Employees recruited from "inside" sources more likely to stay

December 02, 1999

EMPLOYEES RECRUITED FROM 'INSIDE' SOURCES MORE LIKELY TO STAY COLUMBUS, Ohio -- A comprehensive study of employee recruitment found that new hires were more likely to stay at least a year if they were recruited through inside sources, rather than through ads or employment agencies. Researchers at Ohio State University re-analyzed data from 28 studies involving 38,871 employees to see which recruitment sources were most likely to yield long-term employees. Results suggested companies can increase their job survival rate by 25 percent or more if they focus on finding new workers through inside sources such as former employees, people referred by current or former employees and internal job postings. "These inside sources are much more effective than outside sources, such as advertising and employment agencies, in attracting employees who stay," said John Wanous, co-author of the study and professor of management and human resources at Ohio State's Fisher College of Business. The findings are important because most human resource executives still think advertisements are the most effective source of new hires, according to a survey conducted and published last summer by the Society of Human Resource Research and CCH, Inc. "We hope our results will persuade human resource professionals to re-direct their current recruitment practices," Wanous said. Wanous, who is also professor of psychology, conducted the study with Michael Zottoli, a psychology graduate student at Ohio State. Their results will be published in an upcoming issue of the journal Human Resource Management Review. One strength of this research is that it includes more studies than had ever been analyzed previously, Wanous said. The studies involved workers from a wide range of fields, including fast food and retail workers, insurance agents, bank tellers and public school teachers. Wanous and Zottoli examined the studies to find the job survival rate -- those employees who stayed with a firm for at least one year. They found dramatic differences related to recruitment strategies. The findings suggest, for example, that if a company currently uses mostly outside recruitment sources and has a job survival rate of 30 to 70 percent, the rate will increase by 8 to 10 percentage points if they switch to more effective sources. "The actual percentage increase can be considerable," Wanous said. "A company that goes from a 40 percent one-year job survival rate to a 50 percent rate is actually getting a 25 percent improvement in job survival for that year." Improved job survival rates can mean big savings for a company. Wanous calculated that a national fast-food chain that needed 100,000 new workers annually could save $9.1 million a year by increasing job survival from 50 percent to 59 percent (based on an average cost of $300 per new hire). In another part of the analysis, the researchers also examined 14 studies that researched the link between recruitment sources and job performance. In general, the results showed that employees who were recruited from inside sources did better on the job -- according to indicators such as supervisor ratings -- than did employees hired from outside sources. "These results weren't as strong as those for job survival, but they are another indication of the value of recruiting people from inside sources," he said. Why are inside job sources so much better than outside ones? The results fit with a theory that Wanous developed 20 years ago that he calls the realistic-information hypothesis. "People who have inside sources at a company are more likely to know what it is really like to work there. They know the ups and downs. The better someone's information, the less likely he or she is to quit from unexpected disappointments," Wanous said. # Contact: John Wanous, (614) 292-4591; Wanous.1@osu.edu Written by Jeff Grabmeier, (614) 292-8457; Grabmeier.1@osu.edu

Ohio State University

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