HRM textbook

CHAPTER 5 PERSONNEL PLANNING AND RECRUITING 157
Offshoring and Outsourcing Jobs
Outsourcing and offshoring are perhaps the most extreme examples of alternative
staffing. Rather than bringing people in to do the company s jobs, outsourcing and
offshoring send the jobs out. Outsourcing means having outside vendors supply
services (such as benefits management, market research, or manufacturing) that the
company s own employees previously did in-house. Offshoring is a narrower term.
It means having outside vendors or employees abroad supply services that the company s
own employees previously did in-house.
Outsourcing and offshoring are both contentious. Particularly in challenging
economic times, employees, unions, legislators, and even many business owners feel
that shipping jobs out (particularly overseas) is ill-advised. That notwithstanding,
employers are sending more jobs out, and not just blue-collar jobs. For example, GE s
transportation division announced that it was shifting 17 mid-level drafting jobs
from Pennsylvania to India. 85
Sending out jobs, particularly overseas, presents employers with some special
challenges. One is the potential for political tension in countries such as India. Others
include the likelihood of cultural misunderstandings (such as between your homebased
customers and the employees abroad); security and information privacy
concerns; the need to deal with foreign contract, liability, and legal systems issues; and
the fact that the offshore employees need special training (for instance, in using
pseudonyms like Jim without discomfort). Rising overseas wages, higher oil prices,
and quality issues are prompting more U.S. employers to bring their jobs back
home. 86 The bottom line is that neither outsourcing nor offshoring always brings all
the savings one would have hoped for, and both require careful consideration
of human resource issues.
Executive Recruiters
Executive recruiters (also known as headhunters) are special employment agencies
employers retain to seek out top-management talent for their clients. The percentage of
your firm s positions filled by these services might be small. However, these jobs include
key executive and technical positions. For executive positions, headhunters may be your
only source of candidates. The employer always pays the fees.
There are two types of executive recruiters contingent and retained. Members
of the Association of Executive Search Consultants usually focus on executive positions
paying $150,000 or more, and on retained executive search. They are paid
regardless of whether the employer hires the executive through the search firm s
efforts. Contingency-based recruiters tend to handle junior- to middle-level management
job searches in the $50,000 to $150,000 range. Whether retained or contingent,
fees are beginning to drop from the usual 30% or more of the executive s first-year
pay. 87 Top recruiters (all retained) include Heidrick and Struggles, Egon Zehnder
International, Russell Reynolds, and Spencer Stuart. 88
Executive recruiters are using more technology and becoming more specialized.
The challenging part of recruiting has always been finding potential candidates to
find, say, a sales manager with experience in chemical engineered products. Not
surprisingly, Internet-based databases now dramatically speed up such searches.
Executive recruiters are also becoming more specialized. The large ones are creating
new businesses aimed at specialized functions (such as sales) or industries (such as oil
products). So, it s advisable to look first for one that specializes in your field.
PROS AND CONS Recruiters bring a lot to the table. They have many contacts
and are especially adept at finding qualified employed candidates who aren t actively
looking to change jobs. They can keep your firm s name confidential until late into
alternative staffing
The use of nontraditional recruitment
sources.