BUS 401

Section

Title: Recruitment of employee based on recommendation
rather than qualification.
Company: Juvenile service ltd.

Prepared for: Dilara Afroz Khan (Senior Lecturer)

Prepared by:

Faisal Khaled Ahmed 0930667530
Farhana Kashfi Zahir 0930746030
Sawgat Mahmud 0930837030
Anika Ishrat 1010098030
Zahid- Ul- Hasan 1010204030
Sha Foysal Bin Amin 1010229030
Ashraful Adib 1020090530




DUE DATE: 24/04/2014
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Table of Content:


Topic: Page no.

Introduction 3
Research Objective 4
Hypothesis 4
Literature Review 5
Research Limitation 7
Research Methodology 7
Data Analysis 8
Conclusion 17
Bibliography 18
Appendix 19











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Introduction:

It is a wide spread phenomenon all around the world that recruitment process is biased
towards various individuals with high links and high contacts. Considering Bangladesh there are
lots of different private as well as public companies where this kind of biasness approach is taken
place during recruitment. This is an unethical act that takes place as fresh graduates or more
deserving candidates are pushed away from opportunity that they rightly deserve. A lot of
undeserving candidate is placed in position in the corporate world where they are not capable of
without the backing of high links or political links. This causes a demonization to the capable
candidates who would have done a much better job is the opportunity was offered. This research
paper will focus on a local Bangladeshi company Juvenile Service ltd which is a buying house
in situated in Bangladesh and its recruitment process which is usually biased on granting jobs to
candidates with recommendation rather than candidates with merits or much deserving
candidates. Thus in this research will focus whether it is an unethical act that is taking place in
this company or not. Due to this practice taking place in the organization employees existing in
the company who is not hired by recommendation feels less motivated toward work and sense
less scope of achievement. This kind of practice reduces job satisfaction in the work place and
hence distorts the job objective. This research will help to understand more about the elements
that revolves around this current issue going on in the job sector of Bangladesh and specially in
Juvenile Service Ltd.







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Research Objective:

Our objective is to look in to the core reason why this kind of unethical act is encouraged or
not resisted in Juvenile Service ltd. This paper will also focus on whether this kind of approach
benefits the company in any way or does it have impact on the work environment. To understand
if there is any other external factor that the company face other than pressure from top
management or people with high political background that acts as catalyst to this unethical act.
This research will bring out policies that will help the company to move away from such
unethical act. This research will answer questions like:-
1. Is it beneficial to the company to hire employees on recommendation rather than merit?
2. Does this unethical act have any impact on the work environment?
3. Do employees with recommendation contribute more to the company than employees
selected on merit basis?

Hypothesis:

H0: Recruitment of employees based on recommendation is unethical.
H1: Recruitment of employees based on recommendation is ethical.

H0: Unethical recommendation does not have any impact on work environment.
H1: Unethical recommendation has any impact on work environment.





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Literature Review:

The connection between fraud and the tone at the top of an organization has received
international attention over the last few years. Tone at the top refers to the ethical atmosphere
that is created in the workplace by the organization's leadership. Whatever tone management sets
will have a trickle-down effect on employees of the company. If the tone set by managers
upholds ethics and integrity, employees will be more inclined to uphold those same values.
However, if upper management appears unconcerned with ethics and focuses solely on the
bottom line, employees will be more prone to commit fraud because they feel that ethical
conduct is not a focus or priority within the organization. Employees pay close attention to the
behavior and actions of their bosses, and they follow their lead. In short, employees will do what
they witness their bosses doing.
It is crucial to a companys success for executives and management to set an ethical example (or
tone) of how their employees should behave in the workplace. When those in top positions set
the wrong, unethical example by committing fraud, their employees will take heed and follow in
their bosses fraudulent footsteps, creating an entire culture of workplace fraud. When executives
put pressure on their employees to meet unrealistic goals to yield profits for the company, they
are essentially forcing employees to do whatever it takes to achieve those goals, whether they
achieve those goals improperly or not. In their minds, the end justifies the means.
Thus when talking about all the unethical practice in the workplace and how the
employees will learn from the top management about the unethical behavior. Recruitment in
most cases tend to be recommendation based rather that qualification, thus when employees
know that unethical practice is going on at the first step i.e. recruitment then the employee will
have less motivation on work and have high possibility of conducting unethical behavior at work
place. This leads to negative workplace environment.
People opted not to report about the unethical act of recruitment by recommendation as
he/she may have followed the same route or thinks that it is done by the top level officers and
going against them will have his/her job at stake. Obviously, there are many different forms of
misconduct that go on in the workplace and are observed by employees every year. Yet, many
employees do not report this unethical conduct. According to the National Business Ethics
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Survey, only 55 percent of employees in 2005 said that they reported misconduct that they
observed in the workplace. This was a 10 percent decrease from the previous survey in 2003.
In the past, employees under age 30 with little tenure (less than three years) were the
least likely of any group to report ethical misconduct. This was due to their fear of retaliation
from management and coworkers. They also felt that managers would consider them trouble
makers if they reported unethical conduct. Middle managers and senior managers were most
likely to report misconduct. However, in 2005, there was no significant statistical relationship
between age/tenure and reporting. The top reasons for not reporting unethical conduct, according
to the 45 percent of employees who did not report misconduct.
To eliminate such activities the HR department has to play a vital role in this issue they
have to carefully screen job applicants According to the ACFEs Fraud Examiners Manual, one
of the easiest ways to establish a strong moral tone for an organization is to hire morally-sound
employees. Too often, the hiring process is hastily conducted. Organizations should conduct
thorough background checks on all new employees, especially managers and those who will be
handling cash. These background checks should include a thorough examination of the
candidates educational credentials, criminal record, history of employment, and references.
Speaking with former employers or supervisors can provide valuable information about a
persons reputation for trustworthiness, moral conduct, and loyalty.
Implement a confidential hotline Hotlines have proved to be a very effective reporting
mechanism. According to the ACFEs 2006 Report to the Nation on Occupational Fraud and
Abuse, occupational frauds were more likely to be detected by a tip than by any other means
such as internal audits, external audits, or internal controls. Additionally, organizations with
hotlines had a median loss of $100,000 per scheme and detected their frauds within 15 months of
inception. By contrast, organizations without hotlines suffered twice the median loss ($200,000)
and took 24 months to detect their frauds. The mere mention of an anti-fraud, confidential
hotline can deter fraud. When employees are aware of workplace ethics, their likelihood of
engaging in misconduct decreases, according to the NBES survey. An organization can place an
advertisement in the staff break room with a hotline number that employees can call to
confidentially report suspicious fraudulent activity in the workplace. Promoting anti-fraud
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hotline numbers will send the message that the company is encouraging an ethical environment
by allowing employees to fearlessly report misconduct.

Research Limitation:

Time constraints is a major limitation is this research as the research paper will have to be
finished in two months time which can lead to various forms of error. The sample size which will
be used for the survey is very less to actually understand the depth and various variables
involved in this research. Budget limitation will limit the paper from other methods to conduct
this research which could have been more accurate and effective.
The survey carried out might have a biasness trend which can limit us from
understanding the factors preciously for this research and hence lead us to conclusion to a
different direction.

Research Methodology:

For primary research, we have conduct survey of the representative sampling of
employees working in Juvenile service ltd (Management trainee officer, Executive, Clerks etc).
Our sample size for this research is n=50. An interview was also taken place on few of the
employees to better understand the depth of the scenario of our topic. Therefore, questioner was
developed to inquire the target sample about their personal values, their expectation from their
job, their social recognition, their work satisfaction, their ethical values etc to determine how
they feel about the unethical recruitment process that is carried out in their company.
For the papers secondary research, we have used the resources from our university
library where we can access the j-store for journals and will also consult few books. This
research paper has information from different websites and related articles on the relevant topic
about various recruitment acts that is unethical to law. Google Scholar will also be used for
scholarly journals.
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Data Analysis:

This section presents the findings of our primary research on ethical recruitment
practices of Juvenile service ltd and its relevant impact upon the organization. These findings are
set in accordance to our set of initial hypotheses and attempts to shed concluding evidence for or
against them. Thus, these findings are analyzed according to the relevant theories and concepts
of business ethics, aided by our secondary research of various ethical practices concerning
recruitment in similar situations throughout the world.

Set of Findings from Questionnaire:

Figure 1 shows us that amongst the 50 people
surveyed, 40 of them were employees, 5 were
employers, and 5 labors. Such a dynamic was
created in order to ensure that a diverse array of
opinions was collected from the survey where
biasness from different parties, the employer or
the employee, would get minimized. This was
one essential requirement for accurate collection
of information regarding the issues under
discussion. By ensuring that the majority of the respondents of the survey were employees, we
ensured that in-depth knowledge of the effects of various forms of recruitment could be acquired.

80%
10%
10%
Segments of Survey
Sample
Employee Employer Labor
Figure 1: Segments of the Sample surveyed
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Figure 2 illustrates the firms strategies
concerning its source of recruitment 80% of the
respondents claimed that the company preferred
internal recruitment. Internal recruitment is a
cheaper alternative to external recruitment and
helps ensure that the firm has a greater control
and better relation with its employees. It is a form
of retention of employees by providing them with
career growth, and generally is highly
appreciated by employees. But it also gives the
top management adequate scope to play favorites
and hire or promote the people with whom they
have good relations into the vacant positions.

Figure 3 illustrates the importance that an
educational degree plays in the recruitment
process, according to the respondents. While 50%
of them stated that the required level of
educational qualification is a must, 50%
declared that though it is of importance, it is not a
mandatory. None of the respondents perceived it
as having zero influence on the recruitment
process. If we focus on the statement of the
respondents who declared education as important
but not a strict, mandatory guiding tool, we can
realize that there lies some scope for informal
hiring where managers do have the capability to
hire people who do not meet the educational
requirements set by the company itself.

80%
20%
Preferrred Source of
Recruitment
Internal External
Figure 2: Internal Recruitment vs. External Recruitment
50% 50%
0%
Importance of
Educational
Background
Very Important Slightly Important
Not Important
Figure 3: Importance of Educational Qualification
60%
20%
20%
Importance of Specific
Skills
Very Important Slightly Important
Not Important
Figure 4: Importance of Technical Skills
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While Figure 3 discussed the perceived role of educational qualifications of a given applicant for
recruitment, Figure 4 discusses about his/her technical expertise and level of competence. While
60% of the respondents viewed candidates possessing the specific technical skills required to do
their work is a mandatory, 20% stated that it was just slightly important, while the rest 20%
viewed is as not important at all. Here, we must try and ascertain that most of the respondents of
the latter group could have mainly formed of labor. Nevertheless, here still lies even more scope
for unethical recruitment where the managers can simply recruit a person they want, regardless
of whether anyone else possesses a better repertoire of skills than him. Yet, we must also
acknowledge that firms do take in less competent people and train them later if they cannot find
a supply of competent people in the applicant pool.

Figure 5 illustrates the frequency of hiring under-
qualified candidates for a position. Here the
views of the respondents were highly varied as
two groups 30% stated that it is only done for
emergencies, and it is only done rarely,
respectively. 20% of the respondents felt that the
company never hired under-qualified people,
while the rest 20% admitted that they actually did
it very, very regularly. Such variation in answers
to the same question deduces the fact that either
the respondents do not share the same knowledge
about their organizations recruitment process, or
they were not sharing real information. But both
these cases can deliver wrong sets of information.
Therefore, further discussion into the matter
would be futile.


20%
30% 30%
20%
Frequency of Hiring
Underqualified
Candidates
All the time Only for emergency
Sometimes Never
Figure 5: Hiring without adequate Qualification
20%
60%
20%
Degree of Fair
Treatment by
Managers
Quite Fairly Slightly Fairly Unfairly
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Figure 6 shows how equally the respondents feel
that they are treated by their managers. While
60% stated that they are treated slightly fairly, the
rest were divided in their opinions, where half of
them felt that they were treated very fairly and
the other half felt they were treated unfairly. On
inspection, we would find that the people who
felt that they were inferiorly treated were in the
latter section, and the people who were given
additional privileges thought that treatment was
very fair. In short, discrepancy concerning
treatment of employees from their seniors exists quite significantly. This can be a clue which
leads to favoritism and biasness concerning promotions and rewarding systems for the
employees.

Figure 7 illustrates the importance of good recommendations for a fresh recruit for the company.
While 60% of the respondents felt that good recommendations were important but not
mandatory, 20% insisted on it having an even greater importance, and the rest 20% believed that
new recruits need not have such recommendations to face the recruitment process. If our findings
had indicated that recommendations for recruitment played a very important role for this
organization it would have led us to deduce strongly that the management always picked up their
recruits through unethical means of recommendations all the time. But the fact that the majority
of the respondents viewed it as slightly important shows that even though there are enough
evidence to suggest unethical, recommendation-based recruitment present in the organization, it
is not the primary method for hiring new employees.

Figure 6: Equal Treatment by Managers
20%
60%
20%
Importance of Good
Recommendation
Very Important Slightly Important
Not Important
Figure 7: Significance of Recommendations for
Recruitment.
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Figure 8 illustrates the performance of the new recruits who are hired based primarily on
recommendation as compared with the other employees of the firm, typically the ones who hold
positions primarily based upon their competence and work efficiency. While 3 groups of
respondents, 20% each, stated that these new recruits performed slightly better, significantly
better, and slightly worse than the typical employee, respectively, the majority, 40%, stated that
the competence and efficiency of the recruits who came through good recommendation is
initially quite poor, as compared to their regular standards. This begs to question the plan behind
recommending for recruiting new employees who do not perform according to the organizations
standards. And the answer might be that the primary intention of managers of recruiting these
employees was not to maximize the effect on
organizational efficiency the intentions of such
managers must have been focused on an external
or personal issue. This is a severe form of
unethical practices of recruitment for the
organization.

Figure 9 focuses on the impact that under-
qualified candidates have on organizational
efficiency, according to the respondents of the
survey. As with the previous discussion regarding
the efficiency of such employees, the majority of
the respondents, 40%, felt that these employees
brought significantly negative impacts upon the
organizational efficiency, while 3 groups of
respondents, 20% each, felt that the impact is
highly positive, slightly positive, and slightly
negative, individually. It must be noted that, like
the previous discussion, none of the respondents
felt that such recruitment brings no change to
20%
20%
0% 40%
20%
Performance
Comparison of Highly
Recommended
Recruits
Significantly better Slightly better
Same Slightly Worse
Significantly Worse
Figure 8: Performance of Recruits hired primarily on good
Recommendations
20%
20%
0%
20%
40%
Impact of Hiring
Underqualified Candidates
on Organizational Efficiency
Highly Positive Impact
Slightly Positive Impact
No Impact
Slightly Negative Impact
Highly Negative Impact
Figure 9: Unqualified Employees' Impact on
Organizational Efficiency
10%
10%
0%
20%
60%
Impact of Hiring
Underqualified Candidates
on Work Environment
Highly Positive Impact
Slightly Positive Impact
No Impact
Slightly Negative Impact
Figure 10: Unqualified Employees' Impact on Work
Environment
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organizational efficiency. Thus, we can deduce that recruiting under-qualified employees does
not bring coherence within the work environment or organizational efficiency, once again
leading to the question of employing such candidates to being with.

Figure 10 focuses on the impact that under-qualified candidates have on the work environment,
according to the respondents of the survey. The majority of the respondents, 60%, felt that these
employees brought significantly negative impacts upon the work environment. It must be noted
that, like the previous discussion, none of the respondents felt that such recruitment brings no
change to organizational efficiency. Thus, we can once again deduce that recruiting under-
qualified employees does not bring coherence within the work environment, leading to the
question of employing such candidates in the first
place.

Figure 11 focuses on the respondents views
concerning the most efficient means of
recruitment, provided that it is either through
recommendations or through educational
qualification. 60% of the employees seemed to
state that recommendation should be the primary
criterion for recruitment, while only 40%
preferred educational qualifications more. This goes against most of our initial findings from the
outset. But on further explanation of their choice it was deduced that they did not feel that
educational degrees and experience were adequate enough to judge a potential employees
prospects, and proper recommendations from a neutral source could provide a better guidance.
Yet they might have felt that some management might at times exploit such an opportunity and
recruit employees who did not have adequate potential to work in the given positions.

Set of Findings from Regression:

40%
60%
Recommended
Primary Criterion for
Recruitment
Educational qualifications and level of
experience
Recommendations from top management
Figure 11: Recommendation vs. Education and Experience
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Two sets of regression were run in an attempt to prove the two following hypotheses:
1. The company recruits more employees based on recommendation than on qualifications.
2. The impact of hiring employees based on recommendations on organizational efficiency
is negative.
The major aim of this research was to prove that these two initial hypotheses were correct. In
case the regressions run resulted in a negative set of answers we could discard these initial
hypotheses and deduce that the company in fact recruits most of tis employees primarily based
upon their educational and technical qualifications rather than good recommendations, and that
any recommended employee, irrespective of his/her qualification impacts the organization in a
positive manner.
Hypothesis 1:
The company recruits more employees based on recommendation than on qualifications.
Regression Analysis:


Validity:
The model used to generate these values have a strong validity behind it as is explained by an
adjusted R Square value of 0.79, which means that this model can explain 79% of real world
practices of the company. Generally, most statisticians take an R Square value of .60 or more as
a reliable figure for the regression model.

Hypotheses Testing Result:
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.89529863
R Square 0.80155964
Adjusted R Square 0.79742546
Standard Error 12.1772013
Observations 50
ANOVA
df SS MS F Significance F
Regression 1 28750.27692 28750.28 193.8862733 1.77045E-18
Residual 48 7117.643083 148.2842
Total 49 35867.92
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 1.90707497 5.052034378 0.377487 0.707476074 -8.25072076 12.064871 -8.250720764 12.06487071
X Variable 1 22.4941922 1.615462458 13.92431 1.77045E-18 19.24608728 25.742297 19.24608728 25.7422971
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The F
CALC
is lower than the F
CRIT
, which means that the initial hypothesis is true. Thus we can
deduce that this company does in fact hire employees based more on recommendations than on
qualifications.




Scatter Plot of the Model:



Hypothesis 2:
The impact of hiring employees based on recommendations on organizational efficiency is
negative.









y = 0.0356x + 0.5155
R = 0.8016
0
1
2
3
4
5
0 20 40 60 80 100 120 S
t
r
e
n
g
t
h

o
f

R
e
c
o
m
m
e
n
d
a
t
i
o
n
s

% of Hiring employees
Hiring based on Recommendations
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Regression Analysis:




Validity:
The model used to generate these values have a strong validity behind it as is explained by an
adjusted R Square value of 0.59, which means that this model can explain 59% of real world
practices of the company. Generally, most statisticians take an R Square value of .60 or more as
a reliable figure for the regression model, and the R Square for this model is roughly .61

Hypotheses Testing Result:
The F
CALC
is lower than the F
CRIT
, which means that the initial hypothesis is true. Thus we can
deduce that when the company hires employees primarily based upon their recommendations it
results in negative impacts upon the organizational efficiency and productivity.








SUMMARY OUTPUT
Regression Statistics
Multiple R 0.779202584
R Square 0.607156668
Adjusted R Square 0.598972431
Standard Error 15.53817765
Observations 50
ANOVA
df SS MS F Significance F
Regression 1 17911.12169 17911.12 74.18611 2.64982E-11
Residual 48 11588.87831 241.435
Total 49 29500
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 18.15449735 6.912019927 2.626511 0.011543 4.25695009 32.052045 4.25695009 32.0520446
X Variable 1 13.76719577 1.598395243 8.613136 2.65E-11 10.55340679 16.980985 10.5534068 16.9809847
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Scatter Plot of the Model:



Conclusion:

From the data analysis we can conclude that our null hypothesis is accepted as
recruitment of employees based on recommendation is an unethical act that is taking place in
Juvenile service ltd. Due to this unethical act the employee loose motivation and faces
uncertainty in their work. Unethical act of this type tend to have negative impact on the work
environment in the company. Thus the HR department should look into this issue and establish
or restructure their recruitment policy so that such unethical act can be minimized and eventually
eliminated, which will later increase the work environment of the company and hence translate
to profitability. As productivity of employees will increase with high moral and ethical work
environment, as productivity increases the company can expect higher profitability and wealth
maximization which it the ultimate goal.





y = 0.0441x + 0.81
R = 0.6072
0
1
2
3
4
5
6
0 20 40 60 80 100 120
I
m
p
a
c
t

o
n

o
r
g
a
n
i
z
a
t
i
o
n


% of employees hired through recommendation
Impact of recruiting recommendation-
based employees on organization
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Bibliography
Anon., n.d. TONE AT THE TOP:, s.l.: ASSOCIATION OF CERTIFIED FRAUD
EXAMINERS .
Bagehot, 2011. The depressing tale of Johann Hari. The Economist.
MelissaMelander, S. M. &., n.d. Historical Cases ofUnethical Research, s.l.:
University of North Dakota.
Roth, W.-M., 2004. Political ethics, Unethical politics. Qualitative Social Research,
Volume 5, p. 3.