AN ANALYSIS OF DETERMINANTS OF RECRUITMENT AND SELECTION OUTSOURCING IMPLEMENTATION

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1 ACTA UNIVERSITATIS AGRICULTURAE ET SILVICULTURAE MENDELIANAE BRUNENSIS Volume Number 1, 2015 htt://dx.doi.org/ /acn AN ANALYSIS OF DETERMINANTS OF RECRUITMENT AND SELECTION OUTSOURCING IMPLEMENTATION Jana Cocuľová 1 1 Deartment of Management, Faculty of Management, University of Prešov in Prešov, 17. novembra 1, Prešov, Slovak Reublic Abstract COCUĽOVÁ JANA An Analysis of Determinants of Recruitment and Selection Outsourcing Imlementation. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 63(1): In order for the comanies to maintain their ositions in the current market, they are forced to find new oortunities and ways to streamline their oerations. One of such otions for the comany is outsourcing, which is the subject of this aer. Given the increasing trend of outsourcing in human resource management, the article deals secifically with the issue of outsourcing of selected human resource (HR) activity the recruitment and selection rocess (R & S). The main goal of the research study is to establish a set of determinants of the success of of R & S outsourcing. The research was carried out by using a questionnaire survey from February 2013 as the rimary data source. Questionnaires were distributed to a samle of organizations oerating in Slovakia. In order to achieve the research objective, six hyotheses have been contested by correlation analysis and Mann Whitney U test, while in five cases statistically significant correlation between selected determinants and the erceived success of the outsourcing have been confirmed. Keywords: outsourcing, recruitment and selection rocess, outsourcing INTRODUCTION In the current climate, which is characteristic in its raid ace of develoment and the need for high flexibility, HR management becomes the subject of many changes. One asect that changes the current form of roviding HR activities in the comany is outsourcing. Outsourcing of HR activities has started to develo in Slovakia after Here the main imetus was oening u to foreign investors, whereas in the Western countries outsourcing of HR activities was already a common form of business management. First forms of selective outsourcing started to be used, which consisted of transferring one or eventually several HR activities to an external sulier. After 2000 there were some cases of comlex outsourcing, in which the entire HR management is moved to an external organization. However, as Chaluová (2006) has reorted, on the Slovak market, selective outsourcing still revails, one of the reasons being that there is a limited number of organizations that could rovide comlex HR outsourcing. Organisations using HR outsourcing can gain certain advantages. Heeng (2014) lists three advantages of HR outsourcing and that is economic value, technological value and strategic value, these increase the level of HR management and the cometitive advantage of the organization. The economic advantage of outsourcing means that outsourcing can make the enterrise use the outsourcing service rovider of economies of scale advantage and low cost service for better services, human resources management and the ability to kee receiving outsourcing the changing of advanced equiment, advanced technology and sace exansion of the human resources management advantages. Technological value of outsourcing, as the author states, relates to the ossibility of obtaining new technology, which is a rerequisite for ensuring a high level of HR management. The author also emhasizes the strategic value of outsourcing, since outsourcing relieves the HR managers from a number of administrative and oerational activities, so they can focus on strategic HR management activities more. 185

2 186 Jana Cocuľová Outsourcing has infiltrated the world of HR management in a major way and is a growing trend today (Choudrie, Grey and Selamat, 2009; Galanaki and Paalexandris, 2007). A recent study which surveyed more than 200 HR managers and CEOs shows, that HR management outsourcing is undergoing a dynamic growth. It reveals, that u to two-thirds of the resondents consider outsourcing a solution that is designed to ensure quality of service and cost savings (Chaluová, 2006). Even though the use of outsourcing in HR has become a growing trend, its alication does not always bring about the results the comany hoed for (Goldschmidt, 2009). It is not uncommon that the set-u goals are not reached when outsourcing is used. This was confirmed by a survey executed by the American Management Association, which found that three-quarters of the resondents roclaimed that they did not reach the set-u goals after outsourcing was used and half of the resondents rofessed that they had to bring back at least one outsourced activity back to the firm (McIvor, 2005). Authors Lihua, Jiang and Jing (2013) conducted research in order to define the factors that influence the degree of utilization of outsourcing. They found that the degree of use of outsourcing is determined by factors such as the degree of intervention of to managers and his decision-making ower, strategic osition and asset secificity. A art of the research is the finding that firm first evaluates the imortance of the strategic osition of certain management functions when deciding on HR outsourcing. Human resources management business whose asset secificity is higher, if it is outsourced, suliers may not be able to fully understand the culture so outsourcing risk is higher. Ates (2013) found out that the key factors in outsourcing success are the decision rocess, artners, contract and artnershi quality. Partnershi quality, which is the indeendent variable of the study, is formed by factors such as trust, business understanding, benefit/risk share, conflict and commitment. These factors are determined to be affected ositively by certain determiners such as joint action, communication quality, information sharing, mutual deendency, cultural similarity and to management suort. Another authors state, that the indicators such as the ability to access new technologies, skills and resources/caabilities and cost cutting and cost shifting contribute heavily to shae the decisions makers ercetion towards the benefits of outsourcing (Jain and Ramachandran, 2011). Another interesting research study carried out in 2013 is by authors Ee, Halim and Ramayah (2013). The subject of the research is the successful of outsourcing, while the authors focus on the quality of the relationshi between the sulier and rovider of the outsourced service. The analysis has shown that the factors which influence the artnershi between sulier and rovider, such as trust, business understanding and communication have a significant ositive imact on HR outsourcing success. Therefore, a good relationshi between the sulier and rovider is a rerequisite for achieving success in outsourcing. Other reconditions for effective outsourcing include identifying clear goals and exectations of outsourcing, the right choice for a artner, building trust between workers, getting the right eole to imlement outsourcing, setting-u an adequate suorting infrastructure, establishing objective erformance criteria as well as readiness to change and the related need for flexibility (Faohunda, 2013). Desite certain limitations and difficulties, outsourcing leads to the increase of rofits and market share but it must be handle carefully so as not lead to decline in organizational erformance. An imortant factor which contributes to outsourcing bringing the desired results is its successful This realization led to a research study, whose aim is to define a set of factors determining the successful of R & S outsourcing through exloring of statistically significant correlation between selected factors In order to achieve the research objective, six hyotheses have been contested by correlation analysis and Mann Whitney U test. The formulation of the hyotheses whose main object of study is the successful of R & S outsourcing, is based on the review of revious research in the field and contributors different aroaches to the toic. Useem and Harder (2000) deal with the question of management in the rocess of outsourcing These authors claim that u to 80% of managers surveyed confirmed the suort of the management during the outsourcing lan. As Kizilos and Reshef (1997) said, to management lays an imortant role in the romotion of innovation in the field of human resource management in resource allocation and in ensuring access to relevant information. H1: There exists a statistically significant correlation between management suort and the erceived success of the R & S outsourcing Cohen, the vice resident of the comany Garnter, states that in regards to unsuccessful outsourcing, it is the chaotic and imulsive outsourcing that creates a lot of roblems. The roblem is that some comanies decide to enter the outsourcing relationshi without deeer analysis. Another author who emhasizes a structured aroach when deciding on the use of outsourcing is Kóňa (2006). These claims will try to be verified in formulation of the hyothesis 2. H2: There exists a statistically significant correlation between the emloyment of analyses in the decision rocess

3 An Analysis of Determinants of Recruitment and Selection Outsourcing Imlementation 187 The of outsourcing is accomanied by many changes, such as the changing role of the workers who used to rovide R & S services and who must adat to new challenges in the organization. Change of their former work rocess can be frustrating and demotivating, so adequate rearation for the of these changes using change management lan is recommended (Bos, 2008). The question of whether staff rearation is related to the successful of outsourcing is formulated in the following hyothesis. H3: There exists a statistically significant correlation between the rearation of emloyees for changes associated with the of outsourcing and the erceived success of the R & S outsourcing Outsourcing decisions are often made with no regard to the long-term cometitiveness of the comany. There are few comanies that consider the strategic asect in their outsourcing decisions, the greater art of the businesses is simly affected by the sudden need for cost reduction (McIvor, 2000). In ractice, strategic considerations are still an overlooked factor in the use of outsourcing (Potkány, 2005). Whether this asect affects the successful of outsourcing solutions is verified by the hyotheses 4. H4: There exists a statistically significant correlation between a strategic aroach to outsourcing and the erceived success of the R & S outsourcing As Potkány (2005) states, in ractice outsourcing rovides short-term oerational solutions to roblems, resulting in a limit otential benefit that outsourcing can bring to these enterrises. The following hyothesis is set to verify these arguments. H5: There exists a statistically significant correlation between the lanned duration of the use of outsourcing For successful outsourcing it is necessary to rovide monitoring of services erformed, to evaluate measured criteria and to comare them with the rojected figures. In most cases, monthly evaluation of achieved results is recommended (Caruth and Caruth, 2010). To verify the claim the following research hyothesis is formulated. H6: There exists a statistically significant correlation between the management of relationshi with the sulier and the erceived success of R & S outsourcing MATERIALS AND METHODS The object of the current research study is the issue of R & S outsourcing with a focus on the analysis of the factors, which we assume affect the successful of outsourcing in organizations. The following objective has been set for the study: To establish a set of determinants of the successful of R & S outsourcing by the establishment of statistically significant links between selected factors and the erceived success of the outsourcing Based on the analysis of the arguments of various authors, otential factors determining the success of the of outsourcing have been identified: Management suort. Emloyment of analyses when deciding on the use of outsourcing. Prearation of staff before the of outsourcing. A strategic aroach to the use of outsourcing. Planned duration of the use of outsourcing. Management of the relationshi with the sulier of the service rovided. Research was carried out on the basis of rimary data collection using a questionnaire survey. Questionnaires were distributed to a samle of organizations oerating in Slovakia both ersonally and electronically to the addresses rovided by Infostat. The research samle consisted of organizations that use, or formerly used R & S outsourcing. The questionnaire consisted of 14 main items, to which articiants (managers) resonded using a five-oint Likert scale. RESULTS AND DISCUSSION In order to identify the factors that determine the successful of R & S outsourcing, it was necessary to verify whether there exists a statistically significant correlation between the selected variables and the erceived success of outsourcing Percetion of successful outsourcing was rated by an item questionnaire consisting of eight subitems. In order to verify the internal consistency of the sub-items, the Cronbach alha coefficient was emloyed. The coefficient value is 0.910, which shows a high degree of internal consistency of the individual sub-items (> 0.7, according Rimačík, 2007). H1: There exists a statistically significant correlation between management suort and the erceived success of the R & S outsourcing Based on the results obtained by the questionnaire, it was confirmed that the head managers are involved in decisions about the use of outsourcing to the great extent, although other eole like HR managers and other members of management usually articiate in the decision rocess also, albeit in a substantially lower range. The articiation of individuals in decisions about the use of R & S outsourcing was assessed on a scale from 1 to 5, where 1 exresses no articiation in decision-making and 5 maximum share in decision on the use of outsourcing. The issue whether this asect can be considered a determinant factor in

4 188 Jana Cocuľová the successful R & S outsourcing was verified through correlation analysis. Given the nature of the variables, the Kendall correlation coefficient was used. As shown in Tab. I, correlations were identified in relation to the individuals involved in the decision to use outsourcing. In all three cases, the result of correlation was > 0.05, based on which we can conclude that there is no statistically significant correlation between the suort of executives and the erceived success of the of R & S outsourcing. The value of the correlation coefficient is < 0.1 in two cases and < 0.2 in one case, which shows very little to insignificant correlation. Based on the findings, the hyothesis H1 is rejected. H2: There exists a statistically significant correlation between emloyment of analyses in the decision rocess Another factor that may be considered as the determinant of the successful of outsourcing is the existence of analyses aimed at assessing the suitability of erforming the rocess by external way. Such analysis should be an essential art of every decision rocess about making changes in the comany. The research results showed that 66.7% of comanies using outsourcing, have erformed some analyses, while almost all comanies resected the results of the analyses in the decision to use outsourcing. What is not so ositive is that 19% of organizations which erform no analyses, would erform no analyses in the future either. Failure to erform the analysis is a deficiency in the assessment of such severe decision, such as the use of outsourcing. To verify the hyothesis H2 the Mann-Whitney U test was used, and the results are given in Tab. II. The test statistic resulted in < 0.05, based on which H2 is acceted. Performing the analysis in the hase of deciding on the use of outsourcing can be considered as one of the determinants of successful outsourcing Any strategic decision should be receded by thorough analysis and, therefore, the decision to transfer the business activities to an external sulier without revious analysis can be considered very risky due to ossible unforeseen roblems. H3: There exists a statistically significant correlation between the rearation of emloyees for changes associated with the of outsourcing and the erceived success of the R & S outsourcing In case that the of outsourcing has an imact on internal staff, whether their osition or job descrition, it is imortant that the comany reares the emloyees for the new situation in time. The aim was to verify the existence of a statistically significant correlation between stated variables using the Kendall correlation coefficient. For uroses of assessment of the degree of internal consistency of the sub-items related to the variable the rearation of emloyees to change, the Cronbach alha coefficient was used, I: Correlation between the share of individuals in decision rocess The share of individuals in decision rocess about the R & S outsourcing Kendall s _b To manager HR manager Member of management board Percetion of successful R & S outsourcing II: Verification of statistically significant correlation between the erforming of analyses Percetion of successful R & S outsourcing Performing of the analysis before making a decision about the use of outsourcing n Average ranking Median U z Yes < No III: Correlation between the rearation of emloyees to change Percetion of successful R & S outsourcing The rearation of emloyees to change.420 < 0,001

5 An Analysis of Determinants of Recruitment and Selection Outsourcing Imlementation 189 the value of which is and suggests sufficient consistency. The results are given in Tab. III. Based on the obtained values, it can be confirmed that there is a statistically significant correlation between the rearation of emloyees for the change and the erceived success of the outsourcing, and according to the value of the correlation coefficient (r = 0.420), we can talk about moderate statistical deendence. Therefore, the hyothesis H3 is acceted and it can be stated that rearation of staff for outsourcing, whether through rocessing of change management lan, roviding adequate suort or ensuring adequate communication with affected emloyees, is a factor which determines successful outsourcing In case there is a lack of awareness of emloyees about the lanned changes, effects such as demotivation, work dissatisfaction, reduced loyalty or squitting the comany can be seen, which may ultimately lead to unforeseen difficulties in the the lanned changes. The role of the comany in the of outsourcing is: to inform emloyees about ucoming changes in a sufficient timeframe, to exlain the imortance of the outsourcing, to describe the state of the organization following the of changes, to rovide intensive communication with affected emloyees, to choose the most aroriate means of suorting individual emloyees, deending on the extent of the imact of changes have been imlemented. H4: There exists a statistically significant correlation between a strategic aroach to outsourcing and the erceived success of the R & S outsourcing Another factor that can determine the R & S outsourcing in terms of ercetion of its success is the strategic aroach to that decision. Variable value was rated by articiants resonses to four assertions (sub-items), related to the alication of the strategic aroach in deciding on the use of outsourcing. The value of Cronbach s alha coefficient for the item is 0.838, which resents sufficient internal consistency of sub-items. H5: There exists a statistically significant correlation between the lanned duration of the use of outsourcing Both hyotheses number 5 and 6 are closely linked, since on the basis of a lanned eriod of utilization of outsourcing we can judge whether the organization concerns itself mainly with shortterm or long-term objectives and, therefore, whether it alied the strategic aroach to outsourcing solution. In both cases, the Kendall correlation coefficient was used. The results of both correlations are given in Tab. IV. In both cases, the results are very similar. Based on the results of correlation in the first case ( < 0.05 and > 0.4), it can be confirmed there exists a statistically significant relationshi between the strategic aroach to outsourcing and the erceived success of R & S outsourcing, thus hyothesis H4 is acceted. Based on the ositive value of (0.481), it can be concluded, that the higher rate of agreement of resondents with individual statements resuoses a higher level of evaluation of successful outsourcing and the correlation between variables can be considered as moderate. In the case of correlation between the lanned duration of use R & S outsourcing and its successful value was found to be and therefore the relationshi between these variables can be assessed as moderate. An interesting finding is the fact that comanies intending to outsource the HR activity in the long term, showed assessed the success of the outsourcing as more ositive. Hyothesis H5 was acceted. Research has confirmed that a strategic aroach is a determinant of successful R & S outsourcing If the firm erceives the use of outsourcing as a strategic decision, it can be assumed that it will aly the equivalent aroach in its The research shows, that from the ersective of some members of the management board (30%), R & S outsourcing is not seen as a strategic choice of the comany, which can be erceived as an obstacle from the future ersective of the comany. Comany s decision to outsource should not be seen as an automatic solution to business roblems. For ersistent roblems, it is necessary to analyze the roblematic situations in the organization in detail, in order to determine the causes of the roblems. The decision to use outsourcing should be suorted by results of IV: Correlations related to hyotheses H4 and H5 Percetion of successful R & S outsourcing Strategic aroach to R & S outsourcing Planned duration of use R & S outsourcing.481 < < 0.001

6 190 Jana Cocuľová V: Correlation between the management of relationshi with the sulier and the erceived success of R & S outsourcing The management of relationshi with the sulier Percetion of successful R & S outsourcing.667 < the analyses, including an assessment of the imact of the introduction of outsourcing in the field of HR management, as well as the overall business activity. In case of the decision to outsource is based on the results of analyses, the comany should have clearly defined goals, which it lans to achieve by using outsourcing in the long term and in line with the business strategy and HR strategy. Based on the research results, it is clear, that the longer the eriod, the comany lans to use outsourcing for, the better is the outsourcing erceived. Imlementation of longterm decisions envisages the adequate rearation of comany, which consists in the analysis and defining clear objectives in line with business strategy and HR strategy. The decision to outsource only for a short time shows that the firm ursues short-term goals or solution of current business roblems by using outsourcing. However, such decisions can be considered risky, since the retransfer of outsourced activities back into the firm in a short eriod of time may require to imlement other changes that require further exenditure of time, effort and additional costs. H6: There exists a statistically significant correlation between the management of relationshi with the sulier and the erceived success of R & S outsourcing Another factor that was redicted to affect the level of successful outsourcing is the level of cooeration with the sulier of outsourced activities. For uroses of determining the correlation between these variables the Kendall correlation coefficient was used. Since the value of Cronbach s alha coefficient is 0.860, we consider sub-items as sufficient internal consistent. The results are given in Tab. V. The value of the correlation coefficient = confirmed that there is a strong correlation between variables. Hyothesis H6 is acceted. It can therefore be concluded that comanies that have established ermanent communication with suliers, continuously assess the relationshi with the sulier and have a designated erson in charge of this relationshi, erceive R & S outsourcing more successfully. This factor can be considered as very imortant for the outsourcing, esecially since the sulier affects the level at which the activity will be carried out and what kind of staff will be emloyed. Cooeration with the sulier comany should not end with the choice of sulier. Given that the external comany takes resonsibility for which emloyees will be available in the comany, it is very imortant to have sufficient confidence in the quality of the sulier. In order to achieve a long-term, mutually satisfactory relationshi with the sulier, a comany may following recommendations: choosing the aroriate tye of sulier, deending on the extent of outsourcing use and tye of outsourced services, negotiation of contract terms, determining the internal ersonnel resonsible for managing the relationshi with the sulier, ensuring regular communication and monitoring the relationshi with the sulier, evaluation of indicators of the efficiency of outsourcing. REFERENCES ATES, F. M The Effect of Partnershi Quality on Outsourcing Success in Human Resources Functions. International Journal of Academic Research in Business and Social Sciences, 3(12): BOS, J To Tis For Driving RPO Success. Workforce Management, 87(10): CARUTH, D. L. and CARUTH, G. D Outsourcing human resource activities: a roosed model. SuerVision, 71(7): 3 8. CHALUPOVÁ, A Starať sa o ľudí môžu omôcť aj iní. Hosodárske noviny, ríloha Kariéra, XIV(109): 2. CHOUDRIE, J., GREY, S. and SELAMAT, M. H Meta-abilities and Outsourcing: An Individual Based Concetual Framework. Knowledge and Process Management, 16(2): EE, E., HALIM, H. A. and RAMAYAH, T HR outsourcing success: does artnershi quality variables matter? Journal of Business Economics and Management, 14(4): 664. FAPOHUNDA, T. M Towards successful outsourcing of human resource functions. International Journal of Human Resource Studies, 3(3): GALANAKI, E. and PAPALEXANDRIS, N Internationalization as a determining factor of HRM outsourcing. International Journal of Human Resource Management, 18(8): GOLDSCHMIDT, A Získejte maximum z outsourcingu náboru. Economia, XLIV(8): HEPENG Small and Medium-Sized Enterrise Human Resources Management Outsourcing Feasibility Study in China. International Journal of Business and Social Science, 5(7):

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