1. What are the sources of recruitment?

Sources of Recruitment
The different sources of recruitment are classified into two categories, viz.,
1. Internal : sources of recruitment are from within the organisation.
2. External: sources of recruitment are from outside the organisation.

Internal Sources of Recruitment

The internal sources of recruitment are:1. Promotions : Promotion means to give a higher position, status, salary and responsibility
to the employee. So, the vacancy can be filled by promoting a suitable candidate from the
same organisation.
2. Transfers : Transfer means a change in the place of employment without any change in
the position, status, salary and responsibility of the employee. So, the vacancy can be
filled by transferring a suitable candidate from the same organisation.
3. Internal Advertisements : Here, the vacancy is advertised within the organisation. The
existing employees are asked to apply for the vacancy. So, recruitment is done from
within the organisation.

4. Retired Managers : Sometimes, retired managers may be recalled for a short period.
This is done when the organisation cannot find a suitable candidate.
5. Recall from Long Leave : The organisation may recall a manager who has gone on a
long leave. This is done when the organisation faces a problem which can only be solved
by that particular manager. After he solves the problem, his leave is extended.

Merits of Internal Sources

The benefits / advantages / merits of using internal sources of recruitment:1. It is time saving, economical, simple and reliable.
2. There is no need of induction training because the candidate already knows everything
about the organisation, the work, the employee, the rules and regulations, etc.
3. It motivates the employees of work hard in order to get higher jobs in the same
organisation.
4. It increases the morale of the employees and it improves the relations in the organisation.
5. It reduce executive turnover.
6. It develops loyalty and a sense of responsibility.

Demerits of Internal Sources

The limitations / demerits of using internal sources of recruitment:1. It prevents new blood from entering the organisation. New blood brings innovative ideas,
fresh thinking and dynamism into the organisation.
2. It has limited scope because it is not possible to fill up all types of vacancies from within
the organisation.
3. The position of the person who is promoted or transferred will be vacant.
4. There may be bias or partiality in promoting or transferring persons from within the
organisation.
5. Those who are not promoted will be unhappy.

6. The right person may be promoted or transferred only if proper confidential reports of all
employees are maintained. This involves a lot of time, money and energy.

External Sources of Recruitment

The external sources of recruitment are:1. Management Consultants : Management consultants are used for selecting higher-level
staff. They act as a representative of the employer. They make all the necessary
arrangements for recruitment and selection. In return for their services, they take a
service charge or commission.
2. Public Advertisements : The Personnel department of a company advertises the vacancy
in newspapers, the internet, etc. This advertisement gives information about the company,
the job and the required qualities of the candidate. It invites applications from suitable
candidates. This source is the most popular source of recruitment. This is because it gives
a very wide choice. However, it is very costly and time consuming.
3. Campus Recruitment : The organisation conducts interviews in the campuses of
Management institutes and Engineering Colleges. Final year students, who're soon to get
graduate, are interviewed. Suitable candidates are selected by the organisation based on
their academic record, communication skills, intelligence, etc. This source is used for
recruiting qualified, trained but inexperienced candidates.
4. Recommendations : The organisation may also recruit candidates based on the
recommendations received from existing managers or from sister companies.
5. Deputation Personnel : The organisation may also recruit candidates who are sent on
deputation by the Government or Financial institutions or by holding or subsidiary
companies.

Advantages of External Sources

The benefits / merits / advantages of using external sources of recruitment:1. It encourages young blood with new ideas to enter the organisation.
2. It offers wide scope for selection. This is because a large number of suitable candidates
will come for the selection process.
3. There are less chances of bias or partiality.

4. Here there is no need to maintain confidential records.

Limitations of External Sources

The demerits / limitations of using external sources of recruitment:1. It is very costly. This is because advertisements, test, medical examination etc., has to be
conducted.
2. It is very time consuming. This is because the selection process is very lengthy.
3. It may not develop loyalty among the existing managers.
4. The existing managers may leave the organisation if outsiders are given higher post.

2.What are the factors affecting wages and salaries ?

The following factors should be taken into consideration in determining wage and
salary structure of workers:

(i) Labour Unions:

The labour unions attempt to work and influence the wages primarily by regulating or
affecting the supply of labour. The unions exert their influence for a higher wage and
allowances through collective bargaining with the representatives of the management.
If they fail in their attempt to raise the wage and other allowances through collective
bargaining, they resort to strike and other methods where by the supply of labour is
restricted. This exerts a kind of influence on the employees to concerned test partially the
demands of the labour unions.

(ii) Personal perception of wage:

Whether the wage is adequate and equitable depends not only upon the amount that is
paid but also upon the perceptions and the views of the recipients of the wage. Even
though the wage is above the going wage rate in the community if it is lower than that of
fellow worker deemed inferior, it will be regarded as inequitable in the eyes of the
recipients of the wage. A mans perception of the equity of his wage will undoubtedly
affect his behaviour in joining and continuing in the organisation.

(iii) Cost of living:

Another important factor affecting the wage is the cost of living adjustments of wages.
This approach tends to vary money wage depending upon the variations in the cost of
living index following rise or fall in the general price level and consumer price index. It
is an essential ingredient of long term labour contracts unless provision is made to reopen
the wage clause periodically.
There are measurement problems both in ascertaining productivity and cost of living
increases. This problem may lead to lack of understanding and unanimity on the part of
the management and the workers.
(iv) Government legislation:
The laws passed and the labour policies formed by the Government have an important
influence on wages and salaries paid by the employees. Wages and salaries cant be fixed
below the level prescribed by the government. The laws on minimum wages, hours of work,
equal pay for equal work, payment of dearness and other allowances, payment of bonus, etc.
have been enacted and enforced to bring about a measure of fairness in compensating the
working class.
(v) Ability to pay:
Labour unions have often demanded an increase in wages on the basis that the firm is
prosperous and able to pay. However, the fundamental determinants of the wage rate for the
individual firm emanate for supply and demand. If the firm is marginal and cannot afford to
pay competitive rates, its employees will generally leave it for better paying jobs. However,
this adjustment is neither immediate nor perfect because of problems of labour immobility
and lack of perfect knowledge of alternatives. If the firm is highly successful, there is little
need to pay for more than the competitive rates to obtain personnel.

(vi) Supply and demand:

As stated earlier, the wage is a price for the services rendered by a worker or employee. The firm
desires these services, and it must pay a price that will bring forth the supply, which is controlled
by the individual worker or by a group of workers acting together through their unions. The
practical result of the operation of this law of supply and demand is the creation of going- wage
rate.
It is not practicable to draw demand and supply curves for each job in an organisation even
though, theoretically, a separate curve exists for each job. But, in general, if anything works
to decrease the supply of labour such as restriction by a particular labour union, there will be
a tendency to increase the wage. The reverse of each situation is likely to result in a decrease
in employee wage, provided other factors, such is those discussed below, do not intervene.
(vii) Productivity:
Increasingly there is a trend towards gearing wage increases to productivity increases.
Productivity is the key factor in the operations of a company. High wages and low costs are
possible only when productivity increases appreciably. The above factors exercise a kind of
general influence on wage rates. In addition, there are several factors which do affect the
individual difference in wage rates.
The most important factors which affect the individual differences in wage rates are:
(a) Workers capacity and age;
(b) Educational qualifications;
(c) Worker experience;
(d) Hazards involved in work;
(e) Promotion possibilities;
(f) The prevailing wage in the community;
(g) Stability of employment;
(h) Demand for the product; and
(i) Profits or surplus earned by the organisation.
A sound wage policy is to adopt a job evaluation programme in order to establish fair
differentials in wages based upon differences in job contents. Beside the basic factors provided

by a job description and job evaluation, those that are usually taken into consideration for wage
and salary administration are:
The organizations ability to pay -Wage increases should be given by those organizations
which can afford them. Companies that have good sales and therefore high profits tend to pay
higher wages than those which are running at a loss or earning low profits because of the high
cost of production or low sales.
Supply and demand of labour -If the demand and certain skills are high and the supply is low
the result is rise in the price to be paid for these skills. The other alternative is to pay higher
wages if the labour supply is scarce and lower wages when it is excessive.
The cost of living -When the cost of living increases, workers and trade unions demand adjusted
wages to offset the erosion of real wages. However when living costs are stable or decline the
management does not resort with this argument as a reason for wage reduction.
The living wage -Employers feel that the level of living prescribed in workers budget is opened
to argument since it is based on subjective opinion.
Job requirements -Jobs are graded according to the relative skill responsibility and job
conditions required.
Trade unions bargaining power -Trade unions do affect the rate of wages. Generally the
stronger and more powerful trade union, higher the wages.
Productivity -Productivity is another criterion and is measured in terms of output man-hour. It is
not due to labour efforts alone. Technological improvements, greater ingenuity and skill by the
labour are all responsible for the increase in productivity.
Prevailing market rate -This is also known as comparable wages or going wage rate. Reason
behind this is competition demand that competitors adhere to the same relative wage level.
Skill levels available in the market -With the rapid growth of industries, business trade there is
shortage of skilled resources. The technological development, automation has been affecting the
skilled levels at a faster rate.
Psychological and social factors -This determine in a significant measure how hard a person
will work for the compensation received or what pressures he will exert to get his compensation
increased. Psychologically, persons perceive the level of wages as a measure of success in life.
Sociologically and ethically, people feel that equal work should carry equal that wages should
be commensurate with their efforts, that they are not exploited, and that no distinction is made on
the basis of caste, color, sex or religion. To satisfy the conditions of equity, fairness and justice,
a management should take these factors into consideration.