February 2011

Back Issues of Trends

Labor Market Information


Current Employer-Job Candidate Search Practices: A Review of the Literature

Finding the right people to fill job openings is of great importance to all firms. Employers incur up-front costs when seeking candidates, and a learning curve also occurs once they are hired. Hiring mistakes may be quite costly, depending on the position. With such a large risk of time and capital involved in employee selection, how can firms reduce costs and find optimal candidates? This article presents an overview of how firms search for workers and how workers search for jobs. The methods described here not only shed light on what methods firms use, but why and how they use them to increase hiring success while reducing hiring costs. The candidate search process is a two-way street; employers search for workers and workers search for employers. This article also examines the influence of social media in the hiring process with a focus on younger and more tech-savvy workers. Lastly, the article describes the ways in which traditional recruiting methods are changing in the digital age.

The Hiring Process

Backes-Gellner and Tuor (2010) found that German companies "were able to reduce job vacancies by signaling the quality of their labor relations through observable characteristics." In this instance, the existence of apprenticeship programs, the level of unionization, employee participation, and corporate culture are directly related to firms' ability to recruit desired candidates. How can employers determine what signals are sent to the marketplace? Clapperton (2010) advises smaller organizations to "keep on top of social media and investigate what prospective employees are saying about them." By extension, larger organizations may be advised to do the same.

Other signals are sent by firms through their compensation plans. Ho and Ling-Chu (2009) found that changes in the compensation structure (from straight commission to salary plus a lesser unit commission) at an auto dealership led to more lower-performing sales people being hired while the higher-performing salespeople left the company. However, the overall profitability of the firm remained unchanged because the new employees changed the sales mix of units sold (fewer more expensive models).

Firms' websites also send signals to potential candidates. Wagner (2008) states that "any candidate worth their salt before they go out on an interview is going to hit the website of the company." Furthermore, company websites should be viewed by employers as tools to obtain talent by describing what it is like to work there. Since the website is the online face of the organization, it must be designed with users — potential job applicants as well as customers — in mind. Systems must be very user-friendly and fast to hold applicant interest (Sylva and Stefan, 2009). This is important because when applicants become disappointed with the hiring process they may withdraw, leading to a loss of potential top candidates (Hulsheger and Anderson, 2009). Hulsheger and Anderson (2009) further state that unfavorable perceptions of recruiting methods negatively impact firm success in hiring.

Companies can and do build their own websites for postings. However, Mickey (2008) cautions that while companies can design websites internally or through turnkey operations, they require considerable resources to remain relevant and useful, including robust search capabilities.

Social Media and the Hiring Process

Social media are becoming more and more prevalent as job search and recruiting tools for both firms and individuals. This is particularly true when establishing contact with younger workers. Robbins (2008) posited that companies need to push toward technology rapidly and be creative in their use of sites such as YouTube and Facebook to reach younger workers. A 2010 survey of 600 human resources professionals and recruiters by Jobvite, a recruiting software company, found that 83% of firms planned to use social networks to hire this year [2010]" (Kim, 2010).

Firms large and small are using social media to attract job applicants. Credit unions of all sizes make regular use of these tools (Grensing-Pophal, 2009). Credit unions actively using social networking in recruiting report greater satisfaction with applicants sourced from referrals and social networks than from job boards. Fortunately, companies do not have to go "all in" immediately when it comes to social networking. Grensing-Pophal (2009) suggests that companies establish a presence in these media for information and then move to active recruiting later.

As the influence of social media grows, firms are becoming more creative in their use of these tools in the hiring process. Cassidy (2010) reported that some firms are turning the hiring process into a game in which both the applicant and the firm participate that includes testing, and working actual on-the-job scenarios. Clapperton (2010) found one firm was using Xbox Live (a video gaming console) to recruit candidates for information technology positions.

Although social media usage is becoming more prevalent in the recruiting process, employers should not disregard the use of traditional methods (Stamper, 2009). Social media should be used to augment and improve current practices, not eliminate them.

Use of Traditional Recruiting Methods

Traditional recruiting methods could vary from job advertisements in print to online job boards such as Monster.com or Careerbuilder.com. It also includes word-of-mouth referrals from colleagues and current or former employees. Although print advertising as a recruiting tool is becoming less prevalent (Chase, 2009), it still has a role in recruiting. This is particularly true where entry-level jobs are concerned. The use of recruiting tools varies with firm size and the amount of resources available (Gusdorf, 2008). In-house referrals continue to be among the most popular recruiting tools regardless of firm size. Large firms (1,800 – 6,999 employees) tend to favor on-site recruitment, while online recruiting and firm websites are heavily used across all firm sizes.

In today's online and digital world, word of mouth and networking are extremely important in finding the right candidates. Among financial planning firms, 84.1% reported using this method (word of mouth and networking together) to recruit workers (King, 2010). Some of the networking activity may be through social networks. Other prevalent methods of recruiting for financial planning firms included large online job boards (Monster.com and Careerbuilder.com).

Two areas where print advertising can be more effective are in the wording of the ads themselves and where they are placed geographically. Trunk (2009) noted that in the current workforce, people are always looking for a job. Furthermore, companies which post vague information in their ads such as "salary dependent upon experience" will have an increasingly difficult time filling positions. This is especially true for entry-level jobs. If at all possible, employers should target print ads geographically. To do this, employers first have to know the geographic sources of their workforces. Rafaeli (2005) found that although print advertising is more expensive than referrals, geographically-targeted print advertising tends to be more successful than untargeted advertising. In fact, the ratio of new hires from a print source to total applicants from that same source was nearly four times greater with geographically targeted print advertising compared to non-geographically-targeted print advertising. Rafaeli (2005) cautioned that the effectiveness of geographically-targeted print advertising will likely vary with the types of positions being filled.


This article provided a broad overview of current practices in worker recruiting. Employers of all kinds may want to bear in mind that while they are observing job candidates, the job candidates are observing employers as well, including those who are unemployed (see related article).

Employers send signals of all kinds to potential hires, as well as their current employees, through their electronic and print communications. To attract top candidates, the literature suggests employers should consider flexibility and use a variety of methods. While traditional methods may be used to reach some candidates, reaching more tech-savvy candidates may require the use of tools such as social media and gaming consoles. The choice of tools depends upon firms' resources and culture in addition to the target audience.


Backes-Gellner, U., & Tuor, S. (2010). Avoiding labor shortages by employer signaling: On the importance of good work climate and labor relations. Industrial Labor Relations Review (January). 271 – 286.

Cassidy, A. (2010). Recruiting the next generation. Campaign (October 1). 22-23.

Chase, D. (2010). We want you. BusinessWest (October 12). 50-79.
Clapperton, G. (2010). Going to work on the web. Engineering & Technology (October 23). 66-69.

Grensing-Pophal, L. (2009). Recruiting 2.0. Credit Union Management (September). 42-45.

Gusdorf, M. (2008). Solving the riddle of recruiting and retention. HR Focus (85)(4). 12-15.

Ho, J., & Ling-Chu, W. (2009). How changes in compensation plans affect employee performance, recruitment and retention: An empirical study of a car dealership. Contemporary Accounting Research (26)(1). 167-199.

Hulsheger, U. & Anderson, N. (2009). Applicant perspectives in selection: Going beyond preference reactions. International Journal of Selection and Assessment (17)(4). 335-345.

Kim, M. (2010). Network via social media: Twitter and LinkedIn can help your job hunt. U.S. News & World Report (December). 53.

King, R. (2010). Hiring strategies that work. Retrieved from www.FPAPracticeManagement.org (September/October). 27.

Mickey, B. (2008). Building online job boards. Folio: The Magazine for Magazine Management (37)(3). Retrieved December 8, 2010, from http://www.foliomag.com/2008/building-online-job-boards

Rafaeli, A., Hadomi, O., & Simons, T. (2005). Recruiting through advertising or employee referrals: Costs, yields, and the effects of geographic focus. European Journal of Work and Organizational Psychology (14)(4). 355-366.

Robbins, M. (2008). Recruiting and retaining the best of Gen Y. Employee Benefits News (February). 20-22.

Stamper, C. (2010). Common mistakes companies make in using social media tools in recruiting efforts. CMA Management (April). 12-14.

Sylva, H., & Stefan T.M. (2009). E-recruitment: A study into applicant perceptions of an online application system. International Journal of Selection and Assessment (17)(3). 311-323.

Trunk, P. (2009). Better hiring practices emerging. California Job Journal (1173). 12-13.

United States Department of Labor, Bureau of Labor Statistics (2010). Unemployed jobseekers by sex, age, race, Hispanic or Latino ethnicity, and active jobsearch methods used. Retrieved January 5, 2011 from http://www.bls.gov/cps/cpsaat33.pdf

United States Department of Labor, Bureau of Labor Statistics (2008). Unemployed jobseekers by sex, age, race, Hispanic or Latino ethnicity, and active jobsearch methods used. Retrieved January 5, 2011, from http://www.bls.gov/opub/ee/empearn200801.pdf

Wagner, K. (2008). Recruiting talent: Talent in property management takes on new importance. Journal of Property Management (January/February). 34-36.


Last modified by Michael Moore.