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Recruitment in small firms

Processes, methods and problems
Marilyn Carroll, Mick Marchington, Jill Earnshaw
Manchester Metropolitan University, Manchester, UK
Keywords Employment, Recruitment, Small firms, Staff turnover Abstract The article summarises findings from recent case study research into recruitment in small firms. The research aims to ascertain whether small firms follow the procedures outlined in the prescriptive literature on recruitment, and to what extent they rely on informal recruitment methods. It finds little evidence of the adoption of the recommended systematic procedures and a high use of ``tried and trusted'' methods including word-of-mouth recruitment and the hiring of ``known quantities''. The implications of this are examined. While these methods have certain advantages, they may also give rise to a number of problems. The study argues that the adoption of more formal procedures and methods could reduce staff turnover in small firms and its associated costs. However, it concludes that many small employers would remain unconvinced by the case for opening up recruitment channels, and may find their existing approaches more cost effective in the short term.

Manchester School of Management, UMIST, Manchester, UK, and

Stephen Taylor

Introduction A considerable quantity of prescriptive literature is available to managers responsible for recruiting staff aimed at helping them to increase the chances of finding the right person for the job. Most of this advice, however, seems to be aimed at large organisations. Assumptions are made about the degree of formality which would normally characterise the recruitment process and the extent to which employers are likely to adopt systematic and proactive searches for new recruits. In contrast, relatively little material is available specifically for small firms. As Hendry et al. (1995, p. 14) note, ``training and human resource management advice to smaller firms has been monotonous in its prescription of large-scale solutions''. The project on which this article is based aimed to find out how practices in small firms compare with the prescriptive ``textbook'' procedures; whether these are seen by small firms as appropriate to their needs; the recruitment problems small firms face, and what strategies they have adopted to overcome them. The project also focused on the use of informal recruitment networks. Research by Earnshaw et al. (1998) indicates that poor recruitment and selection decisions are often blamed for subsequent disciplinary problems in small firms. As a consequence, a number of these firms stated that recruitment was now being undertaken with greater care to ensure they found the ``right'' person, and this included the widespread use of informal, word-of-mouth
Employee Relations, Vol. 21 No. 3, 1999, pp. 236-250. # MCB University Press, 0142-5455

The authors are grateful to the European Regional Development Fund, which financed this project.

recruitment methods, and the hiring of ``known quantities''. While the authors concede that this is understandable from the employer's point of view, they do raise the question as to whether recruitment through informal networks reinforces existing race, gender or disability imbalances within the workforce, and whether certain groups are being permanently excluded from employment in small firms. The recruitment process Texts on recruitment invariably recommend a systematic procedure comprising four stages: an assessment of whether the vacancy needs to be filled, a job analysis, the production of a job description and a person specification. Torrington et al. (1991) suggest that in a small organisation it may be sufficient for one person to consider ``the job's important aspects and the requirements of the jobholder'' in place of the detailed job analysis/job description/person specification procedure usually recommended. Consideration is then given to whether the vacancy can be filled internally. If the vacancy is to be filled externally, the methods by which suitable candidates are to be attracted, how they should apply, and what selection techniques are to be adopted should then be decided. The prescriptive literature usually makes the distinction between formal recruitment methods including press advertisements, Jobcentres and other agencies and more informal methods, such as recommendations from existing staff. Word-of-mouth methods are recognised as having some distinct advantages. As well as the obvious advantages of speed and cost, not only is the new recruit a ``known quantity'', he or she is likely to have been given more prior knowledge about the firm and the job, and what to expect from it (Watson, 1989). Furthermore, existing employees who have recommended people tend to ``socialise'' the new recruit because it is in their interests to make sure that the new employee fits in. Word-of-mouth recruitment is, therefore, sometimes recommended to employers as a way of reducing staff turnover. Bonn and Forbringer (1992) report that in the hospitality industry in the USA, which is notorious for high rates of staff turnover, several large companies actively encourage ``referrals'' by existing employees, through the use of financial incentives and prizes for successful recommendations. However, informal methods have two main disadvantages: they may leave a pool of suitable recruits untapped, and may leave the firm open to accusations of indirect discrimination against disadvantaged groups. Despite the wealth of literature available on good recruitment practice, Kilibarda and Fonda (1997) found little evidence that the textbook advice is being followed, even by large employers. If this is the case in large organisations, what is the situation in small firms? Within the existing literature on employment in small firms there has been disagreement as to the type and quality of employment opportunities offered. While the ``small is beautiful'' approach maintains that smaller firms offer a less formal, more personal, close working environment, Rainnie (1989) has

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questioned whether interpersonal relationships are better in smaller firms. Ritchie (1993, p. 112) paints a particularly bleak picture, arguing that many small firms seem more like ``personal fiefdoms, paternalistic homesteads, backstreet workshops, temporary employment stopgaps, oppressive sweatshops and generally less desirable workplaces''. On the evidence of research both in the USA and the UK, Atkinson and Storey (1994, p. 11) conclude that the quality of employment in small firms is, in fact, lower than in large ones:
Wages are lower, training is less frequent, and the evidence for a compensating higher level of job satisfaction is weak. Furthermore, in view of the financial weakness of many small businesses F F F and their relatively low levels of unionisation, effective job security for workers is likely to be lower than for workers in large firms.

In addition, researchers such as Lane (1994) and Hendry et al. (1995) point out that small firms are less able to sustain internal labour markets. As a consequence, they may struggle to retain key staff and are more vulnerable to changes in the external labour market. Other commentators (Ritchie, 1993; Atkinson and Storey, 1994; Thatcher, 1996) suggest that these factors have serious recruitment implications for small firms, since they are therefore unlikely to be able to attract as high a calibre of employee as large firms. Indeed, Atkinson and Meager (1994) argue that it is only when businesses cease to become small that recruitment problems can be resolved. They also point out that for the small business, the engagement with the external labour market is different from that of a large one. It is likely to be less frequent, ``less predictable and less capable of systemisation'' (1994, p. 39). Moreover, a single event of recruitment is likely to have more effect because of the smaller size of the business. Indeed, as Atkinson and Meager (1994, p. 39) note, ``the smaller a business is, the more critical is its engagement with the external labour market likely to be, and recruitment is likely to be the most critical aspect of it''. Evidence suggests that small firms do, in fact, find it hard to attract the calibre of staff they need. According to Atkinson and Storey (1994) small firms report labour market problems more frequently than any other, including financial problems. The most frequent complaint was with the quality of labour available, including a lack of basic literacy skills, particularly among young people. Scott et al. (1989) also found evidence of dissatisfaction with the quality of labour available for small firms. It is perhaps not surprising that this dissatisfaction was greater in the high-technology sectors since these are more likely to experience a genuine skills gap. In the literature on small firms frequent reference is made to the widespread use of informal, word-of-mouth recruitment methods. However, Scott et al. (1989) found sectoral variations in small firms' approach to recruiting staff. While in traditional manufacturing and service sectors there was a preference for informal methods, there was a much more widespread use of formal methods in the high-technology sectors. Atkinson and Meager (1994) found that the use of word-of-mouth recruitment methods varied according to the type of employee being recruited; while it was the most popular method for

recruiting managers and manual workers, more formal methods tended to be adopted for recruiting clerical and technical employees. They also found evidence of a correlation between business size and the adoption of formal recruitment procedures: ``For the very smallest businesses the availability of a known individual is virtually a precondition for recruitment'' (1994, p. 41). However, once a business reaches a certain size it is suggested that more formal procedures might need to be adopted in order to cope with the greater number of recruitment events. Even so, there was evidence that these slightly larger firms still continue and prefer to use informal methods where possible, raising the question of whether managers who run small businesses ever believe that formal methods are appropriate for their needs. Holliday's (1995) in-depth case study research in three small firms also found recruitment by word-of-mouth to be the most common method. Often an initial approach would be made when it was known that a suitable employee had been made redundant by a competitor. The firms preferred to recruit people who were already trained and experienced, and the collapse of another similar local firm would be ``viewed with relish'' as a provider of a ready-made pool of experienced potential recruits (p. 146). Family members of existing employees were also recruited frequently, which Holliday (1995, p. 142) believes is ``inextricably linked with the most important quality which an individual can bring to the job, which is to be able to `fit in' with the existing workforce and company culture''. The notion of ``fitting in'' is a recurring theme in the literature on recruitment in small firms. Curran and Stanworth (1979), Scott et al. (1989) and Kitching (1994) all suggest that the employer's judgement of a potential recruit as a person is seen as the most important aspect of selection. Each of the case study firms in Holliday's research had a mix of ``core'' and ``transient'' workers, in contrast to Atkinson's (1984) ``core/periphery'' model of the flexible firm, which sees the core workers as specialists, or multi-skilled, while the periphery consists of semi- and unskilled workers. Holliday's ``core/ transient'' model makes the distinction between those employees who can ``fit in'' either socially, or with the ``idiosyncratic working methods'' adopted by small companies and consequently stay with the firm, and those who cannot, and leave shortly after appointment (1995, p. 149). However, contrary to the more usual view of small firms being unable to provide opportunities for career progression, she found that internal promotion was common in the case study firms, not only because of cost, but for two further reasons. First, job descriptions were vague, the jobs themselves changed and developed over time, tasks were added and, to some extent, employees ``created their own jobs'' (Holliday, 1995, p. 143). It would, therefore, be difficult for an ``outsider'' to understand the range of tasks that an individual would undertake. Second, an internal promotee is already ``encultured'' into the organisation. Despite the widespread use of word-of-mouth recruitment methods, research indicates that small firms may well be unaware of the possibility of indirect discrimination. Scott et al. report that the Sex Discrimination Act was of no

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concern for any of their case study firms and there was ``almost total ignorance F F F since no firm reported having ever come into contact with it'' (1989, p. 88). In one survey conducted by Lane (1994) in small and medium sized enterprises, 67 per cent of respondents said that equal opportunities issues arose either rarely or never in their own companies. The majority of firms surveyed by Scott et al. (1989) did not think their recruitment system was adequate, and half believed it was a major problem. Those using formal methods were less satisfied with recruitment procedures than those using informal methods. The authors suggest that the dissatisfaction stemmed from an unrealistic expectation of the calibre of recruits available in the local labour market, rather than with their own procedures. The research and sample Our research adopted a case study approach. It was decided to limit the case studies to five sectors in order to ascertain whether industry-specific factors influenced the procedures adopted. We aimed to select a cross-section of industries covering service, manufacturing and transport, involving different types of occupation from manual to professional. We also wanted to include some sectors where occupations tend to be gender segregated, as well as some which are known to have recruitment problems and/or high levels of staff turnover. The project was funded by the European Regional Development Fund, which imposed limitations on the sectors which could be studied, as well as restricting the geographical area to Greater Manchester, Lancashire and Cheshire. The sectors chosen were hotels and catering, road haulage, nursing/ residential homes, printing and solicitors' firms. A total of 40 firms were involved, eight in each of the five sectors. Before carrying out the research an advisory group comprising representatives of employers' organisations and an independent consultant was formed. The group was very helpful in providing background information on the industries concerned, identifying issues which might be explored, and gaining access to suitable firms. Access to 13 of the case study firms was gained with the help of advisory group members. A further nine were suggested by firms which had already taken part in the research. The source of the remaining 18 was through personal contacts, either direct or indirect, of members of the research team. While it is recognised that these methods of selecting the case study firms could lead to an element of bias in the sample, they did prove to be extremely successful. Only two of the firms which were contacted declined to participate, and in both cases the reason given was lack of time. The case studies were carried out over a five-month period during the spring and summer of 1998, and consisted of semi-structured interviews with the business owner, partner, director or other manager responsible for the recruitment of staff. The interview covered the following areas: general information about the business, the composition of the labour force, human

resource management practices in general, and the recruitment process in particular, awareness of the legal issues associated with recruitment, recruitment problems and any steps taken to overcome them. The size of the firms ranged from 7 to 207 employees. Of the firms, 13 had more than one establishment, and individual establishment sizes ranged from 2 to 130 employees. A breakdown of the sample in terms of sector and total number of employees is shown in Table I. The case study organisations in the hotels and catering sector comprised a diverse range of bars, pubs, restaurants, a club and a country house hotel. Three were small, independent chains with a number of outlets. The majority of the employees were bar staff, waiting staff, kitchen staff or cleaners. Many worked part-time, and a large number were students. Most of the road haulage companies were well-established family firms. The majority of employees were drivers, but companies also employed mechanics, warehouse staff, general maintenance yard staff, transport managers, traffic operators, clerical/administrative staff and cleaners. Nearly all the staff worked full-time. The case study homes comprised a sample of eight nursing or dualregistered (nursing and residential) homes, all relatively new businesses between 7 and 14 years old. Most of the home owners had an NHS background, many were qualified nurses and one was a retired GP. The homes were heavily regulated and subject to regular inspections by the District Health Authorities, Social Services Departments and the Registered Nursing Homes Association. Most of the homes' employees, i.e. nurses, care assistants and domestic staff, were women and many worked part-time. The printing industry in the UK is characterised by a large number of very small firms, and the case study organisations reflected this with six having less than 25 employees. The industry has undergone major changes in recent years as trade union influence has declined and computers have revolutionised production. Jobs in the industry fall into three main categories: pre-press, printing and finishing. Work is heavily segregated along gender lines; the majority of printers in the case study firms were men, while most women worked in the finishing department as ``table-hands''. The case study firms of solicitors comprised a diverse sample in terms of size and type of work undertaken. Most had, or were in the process of obtaining, a legal aid franchise. Jobs are divided into two main categories: fee
Under 25 Hotels and catering Road haulage Nursing homes Printing Solicitors Total 3 6 3 12 25-49 4 6 1 11 50-99 7 2 1 1 11 100 and over 1 1 4 6

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Table I. The case study firms

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earners (qualified solicitors) and support staff. The majority of support staff in the case study firms were women. On the qualified side, although approximately equal numbers of men and women are now entering the profession they tend to specialise in different areas of work, with more women opting for family and childcare work, while men seem drawn to commercial and criminal work. Employment in the case study firms reflected this divide. Recruitment in the case study firms The first aim of the research was to ascertain whether small firms adopt similar recruitment procedures to the first four stages prescribed in the literature. Table II shows the number of firms in each sector which follow each of these stages. The solicitors' firms had most scope for considering alternatives to recruitment. For example, if a solicitor left, his or her caseload might be shared out among others. In contrast, the nursing homes had no scope at all for considering alternatives to recruitment, as every vacancy had to be filled because the inspecting authorities impose a ``staffing ratio'' of carers to residents. Other firms said they could not consider alternatives to recruitment because they were too small, ``we work on tight numbers anyway'', or staff are ``already stretched''. We found no evidence whatsoever of formal job analysis being carried out systematically. Indeed, most of the respondents were unsure of the meaning of the term. Job descriptions were, however, used by the majority of firms, although two only had them for certain categories of staff (office staff and managers). Flexibility was the main reason for not having job descriptions they were thought to be ``too rigid''. Another reason given was that the content of the job was ``obvious'' and ``everybody knows what's involved''. Only nine of the firms which had job descriptions had gone on to produce person specifications, however. This suggests that job descriptions may be seen more as a source of information for existing staff, rather than a stage in the recruitment process. A second aim of the research was to examine the methods small firms use to attract candidates. Table III shows the methods used by the firms in each sector. We have classified these recruitment methods into four types: ``internal recruitment'', ``closed searches'', ``responsive'' methods and ``open searches''. We will deal with each of these in turn below.
Hotels and catering Does the vacancy need to be filled? Job anaysis Job description Person description 1 0 5 1 Road haulage 1 0 2 1 Nursing homes 0 0 7 1 Printing 3 0 3 1 Solicitors 5 0 7 5 Total (n = 40) 9 (23%) 0 24 (60%) 9 (23%)

Table II. The recruitment process

Hotels and Road Nursing catering haulage homes Printing Solicitors Internal recruitment Existing staff Offering permanent jobs to temps Closed searches Recommendations from staff Network of contacts Poaching Former employees Contacts in education Recruitment consultants Responsive Former applicants Casual callers Register of interested applicants Open searches Jobcentres Other agencies Notice in own bar/shop Local press National press Specialist journals Other open 8 1 8 3 3 4 2 0 4 4 7 8 2 5 7 1 3 0 5 0 8 2 3 7 0 0 2 4 4 7 2 0 7 0 1 0 3 0 8 0 3 5 5 0 2 7 1 7 3 0 8 0 1 5 5 0 8 2 1 5 4 0 7 6 8 7 2 1 6 1 1 0 6 2 8 4 3 6 5 2 7 0 8 8 4 0 7 1 6 0

Total (n = 40) No. 27 3 40 11 13 27 16 2 22 21 28 37 13 6 35 3 12 5 (13) (%) (68) (8) (100) (27) (33) (68) (40) (5) (55) (52) (70) (93) (33) (15) (88) (8) (30)

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Table III. Methods of attracting candidates

Although some firms might be considered to be too small to offer opportunities for career progression or movement into a different type of work, there was a great deal of evidence of the operation of internal labour markets. Reasons given by the respondents were ``to motivate people'', ``to encourage loyalty to the firm'', ``better the devil you know'', or because a lower level vacancy would be easier to fill externally. In the hotel and catering sector and solicitors firms there was most scope for internal promotion. Hotels and catering sector managers tried to identify people with aptitude and ability and promote them into a more senior or supervisory role when a vacancy arose. Those solicitors' firms which took trainees said they liked to keep them on if possible after they qualified and there is a recognised career path to associate, salaried partner and equity partner. In the printing and road haulage sectors there were very few opportunities for promotion because of the nature of the work. However, printers sometimes had the opportunity to move on to operating a bigger machine and drivers to a larger vehicle. The nursing homes, however, found it most difficult to offer opportunities for career progression because, for a care assistant, this would mean leaving to undertake formal nurse training. Closed searches were among the most widely used recruitment methods in the case study firms. All had used recommendations from staff, 27 per cent had

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found staff through a network of contacts in the industry and 13 per cent had poached staff directly from competitors. One printing company had been able to fill all its vacancies by these methods since starting six years ago. Employing friends and family members of existing staff was especially common in the hotels and catering, road haulage and nursing home sectors. The view was expressed that people recruited in this way were more likely to ``blend in'' well. In the hotels and catering sector, especially for jobs which involve cash-handling, some knowledge of the background of the potential recruit was thought essential. However, a few employers expressed reservations about employing friends and family members because ``if you fall out with one you lose two''. For solicitors the recruitment of fee-earners ``through the network'' was widespread including offering employment to solicitors who had worked for ``the other side'' in a case. The firms had ample opportunities to assess the capabilities of potential recruits, by observing how they performed in court, for example. Attitudes towards poaching staff varied. While some interviewees would poach staff without any reservations, others regarded the practice as ``unethical''. As the manager of an Indian restaurant put it, ``it happens very often round here but I don't do it to other people because I don't like it happening to me''. Sometimes competent staff were ``poached back'' after leaving to work for another employer and, indeed, the hiring of former employees was common, especially in the road haulage industry, where drivers often moved around from one company to another. In all sectors, apart from road haulage where drivers have to be at least 21 to train, some firms recruited direct from local educational establishments. Typical reasons for using closed searches included the belief that an existing member of staff is unlikely to recommend someone unsuitable, the preference for a ``known quantity'', and valuing someone who would ``fit in''. Only two of the interviewees (solicitors) expressed reservations about informal, word of mouth recruitment because of the equal opportunities implications, and because it was thought preferable to consider ``the whole field''. Responsive recruitment methods were also widely used. Over half looked at former applications again if a similar vacancy arose. Similarly, over half would offer work to casual callers who contacted the firm either by telephone or in person, provided there was a vacancy and the person was suitable; 70 per cent kept a register of interested applicants or a file of CVs. To some extent, this approach is rather less proactive than the others, relying on a pool of potential recruits who had happened to contact the firm. On the other hand, it could be argued that these individuals utilised their initiative in seeking work, and might be all the more attractive to employers because of this. Of the more formal ``open search'' recruitment methods, advertising in Jobcentres and the local press were the most common. Jobcentres were routinely used by almost all the case study firms, at least for some categories of staff. The advantages of Jobcentres were said to be that they are free, and the advertisement stays in until the vacancy is filled. However, while some interviewees found the Jobcentres to be a good source of new recruits, others

expressed dissatisfaction with the standard of service offered. The most frequent complaints were that candidates were ``not properly vetted'', they frequently failed to turn up for interview, or they were ``not really interested in finding a job''. Fewer firms used other recruitment agencies, mainly because they were regarded as expensive. Specialist driver agencies were criticised by the road haulage companies, with only two having used them, and then merely as a last resort. Once again, the people on their books were thought to be ``not properly vetted'', inexperienced, or not looking for permanent, full-time work. Although most firms had advertised in the local press, some only did so when less expensive methods had failed to produce a suitable candidate. The whole process of advertising, an initial telephone screening (sometimes), sifting through CVs or application forms, shortlisting, interviewing, checking references (possibly) and making a selection decision was thought to be not only costly in terms of management time, but was regarded as a ``hit and miss affair''. Only three firms had advertised in the national press, and in each case this was a ``one-off'' to fill a management position rather than being used as a regular recruitment method. Specialist journals were, however, more widely used, especially by the solicitors' firms. Another open search method popular with the bars and pubs was placing a notice of the vacancy in the bar itself, which was felt had the advantage of attracting the same type of person as the establishment's customers. Other open search methods of recruitment used by the nursing homes were placing notices of vacancies in post offices and newsagents and, in one case, advertising on local radio. Having reviewed the extent to which these firms followed prescriptions about the recruitment process and the methods they used to attract staff, we can now turn to an assessment of the problems encountered in recruitment. Despite using a variety of methods, several of the case study organisations reported difficulties attracting staff. In some cases these difficulties were compounded by high staff turnover rates so that, despite their small size, the firms had ongoing recruitment drives, involving permanent advertisements in the Jobcentre and/or regular advertisements in the local press. The road haulage sector was particularly affected by recruitment difficulties. A large number of LGV licence holders no longer work in the industry and all the companies reported a shortage of ``good quality'' staff. In fact, two of the companies reported that the shortage of suitable drivers had hampered their expansion plans. Staff turnover rates were also high. Most of the case study companies reported having a ``core'' of long-serving drivers while others constantly ``come and go''. Recruitment and retention problems were thought to come about for a number of reasons. First, truck driving is no longer seen as a prestigious job and wages have decreased in real terms. Second, hours are long and unsocial, and people are now said to be more reluctant to stay away from home. In addition, some companies faced competition for staff from other industries which were seen as more attractive, and others competed for staff with road haulage companies in the area. Most companies looked for experienced drivers, although two interviewees said they

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were happy to take inexperienced people and train them. One company held interviews and carried out test drives for prospective drivers every weekend and a list of suitable candidates was kept on the basis that even if there was no immediate vacancy there was likely to be one in the near future. Because of the long unsocial hours, and the implications for social and family life, it was said to be important to spell out, especially to new drivers at interview stage, exactly what the job entailed. Other strategies for reducing turnover included tightening up on selection procedures including test drives, interviews and requiring references introducing training opportunities and a pension scheme open to longer serving staff, providing better vehicles, bonus and profit-sharing schemes and, in one case, designing pay scales to reward long service as well as good performance. Many of the nursing homes also had problems with high turnover of staff and a shortage of applicants, especially qualified nurses. The homes cannot compete with the NHS in terms of non-pay benefits such as pensions and sick leave, fewer people are entering the profession, and many of the homes now rely on older nurses who are approaching, or even past, retirement age. For care assistants, low wages, unsocial hours and the nature of the work itself were seen as barriers to recruitment, and the homes relied on a pool of people in the local labour market who might, for example, find it difficult to find other work to fit in with family commitments, or who were drawn to working in a caring profession. Some homes used press advertisements especially designed to be eye-catching and to raise the profile of care work, and one had advertised on local radio. Other recruitment and retention strategies included offering working hours to suit the individual, providing opportunities to train for NVQs and giving automatic pay increases after a qualifying period of service. One matron expressed the view that low pay (typically between 3.00 and 3.75 an hour for care assistants) was not the main reason why people left, but instead it was the nature of the job itself. One owner invited potential recruits without experience to a ``fly-on-the-wall'' evening to let them see the reality of the job, and reduce the likelihood of their leaving in the early stages of employment. Once new recruits had overcome the initial stages and were used to care work, there was more likelihood that they would stay and, again, many homes reported that they had a ``core'' of long-standing and loyal employees. In the hotels and catering sector part-time staff, especially bar staff, were not difficult to find because large numbers from the local student population looked for this type of work. However, full-time staff, especially managers, were more difficult to recruit. Another frequently reported problem was finding suitably qualified and experienced kitchen staff. On the catering side there was said to be a skills shortage. It was felt that colleges in the area did not turn out enough qualified people each year to meet the demand created by the ever-increasing numbers of new outlets. The Indian restaurant had a further problem because the local colleges did not teach Asian cooking. The hotels and catering sector is notorious for high rates of staff turnover and most of the case study organisations seemed resigned to this situation, regarding it as a ``fact of life''.

However, some of the organisations considered their turnover to be lower than others. Reasons given included ``a good team spirit'', ``hands-on'' management style, paying above the ``going rate'', looking after staff well, management accessibility, a ``family atmosphere'' and the interaction of job and social life. In general the case study printing firms did not have a problem with staff turnover, and their most common concern was that the printing industry is facing a skills shortage. As older printers retire not enough young people are entering the industry, perhaps because it still has a ``dirty'' ``old-fashioned'' image when, in fact, it is now very high-tech. Furthermore, the smallest firms had problems taking on trainees because of the need to keep production going, and because trainee pay rates seemed relatively high to the employers, even though it was several months before they were producing any useful output. The firms usually aimed to recruit someone with experience of operating a particular type of machine. In the printing industry, for many years unions played a major role in recruitment, and half the case study firms regretted that this was not now a good source of potential recruits. Staff turnover in the solicitors' firms was also said to be low, particularly among fee-earners. Apart from occasional difficulties finding suitable support staff, or solicitors in some specialisms, attracting staff was not seen as a problem. On the contrary, the biggest problem the firms faced was dealing with the large number of applications received each year for traineeships, typically between 1,000 and 2,000 each year for one or two vacancies. Sifting through these was extremely time consuming and most of the applicants, according to the interviewees, would be perfectly suitable for the job. None of the employers had actually calculated the direct and indirect costs of recruitment and, indeed, some said they would rather not know. Typical responses were ``it's a necessary evil'' and ``I don't need anything else to horrify me''. Although several of the employers admitted to having made expensive mistakes, generally high levels of satisfaction with recruitment methods were expressed. Most employers used a range of different methods and many said ``I don't know how else we'd do it''. Where there were problems, they were thought to stem from a shortage of suitable candidates, rather than recruitment methods as such. Conclusions The main purpose of this paper has been to outline and analyse the ways in which recruitment takes place in small firms, drawing on data collected during 1998 from a sample of 40 organisations in the North West of England. The project focused on five diverse industries (hotels and catering, road haulage, nursing homes, printing and solicitors) in order to examine recruitment in a range of circumstances, including workplaces where there are significantly different proportions of men and women in employment. Despite this diversity, we can not claim that the findings are capable of generalisation to the workforce as a whole, although it is highly likely that similar processes, methods and problems are observable in other workplaces. Once the more

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detailed results from the 1998 Workplace Employee Relations Survey (Cully et al., 1999) become available, it may be possible to draw wider conclusions about employment practices in firms employing ten or more people. As might have been expected, the research found little in the way of formalised and systematic procedures which are prescribed in the textbooks. For example, none of the firms carried out any form of job analysis, and less than a quarter overtly questioned whether or not the vacancy needed filling or drew up a person specification. Job descriptions were, however, used in 60 per cent of the firms. In terms of the methods which were used, all 40 firms used recommendations from existing staff, and at least two-thirds used Jobcentres, local newspapers, internal labour markets, the employment of former employees and registers of interested applicants. Many of these could be categorised as relatively closed searches (of internal and external labour markets) or as responding to approaches from interested applicants. On the other hand, there was a surprisingly high use of open searches, such as through Jobcentres and the local press, as well as through other channels which had proved effective in the past such as through a local college. Whatever the method chosen however, it tended to rely heavily on tried and trusted techniques/methods; for example, internal recruitment and Jobcentres were used by all the hotel and catering establishments, former employees were recruited by all but one of the road haulage firms, local press advertisements were used by all the nursing homes, registers of interested applicants were universal at the printing firms, while all the solicitors used registers and Jobcentres for at least some grades of staff. While this may be potentially problematic for a number of reasons, not least in terms of social exclusion and the strengthening of imbalances in the workforce, it does have some advantages for these small firms. In particular, it makes the recruitment process simpler to conduct given that it relies on existing channels and contacts, it does not require specialist expertise in personnel to undertake, and it reduces the risk and uncertainly which is typically associated with hiring new recruits. It is self-evident that the consequences of ``inappropriate'' selection are more immediately apparent in a workplace which employs few people, and there is little opportunity for staff to be moved to other departments or establishments. Clearly, there are differences between firms in different size bands and in different industries, and this is something we will explore in a separate paper. There are a number of implications from these results. First, the ``core/ transient'' model proposed by Holliday gains support from our study, and is a much better way of characterising the employment relationship in small firms than the core/periphery model which is so widely quoted. We would like to suggest that the use of stability indices for labour turnover would be rather more effective than simple labour turnover calculations expressed in terms of wastage rates; indeed, in several of these organisations, many new recruits did not last longer than a few days. In many cases there was an almost fatalistic acceptance of high turnover rates. Managers in small firms seem unaware of the

``costs'' of recruitment which tend to become manifest if employees leave within a few days of starting, if they fail to perform at a satisfactory level or employers have to appear before an employment tribunal to defend their actions. Second, given that small firms are generally recognised as a major source of new employment opportunities, despite the publicity gained by large employers which open new establishments, it is worrying that their recruitment practices tend to be ``exclusive'' in nature and often not ``open'' to applicants who fail to find out about these opportunities. Third, the dominant emphasis at the recruitment stage on ``interpersonal fit'', while understandable, is potentially unstable given that relationships change over time and previously-close friendships can be broken. Similarly, the highly personalised management styles which characterise small firms can lead to reassessments of employee worth and contribution, with the danger that once trust has been lost it is almost impossible to maintain professional working relationships. Often the result is a ``forced'' dismissal or resignation (Goodman et al., 1998, pp. 544-45). Of course, the key question remains of whether or not small firms should be encouraged to adopt more systematic recruitment processes and methods, and if so how this might be done. With some exceptions, it is unlikely in our view that small employers would be convinced by the moral and ethical case for opening up recruitment channels so as to widen the net and attract other applicants. The business case might be more persuasive, as too would examples of firms which had saved money in the longer term from more systematic recruitment such as through lower levels of labour turnover in the early stages of employment, through better quality work and less defects, through employees offering alternative perspectives on work, or through less need to discipline or dismiss employees on grounds of poor performance or misconduct. Ultimately, however, the business case is also fragile as employers may find it more cost effective in the short term to continue with existing relatively amateur approaches. Whatever happens, it is clear that small employers need to give rather more thought and attention to the management of employment than is currently the situation.
References Atkinson, J. (1984), ``Manpower strategies for flexible organisations'', Personnel Management, August, pp. 28-31. Atkinson, J. and Meager, N. (1994), ``Running to stand still: the small firm in the labour market'', in Atkinson, J. and Storey, D. (Eds), Employment, the Small Firm and the Labour Market, Routledge, London. Atkinson, J. and Storey, D. (1994), ``Small firms and employment'', in Atkinson, J. and Storey, D. (Eds), Employment, the Small Firm and the Labour Market, Routledge, London. Bonn, M.A. and Forbringer, L.R. (1992), ``Reducing turnover in the hospitality industry: an overview of recruitment, selection and retention'', International Journal of Hospitality Management, Vol. 11 No. 1, pp. 47-63. Cully, M., Woodland, S., O'Reilly, A. and Dix, G. (1999), Britain at Work: As depicted in the 1998 Workplace Employee Relations Survey, Routledge, London.

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Curran, J. and Stanworth, J. (1979), ``Self selection and the small firm worker a critique and an alternative view'', Sociology, Vol. 2.7 No. 2, pp. 427-44. Earnshaw, J., Goodman, J., Harrison, R. and Marchington, M. (1998), Industrial Tribunals, Workplace Disciplinary Procedures and Employment Practice, Employment Relations Research Series Number 2, Department of Trade and Industry, London. Goodman, J., Earnshaw, J., Marchington, M. and Harrison, R. (1998), ``Unfair dismissal cases, disciplinary procedures, recruitment methods and management style: case study evidence from three industrial sectors'', Employee Relations, Vol. 20 No. 6, pp. 536-50. Hendry, C., Arthur, M.B. and Jones, A.M. (1995), Strategy through People Adaptation and Learning in the Small-Medium Enterprise, Routledge, London. Holliday, R. (1995), Investigating Small Firms: Nice Work?, Routledge, London. Kilibarda, P. and Fonda, N. (1997), ``Random selection'', People Management, 4 December, pp. 36-9. Kitching, J. (1994), ``Employers' workforce construction policies in the small service sector enterprise'' in Atkinson, J. and Storey, D. (Eds), Employment, the Small Firm and the Labour Market, Routledge, London. Lane, D.A. (Ed.) (1994), ``People management in small and medium sized enterprises'', Issues in People Management, No. 8, Institute of Personnel and Development, London. Rainnie, A. (1989), Industrial Relations in Small Firms: Small Isn't Beautiful, Routledge, London. Ritchie, J. (1993), ``Strategies for human resource management: challenges in smaller and entrepreneurial) organisations'', in Harrison, R. (Ed.), Human Resource Management: Issues and Strategies, Addison-Wesley, Wokingham. Scott, M., Roberts, I., Holroyd, G. and Sawbridge, D. (1989), Management and Industrial Relations in Small Firms, Department of Employment Research Paper No. 70. Thatcher, M. (1996), ``The big challenge facing small firms'', People Management, 25 July, pp. 20-5. Torrington, D., Hall, L., Haylor, I. and Myers, J. (1991), Employee Resourcing, Institute of Personnel Management, London. Watson T. (1989), ``Recruitment and selection'', in Sisson, K. (Ed.), Personnel Management in Britain, Blackwell, Oxford. (Marilyn Carroll is a Project Officer, Mick Marchington is Professor of Human Resource Management, Jill Earnshaw is Senior Lecturer in Employment Law, all at Manchester School of Management, UMIST, PO Box 88, Manchester M60 1QD, UK. Stephen Taylor is Lecturer in Human Resource Management at the Manchester Metropolitan University, All Saints, Manchester M15 6BH, UK. Further information about this project is available from Marilyn Carroll at UMIST.)