Case Study 33
Case Study 33
Case Study 33
Case Objectives
Recruiting is the first stage in which organizational plans for staffing come into contact with
the labour market for employees. Before making any new recruiting effort, an organization
needs to carefully consider the methods available and balance out the costs of each method
with the organization’s needs.
The recruiting case provides an opportunity to see how staffing managers develop plans for
recruiting efforts. You will develop a recruiting strategy and a recruiting guide for the store
associate job. The case also demonstrates how you can use organizational data to determine
what the best methods for recruiting are. Finally, you will have an opportunity to develop
various forms of recruiting messages that will encourage individuals to apply for jobs as sales
associates at Tanglewood.
Primary Concerns Regarding Recruiting
Like any retail organization, there is a constant need for new employees at Tanglewood
because of turnover. In a typical year, approximately 50% of the sales associates will
turnover. The process of recruiting is therefore of great concern for managers in the field.
However, up to this point, the organization has not had any centralized method for
recruiting new employees. As part of the consolidation across stores, Tanglewood is now
encouraging a systematic review of their recruiting policies that will ultimately result in a
better recruiting system for store associates.
Staffing services has made very few decisions regarding how recruiting should proceed. Each
store has been encouraged to ensure that their recruiting methods attract a culturally
diverse group of applicants. Beyond this general directive from the corporate offices,
however, there is not very much direction for stores regarding how they should be recruiting
new store associates. Regional managers occasionally discuss ideas for how to recruit new
employees, but as you will see, they have some very distinct methods for recruiting in
practice.
Methods of Recruiting Available
There are five primary methods of recruiting store associates used at Tanglewood in
Washington and Oregon. For additional information regarding these sources of recruiting
check your textbook, where advantages and disadvantages of each method are described in
greater detail.
Media
The most traditional method for recruiting used by Tanglewood is media advertising, such as
print, radio, and television advertising sources, coupled with respondents filling out a
standardized job application. This process is accessible through either the internet or an
automated telephone application process. This allows interested individuals to apply
without actually having to go into the stores. Paper applications are still available at stores.
Media expenses are a combination of initially setting up a contact with a media outlet,
developing an advertisement, and the price of processing materials and interviews for each
applicant.
Referrals
Employees are encouraged to refer their friends to apply for work at Tanglewood as well.
The referral process is enhanced by providing current employees with $100 for each friend
they refer who is hired. Referral expenses are a combination of creating and maintaining
records, the price of processing materials and interviews for each applicant, and the
payment for each individual who is hired.
Kiosk
An alternative method of recruiting that minimizes processing costs is to have a
computerized kiosk in the main entrance to the stores. The kiosks look somewhat like ATM
machines, and feature a fully functioning keyboard and touch‐screens. Unlike media
advertisements and internet applications (which are limited by the speed of internet
connections and the fact that not all potential applicants have ready internet access), the
kiosks provide opportunities for applicants to watch short videos explaining what the job
entails. Because the entire application process is completed electronically and scored
automatically, there is no material cost, although there is still an initial processing and
interview cost. Each kiosk costs approximately $40,000.
State Job Services
In urban markets with higher pools of availability of unemployed individuals, state job
services have also been used occasionally to find new applicants. The employment service is
provided with a set of qualifications required for work, and the employment services agency
assists in providing initial screening and hiring recommendations. Training is partially
subsidized through tax incentives. In areas which have less centralized population, the job
service option is less feasible. Essentially, the cost of the job service is for creating and
maintaining an initial contact, with other costs being roughly half of those for traditional
media sites.
Staffing Agency
One method that has been explored recently is the use of an external staffing agency.
Essentially, this is outsourcing the actual selection of candidates to StoreStaff, which is a
large organization that specializes in locating workers for the retail industry. Many
organizations use StoreStaff to find temporary employees, or provide trial employment to
StoreStaff employees as part of a temporary‐to‐permanent arrangement, but for
Tanglewood, individuals recruited through StoreStaff are directly hired as part of the core
workforce. Because StoreStaff provides some training to their pool of candidates, they are
less expensive to train, but the overhead costs of providing money to StoreStaff for locating
and screening these candidates does make this method quite costly.
The Situation at Tanglewood – Four Regions, Four Recruitment Policies
As noted in the introduction, decision making for staffing activities has recently become
centralized within the staffing services division. A major question that arises as a result of
this consolidation is how to determine which HR policies should be left in the hands of each
individual location, and how much should be taken over by corporate HR. The recruiting
function is of particular interest since there is such wide dispersion in how individuals are
recruited. Data is available from the divisions in the form of numerical estimates of costs per
individual processed, employee retention, performance on a pre‐hire work‐sample test
which is given to all employees, and some informal interview data.
Tanglewood Department stores were first established in the western area of Washington
and then moved southwards into Oregon, then spread eastwards into the Rocky Mountain
States. Many of the policies implemented in the Western Washington locations were applied
directly in the Rocky Mountain States. However, because the initial expansion was less well‐
coordinated, there is substantial variety in the staffing policies being followed in the stores
in Washington and Oregon.
Western Washington (Region 1)
It has historically been the largest and most profitable area, with a total of 25 stores in the
region centered around Seattle. In fitting with the organization’s founding philosophy, the
stores in Western Washington are run largely autonomously. The current head of the
Western Washington division advocates a philosophy of individual autonomy and
empowerment. Generally this division has been viewed as highly committed to the core
corporate culture, although this passion for the mission has sometimes meant paying less
attention to careful management of financial concerns. Because of its size and the large
amounts of financial resources available, leadership of this division has been one of the most
powerful positions within the organization.
Western Washington uses a variety of recruiting methods. The primary methods of
recruiting are referrals from current employees. In the Seattle area, the division also makes
heavy use of job services. Over time traditional media methods of recruiting have been
reduced, but are still used occasionally. Finally, to fill in those positions that are not met with
the other three methods, the kiosk method is used.
Eastern Washington (Region 2)
This was where the company began. The split of Washington into Eastern and Western
divisions came early in the store’s history, but their physical proximity and high overlap
between management across the areas has lead to very similar management styles. The
Eastern Washington division is approximately the same size as Western Washington, with 25
total stores. However, with the exception of the area around Spokane, the majority of this
area is much more rural.
To a large extent, the Eastern Washington division pioneered all the policies used by
Western Washington, although the overall policies have been tempered by geographical
differences. The job service method has not been successfully implemented on a wide scale.
Instead of using this method, this division uses more traditional media advertising.
Northern Oregon (Region 3)
Unlike Western Washington, there is a very different philosophy of operations in Northern
Oregon. Northern Oregon has been run very “professionally” for years, with most decisions
carefully weighted against their financial consequences. Administrative decision making is
hierarchical, with specific tasks assigned at each level of the organization’s structure. The
current top administrator for this area, Steven McDougal, has a reputation for being a
technocrat, and has largely worked to maintain the system he inherited when he first took
over five years ago. There are 18 stores in this region.
The recruiting methods of the Northern Oregon division fall into three major categories. The
main methods are media and in‐store kiosks. This division has also used staffing agencies
lately. The division explicitly rejects the use of employee referrals, claiming that the use of
signing bonuses leads to the hiring of unqualified individuals who are selected without
sufficient qualifications due to favoritism.
Southern Oregon (Region 4)
Southern Oregon is unique among the areas within the Pacific Northwest in that it has
remained relatively small, with only 16 stores in the division mostly concentrated in the
Eugene area. However, there is also a growing push to increase concentration in Southern
Oregon as a first step to establishing more stores in Northern California. This area is very
innovative across the board in its human resources practices.
The innovative character of Southern Oregon is reflected in their recruiting practices. They
have relied primarily on a combination of staffing agencies, referrals, and kiosk advertising.
All three of these methods were first tried in this region.
Quantitative data
Data are available from the four divisions of the organization on the number of individuals
who applied for work, the number of individuals who are qualified for the position, the
number who actually receive job offers and accept them, and the number of number of
individuals who remain with the organization at the 6 and 12 month point after hire.
Complete data on the recruiting yields for the four divisions is contained in Appendix B.
Table 2.1 Estimated costs for recruiting methods
Variable costs
Another Angle on Recruitment: Manager Focus Groups
As part of the information gathering process, large scale focus groups have been conducted
with department managers. Tanglewood contacted a market research firm to conduct the
focus groups, and Tanglewood provided a detailed summary of the major findings. While
managers differed considerably in their perceptions of the effectiveness of the different
methods, their core concerns were generally quite similar, and can be grouped into four
major categories:
1. The most pressing concern for many managers is reducing employee turnover.
Although Tanglewood has typical retention rates for a retail chain, the importance of culture
and cooperation in the Tanglewood philosophy means that new employees often are not
fully integrated into the company’s culture until several months have passed. In short,
typical retail turnover is not acceptable for Tanglewood. This is seen as an especially
dangerous situation as the company expands, since it threatens to undermine the unique
elements of the company’s approach to retail.
2. There is an excessive lag between the initial contact between many applicants and
the actual hiring decision, leading many qualified individuals to drop out of the process. A
few managers have suggested that finding a way to concentrate on methods that do not
have this problem would be beneficial. The issue of lags in initial contacts and hiring is
discussed in your textbook.
3. The recruiting process is administratively cumbersome. Managers want to find ways
to reduce the amount of time they have to spend with assessing new candidates. This was
partially a point of contention between managers, because some argued that using more
computerized applications would be a good idea, while others felt this might give applicants
the wrong impression about the organization and its methods.
4. Many new hires without retail work experience do not recognize the importance of
positive customer service for sales, and training often does not solve the problem. Several
managers noted that they had discharged new hires for providing inappropriate customer
service. A particularly frequent problem is new employees becoming frustrated with
customers and refusing to assist them or behaving in a hostile manner. Some managers
specifically suggested that new employees needed a more realistic introduction to the
difficulties of the customer service role. Other managers suggest that a more positive
message would be helpful, since it will draw in more qualified individuals.
5. Many managers also report that they would like to see messages more specifically
targeted to the types of people who are likely to fit in with the Tanglewood stores culture.
Managers note several elements of the organization’s culture (which you read about in the
introductory case) that they think should be part of the recruiting strategy.
Specific Assignment Details
Analyse the information from the recruiting data and prepare a report showing the results of
the analysis to your director. Your report should include a brief outline for a centralised
recruitment strategy for Tanglewood.
2. For each division use the data tables below (Recruiting Yield Data) to estimate how
each method fares in terms of yields and costs. Provide a short summary of the essential
results of the various data tables you have been provided with.
3. Tanglewood’s top management is highly committed to improving customer service
quality, and proposes that simply finding the cheapest way to hire is not sufficient. Besides
costs and retention, what other measures of employee performance would be good
“bottom line” metrics for the quality of a recruiting method? How might the managerial
focus groups’ concerns fit with these alternative considerations?
4. Another issue raised in focus groups was the type of recruitment message to be
used. Provide a recommendation on what type of recruitment message would be most
beneficial for Tanglewood including your justification for your choice.
Recruiting Yield Data
Western Washington
Media Referrals Kiosk Job service
Applicants 1430 3362 3114 4236
Candidates 536 1564 1278 1398
Hired 204 1048 652 378
6 month retention 124 838 502 310
1 year retention 92 712 358 284
Qualification rate 37% 47% 41% 33%
Hiring rate 14% 31% 21% 9%
6 month retention 61% 80% 77% 82%
1 year retention 45% 68% 55% 75%
Fixed costs
Cost of setup (per site) $ 10,000.00 $ 10,000.00 $ 40,000.00 $ 10,000.00
Number of locations 25.00 25.00 25.00 25.00
Cost of setup (per division) $ 250,000.00 $ 250,000.00 $ 1,000,000.00 $ 250,000.00
Variable costs
Materials cost per applicant $ 10.00 $ 10.00 $ 1.00 $ 5.00
Processing cost per applicant $ 30.00 $ 30.00 $ 30.00 $ 15.00
Additional pre-hire costs $ 20.00 $ 120.00 $ 20.00 $ ‐
Orientation and training $ 2,000.00 $ 2,000.00 $ 2,000.00 $ 1,000.00
Total variable costs $ 469,280.00 $ 2,356,240.00 $ 1,413,574.00 $ 462,720.00
Total cost $ 719,280.00 $ 2,606,240.00 $ 2,413,574.00 $ 712,720.00
Cost per hire $ 3,525.88 $ 2,486.87 $ 3,701.80 $ 1,885.50
Cost per 6 mo survival $ 5,800.65 $ 3,110.07 $ 4,807.92 $ 2,299.10
Cost per 1 year survival $ 7,818.26 $ 3,660.45 $ 6,741.83 $ 2,509.58
Eastern Washington
Media Referrals Kiosk
Applicants 4592 4046 2776
Candidates 1608 1720 1110
Hired 676 1016 444
6 month retention 446 894 342
1 year retention 352 762 284
Qualification rate 35% 43% 40%
Hiring rate 15% 25% 16%
6 month retention 66% 88% 77%
1 year retention 52% 75% 64%
Fixed costs
Cost of setup (per site) $ 10,000.00 $ 10,000.00 $ 40,000.00
Number of locations 25.00 25.00 25.00
Cost of setup (per division) $ 250,000.00 $ 250,000.00 $ 1,000,000.00
Variable costs
Materials cost per applicant $ 10.00 $ 10.00 $ 1.00
Processing cost per applicant $ 30.00 $ 30.00 $ 30.00
Additional pre-hire costs $ 20.00 $ 120.00 $ 20.00
Orientation and training $ 2,000.00 $ 2,000.00 $ 2,000.00
Total variable costs $ 1,549,200.00 $ 2,315,760.00 $ 982,936.00
Total cost $ 1,799,200.00 $ 2,565,760.00 $ 1,982,936.00
Cost per hire $ 2,661.54 $ 2,525.35 $ 4,466.07
Cost per 6 mo survival $ 4,034.08 $ 2,869.98 $ 5,798.06
Cost per 1 year survival $ 5,111.36 $ 3,367.14 $ 6,982.17
Northern Oregon
Media Kiosk Agency
Applicants 2686 3896 1290
Candidates 1102 1656 614
Hired 364 696 490
6 month retention 218 558 446
1 year retention 164 446 402
Qualification rate 41% 43% 48%
Hiring rate 14% 18% 38%
6 month retention 60% 80% 91%
1 year retention 45% 64% 82%
Fixed costs
Cost of setup (per site) $ 10,000.00 $ 40,000.00 $ 50,000.00
Number of locations 18.00 18.00 18.00
Cost of setup (per division) $ 180,000.00 $ 720,000.00 $ 900,000.00
Variable costs
Materials cost per applicant $ 10.00 $ 1.00 $ 10.00
Processing cost per applicant $ 30.00 $ 30.00 $ 30.00
Additional pre-hire costs $ 20.00 $ 20.00 $ 20.00
Orientation and training $ 2,000.00 $ 2,000.00 $ 1,000.00
Total variable costs $ 842,720.00 $ 1,526,696.00 $ 551,400.00
Total cost $ 1,022,720.00 $ 2,246,696.00 $ 1,451,400.00
Cost per hire $ 2,809.67 $ 3,228.01 $ 2,962.04
Cost per 6 mo survival $ 4,691.38 $ 4,026.34 $ 3,254.26
Cost per 1 year survival $ 6,236.10 $ 5,037.43 $ 3,610.45
Southern Oregon
Referrals Kiosk Agency
Applicants 1384 2280 1132
Candidates 610 866 522
Hired 396 346 392
6 month retention 348 266 364
1 year retention 290 216 336
Qualification rate 44% 38% 46%
Hiring rate 29% 15% 35%
6 month retention 88% 77% 93%
1 year retention 73% 62% 86%
Fixed costs
Cost of setup (per site) $ 10,000.00 $ 40,000.00 $ 50,000.00
Number of locations 16.00 16.00 16.00
Cost of setup (per division) $ 160,000.00 $ 640,000.00 $ 800,000.00
Variable costs
Materials cost per applicant $ 10.00 $ 1.00 $ 10.00
Processing cost per applicant $ 30.00 $ 30.00 $ 30.00
Additional pre-hire costs $ 120.00 $ 20.00 $ 20.00
Orientation and training $ 2,000.00 $ 2,000.00 $ 1,000.00
Total variable costs $ 894,880.00 $ 769,600.00 $ 445,120.00
Total cost $ 1,054,880.00 $ 1,409,600.00 $ 1,245,120.00
Cost per hire $ 2,663.84 $ 4,073.99 $ 3,176.33
Cost per 6 mo survival $ 3,031.26 $ 5,299.25 $ 3,420.66
Cost per 1 year survival $ 3,637.52 $ 6,525.93 $ 3,705.71