Incremental effectiveness of two key IT recruitment methods

The recruitment of Information Technology professionals has reemerged as an important issue in the workplace. In "The State of the CIO 2006 Survey," 55 percent of IT executives indicated they plan to increase their IT staffs by an average of 11 percent during the year (Overby, 2006). Towers Perrin's study of 22 leading firms in 11 industries identified recruitment and retention of IT employees as a key to facilitating superior business performance (Towers Perrin, 2002). Reports that show firms devoting more revenues to staffing activities than any other human resource ac tivity underscore the importance of understanding effective recruiting practices (Society for Human Resource Management, 2001). Driving this effort are estimates indicating that the average actual and opportunity costs for a professional position remaining unfilled are prohibitively expensive. An organization's costs for a position remaining vacant are estimated to be $1,200 per day (Stanton, 2000) and, on average, to be the cost of two years of pay and benefits for a typical exempt position and six months of pay and benefits for a typical nonexempt one (Oneal, 1998). Importance of Recruiting Focus Scholars cite three factors for the constant importance for recruiting and retaining IT workers. The first is the job-hopping proclivities of workers with specialized skills. The average employee reportedly remains with an organization for a maximum of five years before departing (Wiener, 1998). The rapid voluntary exit of employees from firms places great demand on the recruiting practices of organizations (Humber, 2005). The second element necessitating continued IT recruitment is workforce projections forecasting a labor shortage in areas of technical expertise. The Bureau of Labor Statistics projects positions for computer systems analysts, database administrators, and computer scientists will grow sharply faster than other occupations as organizations' needs for complex technologies advance (Bureau of Labor Statistics, 2004). The final factor underscoring the importance of IT recruitment is that the increased importance of information technology in global competition has positioned human capital as the linchpin for organizational success (Gilpin, 2000). Research studies have found that information technology produces a lasting competitive advantage for those organizations that acquire human capital in the form of skilled employees who can match technology to the firm's needs (Mata et al., 1995; Ross et al., 1996). Human capital gives firms that optimally recruit IT professionals a strategic competitive advantage relative to their competitors (Agarwal and Ferratt, 1999). Recruitment Methods Organizations have available a wide variety of recruiting methods to identify and attract job applicants external to the organization. The present research investigates the effect of two commonly used recruitment practices on organizational performance measures. Prior surveys and recruitment research have found personal and professional relationships and monetary incentives represent, respectively, the second and third most commonly used recruitment practices to attract IT talent, trailing only local newspaper ads (Mencken and Winfield, 1998). This study focuses on the incremental impact of professional relationships and monetary incentives over other techniques (such as ads) due to the high costs in time, money and effort to implement these approaches. Personal and professional relationship recruiting techniques include employee referrals and networking (Ram, 1999). These practices have the advantage of producing affordable costs per hire, reducing uncertainty about the applicant in the hiring stage, and securing high-quality hires (Feldman and Klass, 2002). Monetary inducements for recruitment include offering salaries higher than competitors' offers (to keep candidates from considering them), as well as retention and project milestone bonuses, short- and long-term incentive opportunities, and signing bonuses (Milkovich and Newman, 2002). …