but for technique, skills, and knowledge were considered important for science-related jobs, good health and stamina. (Lai, 2008) All companies give priority on the soft skills of the candidates. Performance at the interview is one of the deciding factors in recruitment. Besides that, all potential candidates must achieve the minimum education qualification set by the company. Participation in co-curricular activities is also another criterion. (Lai, 2008) Most companies prefer to employ experienced workers than train up new staff. (Lai, 2008) Due to rapid economic growth, manufacturers must plan and prepare for growth and expansion to survive. To ensure the innovation and growth in their manufacturing capacity they require more skilled labor. However, severe skilled labor shortages have caused the emerging battle for talent in Asia. (Connie, Soosay & Hyland, 2008) Intracountry skilled labor mobility has been adopted by manufacturing companies in Asia. They require and acquire labor from their neighboring countries to maintain their economic expansion. The problem with strategies is that they only shift the skills shortage problem from one manufacturing region to another. (Connie, Soosay & Hyland, 2008) Due to the flexibility of their organizational design, employees must work on a job rotation basis. This helps employees to familiarize with business knowledge of different departments and functions and will added productivity and efficiency. (Abang Othman, 2009) Moreover, manufacturing sector lacks of ICT in the manufacturing processes. Most people in manufacturing sector are not master in ICT for the purpose of business and manufacturing. (Lai, 2008)

Lastly, for recruiting philosophy, qualification is not really an important factor in recruitment. (Lai, 2008) There are manpower problem using some non-conventional HR methods. (Tulgan, 2001) However, business strategies will certainly influence hiring processes. (Asian Outlook, 2011) The trend of HR outsourcing is increasing significantly. This practice gives companies access to expert services. However, many companies refuse to outsource HR functions because it is not appropriate for their business operations. (Abdul-Halim & Che-Ha, 2010)

3. Development of Issues 3.1 Importance of manufacturing industry for Malaysian economy and contribution to GDP

Manufacturing industry in Malaysia made a significant contribution to Malaysias economy and GDP growth. It has contributed almost 80% of overall countrys export. Manufacturing sector helps to improve the growth of Malaysias agro-based sector by offering the capabilities of some downstream activities such as product processing, packaging and distributing. Furthermore, manufacturing sector can sustain in the utilization and development of Research and Development (R&D) and Information and Communication Technology (ICT). ICT implementation leads to wider usage of electronic commerce for business to business and assist in the utilization of Radio-Frequency Identification (RFID) and product coding standards. On the other hand, manufacturing sector can help to boost Malaysias education sector. Manufacturing sector is capable in providing the working experience, industrial training and actual case study for education and other government sectors in Malaysia. Undergraduate and postgraduate students in Malaysia may have the opportunities to get some working experiences in the manufacturing sector. Besides, a lot of researches can be conducted for the purpose to solve industrial problems. Malaysia has collaborated with other countries like Australia via Free Trade Agreement (FTA) to achieve and put herself in the global manufacturing environment. As a result, Malaysia will be able to produce higher-tech, higher-value added and more sophisticated products and services. Besides, Malaysia can gain benefits through joint-ventures and collaborate with developed countries. Malaysia can acquire a flow of expertise that is needed and some valuable technology transfer. In addition, Malaysia can also carry out projects abroad using expertise of the developed countries and materials and labors from Malaysia. The manufacturing industry contributes to GDP by economic growth. Economic growth is mainly driven by increase in productivity. The increase in manufacture of goods and services will increase the total amount paid for goods and services. The high market value of final goods and services produced in a country within a given period contributes to higher value of GDP.

3.2 Factors Affecting Recruitment Organization reputation An organization with positive image and reputation will finds it easier to attract job seekers than an organization with negative image. Organizations corporate image refers to job seekers shared beliefs about the organizations characteristics. The corporate image comprise of product image, service image, citizenship image and credibility image. It plays an important role in determining whether it can attract top
6

talent. Product image is refers to job seekers perceptions about the innovativeness and quality of the organizations products. Service image is refers to job seekers perceptions of customer orientation of the organization. Citizenship image refers to job seekers perceptions of the organizations involvement in environmental protection and community development. Credibility image refers to job seekers perceptions of the trustworthiness and reliability of the organization. Besides that, the organization culture and the attitude of its management towards employees also influence job seekers decision to apply job in an organization. In additions, the profitability and pay level influence attractiveness and reputation of an organization. Those companies earn high profits and offer high salary which will increase the good reputation whereas those companies earn less profit or suffer loss which will give bad reputation. Attractiveness of jobs One of the major factors that influence the job recruitment in manufacturing industry is the jobs attractiveness. To attract and retain talented employees, many companies have offered a lot of attractive employment terms. Most people like high pay jobs. However, high salary cannot ensure employees job satisfaction. Most employees prefer to work in an interesting and challenging environment as it gives chances to the employees to participate in interesting projects, training and the opportunity to get the promotion. Today, media industry has become more popular as it brings excitement and fun to people besides high salary. Companies have offered many welfare benefits such as pension scheme, medical benefits, free meals, free transportation, special breaks and paternity leave to attract talented employee.

Cost of recruiting Most of the companies used internal recruitment to save the recruitment cost as they do not have to spend money on job advertising and selection cost. Internal recruitment gives motivation to employees to train themselves to be more skillful and develop their competencies as they see opportunity to perform or to get promotion in the organization. Besides, most companies prefer to employ experienced workers than hiring fresh graduates to avoid spending money to send the employees to attend courses or training to improve their skills. Hiring experienced workers help to save time and cost of
7

recruiting. In addition, with experienced workers, errors or delays in production can be reduced. Some company prefer to hire foreign labors from Bangladesh, Indonesia and Philippines to fill competency gaps or labor shortage as foreign workers demand for lower salary compared to local labors. Recruitment goals The goals of the recruitment process have to be defined precisely. It is crucial to set the right requirements for jobs in the organization. Some of the factors affecting recruitment goals include the budget allocated, skills, and knowledge required of the applicants. Budget allocated by firms for the recruitment purpose varies and the management has to set goals based on the budget. For example, less recruiting agencies hired from a low budget may result in a lower chance of hiring the right person for the particular positions. The knowledge and competency requirements set by organizations for particular jobs in the organization also affect recruitment goals. A particular position has to be matched with a qualified applicant possessing the required knowledge and expertise to accomplish goals. Manufacturing companies may require candidates which have technical skills whereas top management posts require candidates with conceptual skills.

Recruiting philosophy In the term of recruiting philosophy, there are two components hugely applied by all organization in recruitment which is internal recruitment and external recruitment. For the internal recruitment, the management would observe their employee performance. We believe that, those who have performed well in an organization will have the potential to be promoted from one stage to another stage. The other component is external recruiting whereby a firm would choose to employ a person from outside the company by using advertisements, employee referrals and private employment agencies. This employment method is used by most of the firms today whom seek out skilled employees work the workforce.
8

3.3 Current Human Resource Practices in Malaysia Manufacturing Industry To maintain manufacturing firms competitiveness to gain market shares, some manufacturers will outsource their production. Some fields that are widely outsourced in Malaysia are logistics and IT services, contract manufacturing, internal audit and R&D. Some of the benefits of outsourcing includes provide efficiency and effectiveness. The outsourcing of these activities can reduce cost. The disadvantage of outsourcing is that the outsourcing company will not follow the same standards and mission of the company. Besides that, the confidentiality of company is also at threat as the companys information is transferred to third party. The quality of the work will not be necessarily high quality as third parties are motivated by profit.
9

Besides that, the manufacturing sector in Malaysia is an industry that is led by technology. Therefore, Malaysia manufacturing industry produces and promotes advanced technology with high quality products and services. However, it is not easy to survive and remain competitive in such market conditions. Workers highly skilled in technology are employed to enable innovation of manufacturing and development of new products. Although Malaysia has a pool of talented workforce, the manufacturing sector is acutely in need of engineering and technical skills. These skills are needed to plan, innovate and adjust new technologies to the manufacturing environment.

Table 2: Shortage of Technical Employees Type of Manpower Engineers Demand 30,100 Supply 21,000 Shortfall 9,100 (30%)

Engineering Assistants

122,900

84,070

38,830 (31%)

Assistant/ Technical Craft Skills

394,000

230,000

164,000 (24%)

Therefore, many companies have recruited skilled foreign workers. For example, recently Globetronics was unable to find any rightly skilled Malaysians for their job positions, and recruited five software engineers from India to fill the positions.
10

The government introduced incentive programs that include incentives like tax breaks and job offers to recruit Malaysians living abroad with highly specialized skills to lessen reliance on foreign workers. Besides attracting skills abroad, steps have been taken to improve skills of fresh graduates and unskilled workers. Education centers such as technical schools, polytechnics and industrial training institutions are important in preparing youths for employment. Apprenticeship programs have also been developed and implemented to resolve the shortage of trained workers for manufacturing industry. The weakness of this method is that high costs will be incurred. Besides that, it is also time consuming as practical skills needed to be practiced to achieve expertise. In the recent years, there have been a large number of vacancies in manufacturing industry caused by a lack of skilled workers. The rising labor demand in Malaysia has led to greater use of labor from abroad. Still, technological companies have difficulty attracting skilled foreign workers because of bureaucratic red tape or excessive regulations. To solve this crisis, the Department of Immigration announced it was simplifying the entry system as of January 1, 2008. One of the main changes will be to streamline the process for issuing skilled worker visas and cut the standard waiting time from 14 days to 7 days. The advantage of this method is the increase in the pool of skilled workers in manufacturing industry. The increase in skill is the basis of a companys innovation in its manufacture of new products. However, this method has its limitations. Jobs are given to foreign workers causing local skilled workers and fresh graduates to have fewer opportunities. In Malaysia, unions have limited power and wage councils establish wage standards for only particular industries. Therefore, there is no set minimum wage in Malaysia, which caused very low wages for low skill workers in manufacturing industry. However, annual rises are given to employees regardless of performance but on a seniority basis.

11

To replace this, the Malaysian government has encouraged Productivity Linked Wage Systems (PLWSs) to gradually replace seniority. In these systems, employers give out variable extra bonuses to employees linked to productivity, profits, or both. This system will increase workers effort and performance in the organization. However, this system will lead employees which are unable to achieve outstanding results as their colleagues to feel unmotivated to work. Besides that, this method will also cause fierce competition in workplace for the incentives and lead to an unconducive working environment.

Table 8: Comparison of Average Wages for White Collar Workers in Malaysia and Other Southeast Asian States Monthly Salary (in US$) Hong Kong Position CEO 15,975 11,131 7,127 5,075 5,916 Singapore Malaysia Thailand Philippines

Factory/Plant Manager 7,044 4,639 2,033 1,945 1,931 1,623

Sales Manager

6,628

3,962

1,699

1,465

Lawyer

7,712

4,053

1,579

530

979

Systems Engineer

3,774

2,290

1,171

927

547

12

Software Developer

3,774

2,792

864

927

547

Secretary

1,781

1,326

366

446

309

Due to the rapidly expanding economy in Asia, strong rivalry exists among organizations for the limited pool of skilled employees. Firms offer incentives and benefits to recruit qualified skilled candidates and prevent top talents from being recruited by rival companies. Higher level employees generally receive marginal benefits in addition to their base salaries which increase the value of the package and may include housing, a travel allowance, and education allowances for children. This indeed will enable the recruitment of top talents by organizations. The disadvantage of this technique is that the skilled employees might expect future benefits from employers and demand for it. The employees will also slack in their performing their job and yet demand for high wages.

13

4. Recommendations The disadvantages of Human Resource outsourcing can be avoided by partnering with the right and reliable service provider so that the threats to confidentiality of the company can be reduced and ensure that a high quality of work can be maintained by the outsourcing company. The company can also sign confidentiality agreement with the outsourcing companies as an assurance of the confidentiality of business information. Another way is the company has to look for service providers which are compatible with the needs of company. For example, the service provider is flexible to the change in needs of company and the standards set by the company. Outsourcing activities should be given to HR Department of the company to achieve the same company standard and mission. By this way, the company can save costs on outsourcing and retain confidentiality. Besides, the company will be able to prevent effects such as credibility of outsourcing company and bad reputation. To improve technical skilled workers, we strongly encourage organizations to establish their own training centers for their staffs and cooperate with human resource department. With this cooperation, training center would be more efficient as they know which skills are highly demanded in organization and help to achieve organizations goal. Besides that, implementation of job rotation enables all the employees to obtain the knowledge of other departments. Furthermore, real case studies given to trainees also ensure their ability to cope in reality.

14

To ensure full productivity for incentives, we would suggest organizations to form innovation teams. Innovation teams will result in better productivity and achievement. Besides that, failure in achieving target output will be less discouraging for employees as they are able to motivate and encourage each other. It also improve relationship between employees in the work team as they work together to achieve goals. To reduce unproductive employees, the organizations should implement performance management by appraising their employees performance on a timely basis. If the performance of the employees is found to be slacking the firms will reduce the incentives. This method will ensure the consistency of employees performance. 5. Conclusion The current practice of Malaysia manufacturing industry is mainly on outsourcing of recruitment. As a result of the recent global economic meltdown, manufacturing companies have opted to cut cost of recruitment through downsizing and hiring contingent workers. However, the hiring of contingent workers does not give long term innovation to manufacturing industries as highly skilled workers are needed. Severe skilled labour shortages have caused the emerging battle for talent in the manufacturing industry in Asia for survival in such competitive economies. Manufacturing companies in many countries in Asia adopt intra-country skilled labour mobility which results in shortage of skills in some countries. Therefore, manufacturing companies in Malaysia have to take steps to solve the current issues arisen from global economic meltdown and skill shortages caused by rapid advancement in manufacturing industry. The factors influencing success of recruitment of qualified skilled workers are reputational organizations, job incentives, resourceful selection processes, recruitment budget and human resource policies. As a conclusion, firms have to know when and how to recruit the best qualified recruits, internally and externally for the right job position. As manufacturing industry contributes a greater part in Malaysia GDP, the recruitment process for skilled workers has to be done precisely to ensure innovation of companies. This will also lead to the progress of Malaysia to be on par with other developed countries around the world.

15

Reference Websites 1. Key Recruitment Process Goals. (2010). Retrieved June 20, 2011, from HR Management Guide website: http://www.simplehrguide.com/key-recruitmentprocess-goals.html 2. Ramos, M. E. (2008, May 3). Recruitment Goals. Retrieved June 20, 2011, from Good Recruits website: http://www.goodrecruits.com/2008/05/recruitment_goals.html 3. Cole, A. (2009, June 5). Jobs & media Industry : Highly paying and attractive Jobs available in the media industry. Retrieved July 23, 2011, from Article Intelligence website: http://www.articleintelligence.com/Art/80327/172/Jobsmedia-Industry-Highly-paying-and-attractive-Jobs-available-in-the-mediaindustry.html 4. King, W. (2010, July 23). What Causes Job Satisfaction? Retrieved June 23, 2011, from 212 Articles website: http://www.212articles.com/what-causes-jobsatisfaction/
5. Granger, B. (2010). Corporate Image, Attraction, and Top Talent. Retrieved June 24,

2011, from I/O At Work website: http://www.ioatwork.com/ioatwork/2010/05/corporate-image-attraction-andtop-talent.html


6. Collins, Christopher J. and Han, Jian. (2004) Exploring Applicant Pool

Quantity and Quality: The Effects of Early Recruitment Practice Strategies, Corporate Advertising, and Firm Reputation. Articles & Chapters. Paper 44. Retrieved June, 24 from: http://digitalcommons.ilr.cornell.edu/articles/44
7. Economic growth. (n.d.). Retrieved from Wikipedia.org website:

http://en.wikipedia.org/wiki/Economic_growth

16

8. Gross Domestic Product. (n.d.). Retrieved June 24, 2011, from Wikipedia.org

website: http://en.wikipedia.org/wiki/Gdp 9. Gross, A., & Minot, J. (2007, October). Malaysia HR Update - 2007. Retrieved June 25, 2011, from PacificBridgeInc website website: http://www.pacificbridge.com/publication.asp?id=99

10. Gross, A. (2011, Fall). HR in Malaysia: An Overview. Retrieved June 25, 2011, from PacificBridgeInc website: http://www.pacificbridge.com/publication.asp?id=14 11. Manpower for Industry. (2000). Retrieved June 25, 2011, from e-Directory.com website: http://e-directory.com.my/web/sw-investorinfo-manpower.htm 12. Azli8073. (2009, March 30). The Importance and Challenges of Manufacturing in Malaysia. Retrieved June 27, 2011, from Scribd.com website: http://www.scribd.com/doc/13768717/The-Importance-and-Challenges-ofManufacturing-in-Malaysia

17