In order to compete successfully in a global market, more companies are beginning to focus on the role of human resources, most importantly on recruitment and selection as a critical part of their core competence and a source of competitive advantage.
A good recruitment is very essential for an effective human resource management. According to Sparrow and Hiltrop (1994), the effectiveness of many other human resource activities, such as selection and training, depends largely on the quality of new employees attracted through the recruitment process.
Also, Sparrow (2006) pointed out that the challenges for HR business partners in handling recruitment for an international organisation vary in each country, but a common need is the question of how to ensure rigour and consistency across operations in very different cultures, business markets and labour markets.
1.1 BACKGROUND TO THE STUDY
Hiring competent individuals has always been and will always be of paramount importance to business organisations, which is highly dependent on the recruitment and selection, which aims to attract and retain high-quality individuals in order to achieve continued success within the organisations.
The importance of recruitment and selection should never be ignored. One of the earliest management writers, Taylor F.W (1911) complained about the typical way individuals were selected based on ‘who you knew’ or who was first in the queue. Taylor introduced the idea that people should be selected for their skills and abilities, which should be tested before the selection decision.
Due to the increase in internalisation, HR departments of multinational companies have put so much importance on the recruitment and selection of their staff, primarily because recruitment and selection is involved in making future predictions about future behaviour, so that decisions can be made about who will be most suitable for a particular job.
1.2 AIMS/OBJECTIVES OF THE STUDY
I aim to analyse the recruitment and selection policies of Ernst & Young (EY) and KPMG in their different subsidiaries which are Nigeria and Sierra Leone, and to build the concepts on human resource management literature, which will help me to analyse what these companies did well? What these companies did badly? How these companies can be improved? What lessons we can learn from these companies? Would the recruitment and selection methods change overtime for Ernst & Young Nigeria and KPMG Sierra Leone in the likely future?.
1.3 SIGNIFICANCE OF THE STUDY
The importance of this study/paper is to explain and persuade my readers on the importance of an effective recruitment and selection policies from my analysis of Ernst & Young Nigeria and KPMG Sierra Leone.
1.4 RESEARCH METHODOLOGY
According to Lee (1989) research is a ‘systematic quest for undiscovered knowledge’. The result of the pursuit of this knowledge is known as research.
I would be carrying out a case study on Ernst & Young and KPMG in their foreign subsidiaries; which are Nigeria and Sierra Leone and to carry out an analysis on the recruitment and selection policies used.
CHAPTER 2
LITERATURE REVIEW
There are many previous studies and literature concerning recruitment and selection, this review will aim to expand on these and use the concepts of human resource management literature to offer a diverse understanding.
Recruitment is defined as searching for and obtaining potential job candidates in sufficient numbers and quality so that the organisation can select the most appropriate people to fill its job needs. Selection is the process of gathering information for the purposes of evaluating and deciding who should be employed in particular jobs.
With that said, every organisation has to recruit workers, select them, pay them, and also motivate them and in the long run eventually arrange for their retirement or departure. However, things are done differently in different countries; not only do they have different cultures (the foreign subsidiaries am analysing are Nigeria and Sierra Leone which are Wes-African countries), they also operate with different educated and skilled workforces, and in different economic situations, with different labour laws, government support or control and so on.
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Recruitment and selection vary across different countries, in HRM there are the concepts of international and comparative human resource management, and there is a distinction between Comparative HRM and International HRM which was made clear by Boxall (1995). Comparative human resource management explores the extent to which HRM differs between different countries or between different areas within a country or different regions of the world (Brewster and Larsen, 2000). Comparative human resource management is telling us that employment systems differ noticeably between countries and that managing human resources has to vary from country to country.
2.1 INTERNATIONAL HRM
In international HRM, which is the basis of this paper, primarily because it seeks to understand the approaches used in the management of employees by multinational companies in their subsidiaries. For these international organisations, human resource management is a key to success. International HRM examines the way organisations manage their human resources across these different national contexts. According to Brewster and Lee (2006), international organisations have employees who work across national borders. In international HRM, there are staffing issues that internationalizing companies encounter that are either not present in a domestic environment, or are complicated by the international context in which these human resource activities take place and how subsidiaries respond.
There are four (4) main approaches in which multinational companies deal with the management of employees in their foreign subsidiaries, these approaches were developed in the international business strategy literature which focused on human resource management and was carried out by Perlmutter (1969) and Heenan & Perlmutter (1979) these approaches are; Ethnocentric, Polycentric, Regiocentric and Geocentric approaches.
In the Ethnocentric Approach; in this approach the strategic decisions are made at headquarters, few foreign subsidiaries have any autonomy. Key positions at the foreign operations are held by headquarters’ management personnel, this type of approach is common at the early stages of internationalisation because of the need to maintain good communication, co-ordination, and control links with corporate headquarters, subsidiaries are usually managed by expatriates from the parent country (PCNs). A common disadvantage to this approach is that the workers of the host country nationals (HCNs) feel inferior or cheated to the workers of the parent country nationals (PCNs) when salaries, compensation packages, company bonuses are compared.
In the Polycentric Approach; in this approach the multinational company treats each subsidiary as a distinct national entity with some decision-making autonomy. Subsidiaries are usually managed by local nationals (HCNs) who are rarely promoted to positions at headquarters. Likewise parent country nationals (PCNs) are rarely transferred to foreign subsidiary operation. In this approach, there is continuity to the management of foreign subsidiaries, which avoids the turnover of key managers that, by its very nature results from an ethnocentric approach. However, the major difficulty with this approach is that of bridging the gap between the host country national (HCN) subsidiary managers and parent country national (PCN) managers at corporate headquarters. This approach will be further analysed in chapter 3.
In the Regiocentric Approach; this approach is a reflection of the geographic strategy and structure of the multinational. Personnel may move outside their countries but generally only within a particular geographic region (e.g. Europe or Asia Pacific). In this approach, regional managers may not be promoted to headquarters position but enjoy a degree of regional autonomy in decision-making.
In the Geocentric Approach; the multinational companies takes a worldwide stance in respect of its operations, it recognises that each part makes a unique contribution with its overall competence. It is usually accompanied by a worldwide integrated business, and nationality is ignored in favour of ability. Here, parent country nationals (PCNs), host country nationals (HCNs) and third country nationals (TCNs) can be found in key positions anywhere of the multinational, including those at the senior management level at headquarters, subsidiaries and on the board of directors. A common disadvantage to this approach is that it can be expensive to implement because it leads to an increase in training of workers and also the issue of relocation costs.
The above literature illustrates the four (4) different approaches used by multinationals in the management of their employees in foreign subsidiaries, some authors believe the polycentric approach to be very global, in that, subsidiary managers are responsible for their own strategy and co-ordination is needed across multiple dimensions. However, there are critics such as Mayrhofer and Brewster (1996) who argue that the vast majority of firms are ethnocentric. These four (4) approaches provide an understanding of international human resource management (IHRM) within an organisation.
2.2 COMPARATIVE HRM
There are also two (2) approaches to research and thinking in the field of HRM; due to the issue regarding whether HR practices can be transferred, these approaches are; the Universalist and the Contextual or in the terms of this chapter, the comparative (Brewster, 1999). These two (2) approaches are also reflected in the debate between the two (2) schools of thought that contest the notion of convergence. Some researchers argue that even when there are differences, they are reducing as the notion of globalisation becomes more established and societies are moving towards each other in the way they do things, also including the way they manage their human resources. Other researchers argue that there is little evidence of such a moving together and that, in fact, societies remain steadfastly different and even unique.
The Universalist approach is very dominant in the USA but is widely used elsewhere. The main aim of the Universalist approach is to improve organisational performance and to achieve organisational goals in HRM, and in particular strategic human resource management (SHRM). The major problem with this approach, is that it operates only at the level of organisation, ignoring policy at the national or international level and because is dominant in the USA it therefore, pertains more to the USA and in reality, it fails to provide insights to different countries in their practice of HRM.
In contrast, the Contextual approach or comparative searches for an overall understanding of what is contextually unique and why. It is more focused on understanding what is different between and within HRM in various contexts and what led to those differences. Most researchers working in this paradigm believe that it is the explanation that matters, any link to firm performance is secondary. Contextualist researchers study the importance of such factors as culture, ownership structures, labour market and so on which are the aspects of the subject rather than external influences upon it.
At this point, is important to know that neither approach is right nor wrong, both approaches, and the others that exist in other parts of the world, have a contribution to make. However, in practice there are often debates between the different approaches used to understand the nature of human resource management.
2.3 DUNNING ECLECTIC THEORY
From the concept of international HRM literature, we understand the four (4) approaches in which multinational companies manage their employees in foreign subsidiaries, however, to understand why these multinational companies decided to set up in foreign subsidiaries, can be better understood with the Dunning’s Eclectic theory (Dunning, 1992) which usually involves an arising need to establish a corporate culture in their subsidiaries and also most importantly, to transfer knowledge from the parent country national (PCNs) to the host country national (HCNs) and third country national (TCNs) which involves the need for expatriates (number of people who are sent by multinational companies on foreign assignments on a short or long period of time). The Dunning’s Eclectic theory explains the roles of expatriates, which are:
• To secure transfer of technology positions, as companies send the expatriates abroad in order to transfer their technology to the foreign subsidiary i.e. in countries where qualified people are not available, companies send the parent country nationals (PCNs) to fill out the positions.
• To secure the headquarter control, where the multinational companies can exercise this control by using the parent country nationals (PCNs) in their foreign subsidiaries. In such situations firms try to incorporate the headquarters culture into the foreign operations, which in some cases may create cultural problems. Especially when multinationals tend to demand administrative and financial control in their foreign operations.
• It leads to an opportunity for international experience or management development, several firms find international experience highly important before promoting their employees. Foreign transfers are here important in order to learn foreign cultures and environments. In such situations qualified host country nationals (HCNs) are available but managers are still transferred to foreign subsidiaries to acquire knowledge and skills.
• To help in organizational development, this could be called the Geocentric approach. This role is performed only by the best people at the best places without nationality barriers. Transfers can take place from headquarters to subsidiaries, from subsidiaries to headquarters, or from subsidiaries to subsidiaries. Nationality of employees does not matter in this situation, as the objective of this staffing strategy is to get to know about different cultures, create international networks, decentralization, and interaction between managers of different nationalities. In general, this strategy is mostly followed by larger global companies.
However, multinational companies are increasingly adopting a strong global mindset and reducing the number of expatriates that are usually sent on foreign operations, which is usually costly for the multinational companies. Interestingly, multinational companies are beginning to recruit and select more of the local talents in their foreign subsidiaries and also ensuring that the top management in their foreign subsidiaries understand the headquarters desires and corporate vision and making sure it conforms in line with the headquarters.
CHAPTER 3
ANALYTICAL THEORY
In order to ensure successful business management, leading companies and organizations are implementing new policies, standards, procedures, ensuring space for new organisational cultures, business models, new projects and products. Yet, managing human resources is more challenging than we may even expect or even imagine and also, most importantly recruiting and selecting the right quantity and quality of staff into an organisation.
The following analysis shall focus on the recruitment and selection of Ernst & Young and KPMG in their foreign subsidiaries which are Nigeria and Sierra Leone.
3.1 ERNST & YOUNG IN FOREIGN SUBSIDIARY- NIGERIA
Ernst & Young (EY) ‘Quality In Everything We do’ is ranked as one of the largest professional services in the world and one of the big four (4) auditors. Ernst & Young which was founded in 1989 due to a global merger between Ernst & Whinney and Arthur Young, however, its individual components can be traced back to 1849. Its global headquarters is located in London, United Kingdom in the region of Europe, furthermore, Ernst & Young is a global industry which offers these professional services; audit, tax, financial advisory and consultancy to their clients.
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Ernst & Young (EY) Nigeria was set up in the year 1991, and has been in Nigeria for twenty-one (21) years. Ernst & Young is one of the largest firms of chartered accountants and business advisers in Nigeria. Their clients include many multinational companies from all sectors of business. The firm also serves an impressive array of middle market and privately held companies, this structure allows Ernst & Young Nigeria to be very responsive to both established businesses and emerging and developing businesses. Ernst & Young Nigeria provides four (4) principal services to their clients; Advisory, Audit, Tax and Transaction services. As at time of writing this paper, Ernst & Young Nigeria has a staff of 260 people including sixteen (16) partners, these partners are both Nigerians and Expatriates, the firm is administered by the Partners who occupy key positions in the firm and are responsible for making decisions on the strategic direction of the firm.
The objective of the recruitment and selection policies of Ernst & Young Nigeria is:
To recruit and select people according to merit (quality of being particularly good or worthy) so as to ensure efficiency and effectiveness and also that the right people (in terms of qualification and experience) occupy the right positions at Ernst & Young Nigeria.
This objective has helped Ernst & Young Nigeria recruit and select the best type of applicants into their organisation. The reasons for recruiting at Ernst & Young Nigeria is either to fill a vacancy i.e. replace a member of staff who has resigned or to bring in a new member of staff to ease the workload in the team. There are various factors which usually affect the design and implementation of recruitment and selection policies of any organisation. As expected the problems encountered during the design and implementation of the recruitment and selection policies of Ernst & Young Nigeria is not for public knowledge. However, I am very certain Ernst & Young Nigeria faced some challenges in the design and implementation of their recruitment and selection policies at the initial stage such as total lack of knowledge of the labour market and also an important issue of corruption which seems to be crippling the Nigerian economy.
3.2 RECRUITMENT AND SELECTION POLICIES OF ERNST & YOUNG IN NIGERIA
This is carried out differently depending on the category of staff required, which are:
• Professionals
These categories of staff are recruited either into the Audit, Advisory or Tax Departments. The three (3) different departments have different skill requirements. Application letters and CVs are lodged by applicants and are reviewed based on the different qualifications required by each department. The minimum qualification for this category is a first degree in any field, also, professional qualifications such as ACCA, CIMA or a Master’s degree is usually an added advantage. After the recruitment process is carried out, the selection is carried out which is in form of an interview, an interview is conducted by either a Business Unit leader or Manager and the HR Head of Ernst & Young Nigeria, to find out more about the individual and their experience, the chosen applicants are assessed during the interview to know if they have excellent communications skills. Depending on the position being interviewed for, applicants may be asked to answer a written test. If the candidate is found suitable, a second interview is arranged with the prospective Partner during which a discussion on the salary and terms of conditions of service for the position are also discussed.
• Trainees
Prospective Trainee Accountants send their applications and CVs throughout the year to the company. These application letters are reviewed by members of the Human Resource department and applicants are short-listed if they meet Ernst & Young (Nigeria) requirements which are as follows:
i. Applicants must be aged a maximum of 25 if they are yet to start the professional examinations.
ii. Applicants should preferably be graduates with good degrees; non-graduates are considered if they have started the professional exams already with good results.
Applications are short-listed based on the above-mentioned criteria. Short-listed applicants are invited for a two (2) hour psychometric test. Those applicants who pass the test, are then selected and invited for an interview, this interview is conducted by a minimum of two (2) people including the HR Head and an Audit Manager. Applicants are expected to portray a commitment to the professional course they are pursuing with the intention of qualifying within the shortest possible time. This interview assesses the candidates’ communication skills, intelligence, and confidence. The interviewers must also be convinced that the candidate has the personality to fit into the Ernst & Young Nigeria’s structure. Thereafter, a training program is run for Trainee Accountants by three (3) Audit professionals to get them familiarized with Ernst & Young Audit methodology.
• Interns
As part of Ernst & Young Nigeria’s co-operate responsibilities, they offer internships/placement for graduates from recognized universities and polytechnics within Nigeria. This program should be over within three (3) months. To be eligible for the Internship Program, candidates must be in their third (3) year and possess a good predicated grade in their undergraduate degree with plans to pursue a career in audit, tax or advisory services.
• Administrators
• Secretaries
For the administrative staff and secretaries at Ernst & Young Nigeria, an informal method of recruitment is usually used through the form of personal recommendation, often referred to as ‘word of mouth’. Those applicants who are suitable are then interviewed by the HR head, which is a very common form of selection. Thereafter, an appointment letter is sent to the suitable candidate detailing the terms and conditions of service and the salary attached to the position. The employee is required to return a signed copy of this agreement on commencement of work.
3.3 RESULTS FROM ANALYSIS
From the overall framework, structure and organisation of Ernst & Young Nigeria, I would say the management and staffing of employees in this subsidiary is using the Geocentric approach due to the fact that key positions at the subsidiary (EY Nigeria) are occupied by nationals of the host country (HCNs) and nationals of the Parent country (PCNs) who are all highly competent employees. The Regiocentric approach is also used by Ernst & Young Nigeria reasons being that some staff are transferred within the same geographic region; some of the staff at Ernst & Young Nigeria are from other African countries specifically from Ghana, South Africa all within the same geographic region.
Ernst & Young Nigeria commonly uses the internet method of recruitment; this method ensures a large pool of applicants, from which the best applicants are selected from. However, I disagree with this method of recruitment for a country like Nigeria, because Nigeria does not yet have a truly web coverage, therefore, people don’t usually have access to the internet to apply for these jobs, and sometimes come across these jobs after the closing dates. For the recruitment of the Trainee Accountants into Ernst & Young Nigeria, one of the criteria is that applicants should be a maximum of 25years; I frown upon this criterion because it is indirect age discrimination and should not be practiced, this cannot be present in Ernst & Young’s headquarters due to the government legislation which frowns against any form of age discrimination.
3.4 KPMG IN FOREIGN SUBSIDIARY- SIERRA LEONE
KPMG (‘cutting through complexity’) is ranked as one of the largest professional services in the world and one of the big four (4) auditors. KPMG is a merger of Peat Marwick International and Klynveld Main Goerdeler this merger was established in 1987, in consonance with a decision of the international council to have all affiliate firms adapt the name to underscore the advisory functions of this world-wide firm. Its global headquarters is located in Amstelveen; Netherland in the region of Europe, KPMG is a global industry which offers these professional services; audit, tax and advisory. Its advisory services are further divided into three service groups- Management Consulting, Risk Consulting, and Transaction & Restructuring.
KPMG Sierra Leone was established in the 1930s by Edward Casselton Elliot but was not known as KPMG. It was called Peat Marwick Casselton Elliot and CO and has been in Sierra Leone for about 80 years. KPMG is the largest firm of chartered accountants and business advisers in Sierra Leone. Their clients include many multinational companies from all sectors of business. The firm also serves an impressive array of middle market and privately held companies, this structure allows KPMG Sierra Leone to be very responsive to both established businesses and emerging and developing businesses. KPMG Sierra Leone provides three (3) principal services to their clients; Audit, Taxation and Advisory services. As at time of writing this paper, KPMG Sierra Leone has a staff of 120 people including three (3) partners namely; Vidal T.O. Decker (Senior & Managing Partner), Claudius Williams-Tucker (Tax & Peoples partner) and Derrick Kawaley (Audit partner) all nationals of Sierra Leone, the firm is administered by the Partners who occupy key positions in the firm and are responsible for making decisions on the strategic direction of the firm.
The objective of the recruitment and selection policies of KPMG Sierra Leone is:
To recruit and select people according to set competencies, competencies are defined as a combination of behaviours, knowledge, skills and personality attributes.
This objective has helped KPMG Sierra Leone recruit and select the best type of applicants into their organisation. The reason for recruiting at KPMG Sierra Leone is either to fill a vacancy i.e. replace a member of staff who has resigned or to bring in a new member of staff to ease the workload in the team. There are various factors which usually affect the design and implementation of recruitment and selection policies of any organisation. As expected the problems encountered during the design and implementation of the recruitment and selection policies of KPMG Sierra Leone is not for public knowledge. However, I am very certain KPMG Sierra Leone faced some challenges in the design and implementation of their recruitment and selection policies at the initial stage such as total lack of knowledge of the labour market.
3.5 RECRUITMENT AND SELECTION POLICIES OF KPMG IN SIERRA LEONE
This is carried out differently depending on the category of staff required, which are:
Professionals
These categories of staff are recruited either into the Audit, Advisory or Tax Departments. The three (3) different departments have different skill requirements. Application letters and CVs are lodged by applicants and are reviewed based on the different qualifications required by each department. The minimum qualification for this category is a first degree in any field, also, professional qualifications such as ACCA, CIMA or a Masters degree is usually an added advantage. After the recruitment process is carried out, the selection is carried out which is in form of an interview, an interview is conducted by either a Business Unit leader or Manager and the HR Head of KPMG Sierra Leone, to find out more about the individual and their experience, roles in KPMG have required competencies based on personal and technical skills. These are assessed during the interview together with communications skills. Depending on the position being interviewed for, applicants may be asked to answer a written test. If the candidate is found suitable, a second interview is arranged with the prospective Partner during which a discussion on the salary and terms of conditions of service for the position are also discussed.
Trainees
Prospective Trainee Accountants send their applications and CVs throughout the year to the firm. These application letters are reviewed by members of the Human Resource department and applicants are short-listed if they meet KPMG Sierra Leone requirements which are as follows:
Applicants must be aged a maximum of 27 if they are yet to start the professional examinations.
Applicants should preferably be graduates with good degrees; non-graduates are considered if they have started the professional exams already with good results.
Applications are short-listed based on the above-mentioned criteria. Short-listed applicants are invited for a three (3) hour psychometric test. Those applicants who pass the test, are then selected and invited for an interview, this interview is conducted by a minimum of two (2) people including the HR Head and an Audit Manager. Applicants are expected to portray a commitment to the professional course they are pursuing with the intention of qualifying within the shortest possible time. This interview assesses the candidates’ communication skills, intelligence, and confidence. The interviewers must also be convinced that the candidate has the personality to fit into the KPMG Sierra Leone structure. Thereafter, a training program is run for Trainee Accountants by three (3) Audit professionals to get them familiarized with KPMG Audit methodology.
Interns
As part of KPMG Sierra Leone’s co-operate responsibilities, they offer internships/placement for graduates from recognized universities and polytechnics. This program should be over within three (3) months. To be eligible for the Internship Program, candidates must be in their third (3) year and possess a good predicated grade in their undergraduate degree with plans to pursue a career in audit, tax or advisory services.
Administrators
Secretaries
For the administrative staff and secretaries at KPMG Sierra Leone, an informal method of recruitment is usually used through the form of personal recommendation, often referred to as ‘word of mouth’. Those applicants who are suitable are then interviewed by the HR head and the partner, which is a very common form of selection. Thereafter, an appointment letter is sent to the suitable candidate detailing the terms and conditions of service and the salary attached to the position. The employee is required to return a signed copy of this agreement on commencement of work.
3.6 RESULTS FROM ANALYSIS
From the overall framework, structure and organisation of KPMG Sierra Leone I would say the management and staffing of employees in this subsidiary is using the Polycentric approach, due to the fact that top management staff consists of host country nationals (HCNs) who are nationals of Sierra Leone and who are recruited and selected to manage the subsidiary, as at time of writing this paper, there are no expatriates working at KPMG Sierra Leone, the company is administered by the partners (nationals of Sierra Leone) who are responsible for strategic decisions of KPMG Sierra Leone, which implies that the top management at KPMG Sierra Leone i.e. partners understands the desires and corporate vision of KPMG headquarters. The Regiocentric approach is also used by KPMG Sierra Leone, because some staff are transferred within the same geographic region, som
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