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A Study on the Effectiveness of Internal recruitment vs.

External Recruitment in the Banking Industry in the UK

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Acknowledgement

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Abstract
The recruitment procedure has great importance in selecting the best employees for the firm who
can help improve the organisational efficiency and performance. Organisations popularly follow
the internal and external recruitment procedures to select employees for the firm. The researcher
has tried to investigate which recruitment method has been more effective in recruiting the
employees. The popular internal recruitment sources are existing employees (using promotion,
transfer, job posting etc.), employee referrals, former employees etc. On the other hand, the
external recruitment includes recruitment via posting advertisements, employment exchange,
campus recruitment, walk-ins and talk-ins, consultants, e-recruitment, international recruiting
etc. These methods are followed to select the most efficient employees for the firm. The
researcher in this research has followed the positivist philosophy under an experimental strategy
to follow the mixed research methods where both the descriptive and numeric information were
analysed. The researcher collected secondary data following the observational method and used
different graphs and charts to show the findings. The researcher collected the information
regarding the recruitment methods in descriptive form. The information regarding the
organisational efficiency has been collected in numeric form. The information related to the net
operating income and net income has been analysed to determine the efficiency of the banks. The
findings show that the banks which follow the internal recruitment procedure have increased the
organisational efficiency. On the other hand, the banking organisations which followed the
external recruitment method to select the employees have failed to increase the efficiency.
Analysing all these information, the researcher has concluded the research stating that the
internal recruitment method is more effective in the UK banking industry in order to increase the
organisational efficiency.

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Table of Contents
Signed Statement...........................................................................................................................ii

Acknowledgement........................................................................................................................iii

Abstract.........................................................................................................................................iv

Chapter-1: Introduction................................................................................................................1

1.1. Research Background.......................................................................................................1

1.2. Problem Statement............................................................................................................1

1.3. Rationale of the research...................................................................................................2

1.4. Aim of the research...........................................................................................................2

1.5. Research objectives...........................................................................................................2

1.6. Research questions............................................................................................................3

1.7. Research hypothesis..........................................................................................................3

1.8. Research structure.............................................................................................................4

Chapter-2: Literature Review......................................................................................................5

2.1. Introduction...........................................................................................................................5

2.2. Recruitment...........................................................................................................................5

2.2.1. Definitions of recruitment..............................................................................................5

2.2.2. Factors affecting recruitment.........................................................................................6

2.2.3. Sources of Recruitment..................................................................................................6

2.3. Internal Recruitment.............................................................................................................7

2.3.1. Definitions of internal recruitment................................................................................7

2.3.2. Types of internal recruitment.........................................................................................7

2.3.3. Importance of internal recruitment................................................................................9

2.4. External Recruitment..........................................................................................................10

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2.4.1. Definitions of external recruitment..............................................................................10

2.4.2. Sources of external recruitment...................................................................................10

2.4.3. Importance of external recruitment.............................................................................11

2.5. Selection procedure............................................................................................................12

2.6. Organisational Efficiency and Effectiveness......................................................................12

2.7. Effectiveness of internal and external recruitment on organisation efficiency..................13

2.8. Conceptual Framework.......................................................................................................13

2.9 Summary..............................................................................................................................14

Chapter 3: Research Methodology.............................................................................................15

3.1 Research Philosophy............................................................................................................15

3.2 Research Approach..............................................................................................................16

3.3 Research Method.................................................................................................................16

3.4 Research Strategy................................................................................................................17

3.5 Data Collection and Analysis Method.................................................................................17

3.6 Sampling Method and Size..................................................................................................18

3.7 Reliability and Validity........................................................................................................19

3.8 Ethical Considerations.........................................................................................................19

Chapter 4: Result and Discussion..............................................................................................20

4.1 Discussion of the Data Sources...........................................................................................20

4.2 Results and Findings............................................................................................................20

4.2.1 Recruitment Procedure of Barclay’s Bank...................................................................20

4.2.2 Recruitment Procedure of HSBC and SCB Bank.........................................................21

4.2.3 Recruitment Procedure of Lloyds Bank.......................................................................21

4.2.4 Recruitment Procedure of Citi Bank.............................................................................22

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4.2.5 Organisational Efficiency.............................................................................................23

4.3 Analysis and Discussion......................................................................................................26

Chapter 5: Conclusion and Recommendation..........................................................................30

5.1 Conclusion...........................................................................................................................30

5.2 Recommendations................................................................................................................31

Reference......................................................................................................................................34

Appendix.......................................................................................................................................38

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List of Figures
Figure 1: Sources of recruitment.....................................................................................................7
Figure 2: Research Conceptual Framework..................................................................................14
Figure 3: Operational Efficiency of Barclay's Bank......................................................................23
Figure 4: Operational Efficiency of HSBC...................................................................................24
Figure 5: Operational Efficiency of Standard Chartered Bank.....................................................24
Figure 6: Operational Efficiency of Lloyds Bank.........................................................................25
Figure 7: Operational Efficiency of Citi Bank..............................................................................26
Figure 8: Job Offerings of Barclay’s Bank....................................................................................38
Figure 9: Internship Offering for Students in HSBC.....................................................................39
Figure 10: External Recruitment Offerings for Lloyds bank.........................................................40
Figure 11: External Recruitment Offerings for Lloyds bank.........................................................41
Figure 12: External Recruitment Offering of Citi Bank................................................................42
Figure 13: Operating and Net profit of Barclays Bank..................................................................42
Figure 14: Summary Income Statement of HSBC........................................................................43
Figure 15: Income Summary of Standard Chartered Bank...........................................................44
Figure 16: Income Statement of Lloyds Bank...............................................................................44
Figure 17: Income Statement of Citi Bank....................................................................................45

List of Tables
Table 1: Structure of the Research...................................................................................................4
Table 2: Recommended Policy Implementation Plan...................................................................31

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Chapter-1: Introduction

1.1. Research Background

According to Arnolodo (2012), employee recruitment is an important part of human resource
management because an effective employee recruitment process selects the right person for a
right place in an organisation. Supporting his own statement, he added the employee recruitment
procedure helps the organisation choose the right person considering the job description and
matching the requirements with the person specifications. There are major two types of
recruitment procedures namely external and internal recruitment procedures or methods. Chen
(2017) mentioned the external recruitment helps select the most efficient employees which can contribute
to the increase in organisational efficiency. On the other hand, DeVaro (2016) stated the internal
recruitment selects that individual who is already known to the work environment and he can quickly
understand his job responsibilities and can effectively contribute to the increase in organisational
efficiency. The researcher could understand the importance of both these recruitment methods but wished
to identify the more effective method between these two in order to increase the organisational efficiency
since most of the banking organisations were found to get concerned of selecting the best recruitment
method for selecting employees as shown by Ballantyne (2013). Therefore, the researcher has
decided to conduct the study in the banking industry in the UK to identify the best recruitment
method. The researcher will investigate commercial, investment banks in order to collect data
and analyse for reaching the conclusion to the research. The researcher has selected Barclay’s
bank, HSBC, Standard Chartered Bank, Lloyds Bank and Citi Bank for collecting the data and
conducting the study. Barclays Bank is the leading commercial bank in UK with its branches in
more than 40 countries. Almost 129, 400 people are employed in Barclays Bank (Barclays.co.uk,
2017). The employees are recruited both from internal and external recruitment. HSBC is a
leading multinational Hong Kong based bank in the UK with more than 1,100 branches and
57,000 employees (Hsbc.co.uk, 2017). Both internal and external recruitment are good sources
of employees in the bank. Standard Chartered bank is another important UK based multinational
bank that is operating in the UK market efficiently. With more than 68,000 employees Standard
Chartered bank is operating in 7 countries in the Europe (Sc.com, 2017). Employees in Standard

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Chartered Bank are recruited both in external and internal recruitment method. Lloyds Bank is
one of the four biggest clearing bank in the UK. The bank is actively operating across the whole
UK with around 45,856 employee who are either recruited internally or externally
(Lloydsbank.com, 2017). Citibank is awarded with the best consumer digital bank in the UK in
2014, 2015 and 2016. This bank is actively running its business operations in the UK with an
employee pool of 34,000 employees. Citibank also recruits employees both from internal and
external sources (citibank.com.uk, 2017).

1.2. Problem Statement

Both the internal and external recruitment methods play a significant role in selecting the
efficient employees for the firm. But the researcher found different thoughts among the
specialists regarding this issue. Different research works from Chen (2017), Armstrong (2014),
Branine (2009) etc. indicated that the banking organisations waste their time to select the best
recruitment method. The researcher investigated a lot and found no research work to efficiently
fill this gap in the research area. No research work has shown the better recruitment method
between these two in the banking industry. Therefore, the researcher has shown his or her
interest on this issue and has intended to fill the market gap by identifying the best recruitment
method for the banking organisation. This research is expected to deliver adequate evidence that
will inform the banking organisations which recruitment method has more benefits and low costs
in the banking industry. It will help the banking firms to select the best strategy without costing
much time.

1.3. Rationale of the research

The research study has studied internal recruitment and external recruitment and find their
effectiveness in the banking sector.

The banking sector is service based and employees play a crucial role to create value for
customers. Selecting the right recruitment practice helps ensure efficiency, the productivity of
human resources (DeVaro, 2016). But which is the best recruitment method has yet to be
confirmed by the existing research workers. Therefore, it has become a research issue for the
researcher.

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The topic is the investigation of the comparative advantage of two recruitment methods which
greatly relate to the employee behaviour. The employee behaviour frequently changes over time
and hence this has become a research issue now because conducting the research on a future date
might fail to reflect the current scenario of the industry. This research made an in-depth study
regarding the matter. The researcher has followed the positivism philosophy under mixed
research method. The experimental strategy has been followed to collect both the numeric and
descriptive data from secondary sources. The recruitment information of the mentioned five
companies and their efficiency measuring information have been collected as the secondary data.

However, this research could shed light on different recruitment tools used under either the
internal or the external recruitment method. The researcher has shown the advantages and
disadvantages of these methods. Finally, the researcher has shown the recruitment procedure and
efficiency of every five organisations and has related these issues to conclude which method has
better effectiveness for the organisation to ensure increasing organisational efficiency.

1.4. Aim of the research

The research aims at analysing which one between the internal and external recruitment method
has better effectiveness in ensuring organisational efficiency in the UK banking industry. The
purpose of the research is also illustrating different recruiting methods and evaluating
comparative advantages of those methods so that the organisations can find the best model to
recruit the employees that can contribute to strengthen the workforce with a view to improving
the business performance.

1.5. Research objectives

In order to accomplish the research aim, the researcher has developed the following research
objectives. The objectives are-

 To critically analyse the cost and benefits of internal recruitment and external
recruitment
 To investigate the current recruitment practices for different levels of jobs in different
banking institutions in the UK

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 To find out the optimal recruitment practice for banks that contribute to their sustainable
development
 To recommend further issues implementing which the bank can improve the selection
process and ensures its sustainable development

1.6. Research questions

The researcher has decided to investigate the following questions in order to help obtain the
research objectives.

 How do companies in the UK financial sector recruit employees for different level of
jobs?
 How do UK banking organisations recruit employees from the internal sources?
 What are the external sources that banking companies consider for recruiting employees?
 What are the cost and benefits of internal recruitment in the banking organisation?
 What are the advantages and disadvantages of external recruitment in the banks?
 Which one between the internal and external recruitment method is the optimal
recruitment practice for banks that will contribute to their sustainable development?
 What are the recommendations implementing which the bank can improve the selection
process and ensures its sustainable development?

1.7. Research hypothesis

H0: Internal recruitment or external recruitment has no significant impact on organisational
efficiency

H1: Internal recruitment or external recruitment have a significant impact on organisational

efficiency.

1.8. Research structure

The researcher has followed the below-mentioned structure while conducting the research work.

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Table 1: Structure of the Research
Chapter Chapter Name
No.
1 Introduction
2 Literature review
3 Methodology
4 Analysis and
findings
5 Conclusion and
recommendation
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Description
This chapter of the research includes a brief on the background
of the study, the rationale behind conducting the study, aim
and objectives, research questions and hypothesis.
This chapter contains a critical review of the previous
literature regarding the effectiveness of external and internal
recruitment.
This chapter of the research includes the philosophy used in
research, research method, research strategy, data collection
plan, and ethical considerations for the research.
In this chapter, the researcher will investigate the effectiveness
of external and internal recruitment and discuss the findings
from the analysis.
This chapter includes the conclusion of the overall research
and recommendation on how to improve the effectiveness of
external or internal recruitment.
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Chapter-2: Literature Review

2.1. Introduction
In this part of the research, the researcher has reviewed the previous literature regarding external
and internal recruitment. The researcher has investigated external and internal recruitment by
reviewing the published literature on different types of recruitment, advantages and
disadvantages of the recruitment methods, and effectiveness of the recruitment method in
improving organisational performance. Finally, the researcher will draw a conceptual framework
showing the impact of external and internal recruitment process on improving organisational
performance.

2.2. Recruitment
According to Beardwell and Claydon (2008), the business corporations focus on Human
Resource Management approaches in the business to fulfil the organisational objectives and
materialising the strategic plans of the business. Armstrong (2010) argued Employee recruitment
and selection is an essential part of managing the human resources because the nature of the
recruitment pursued in HRM approach is highly influenced by the labour market condition and
the company’s strength in the market. Townley (2011) criticised employee recruitment has less
impact on the result of good management of human resource management. But supporting
Armstrong (2010), Arnolodo (2012) stated employee recruitment is an important part of human
resource management because an effective employee recruitment process collects the right
person for a right place in an organisation.

2.2.1. Definitions of recruitment

The researcher has found Recruitment is defined in different terms by a different researcher in
different kinds of literature. According to Bartel (2009), Employee recruitment is a structured
procedure in which an organisation collects a group of capable candidates for a job. The
candidates who have the highest match with the required qualifications and experience in the job
specification may eventually recruit in the organisation. Rotella (2010) argued recruitment is the

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process that has an aim to accumulate a number of qualified applicants to fulfil the needs of an
organisation at the lowest possible way. Sherman and Snell (2010) criticised employee
recruitment is the process of appointing an employee to a vacant position. Supporting Bartel
(2009), Pilbeam and Corbridge (2010) argued employee recruitment is the method in which an
organisation attempt to find and attract suitable candidates for a job, select the best candidates
and appoint the candidates in a vacant position effectively to satisfy the company needs. Sims
(2012) further explained the recruitment as a human resource management process where a set of
activities are coordinated to obtain sufficient numbers of an employee in a legal way at the right
time and place to provide a candidate and an organisation to find each other for their own
optimum interest. Storey (2015) stated Recruitment is the process of searching suitable applicant
for a job position and stimulating the applicants to apply for the job in the business. The process
of recruitment begins with the need for new human resources in one or many positions in the job
and ends with appointing the employees to the vacant job positions. The outcomes from the
process are the group of people who actively work in the job after being recruited.

2.2.2. Factors affecting recruitment

A large number of factors affects an organisation while recruiting employees from variety of
sources. Adnan et al. (2009) stated external and internal factors are the determining factors for
selecting the right way of recruitment for an organisation. Adnan et al. (2009) argued external
factors such as labour market conditions, brand image, political and legal considerations has
significant positive influence in using the way of recruitment. But Wickens and Hollands (2012)
criticised the way an organisation plans its recruitment is strategy is mainly dependent on firm’s
recruitment policy which is the internal factor. Supporting Adnan et al. (2009), internal factors
are important in shaping recruitment plan of a firm but it largely reflects external factors such
that an organisation need to follow the labour market rules while recruiting employees. Besides,
the brand image of the firm highly influence on attracting more candidates for a job position.

2.2.3. Sources of Recruitment

Bartel (2009) stated an organisation can recruit the required employees either from internal or
external sources. Bartel (2009) argued the selection of recruitment sources largely depends on
the internal and external factor of recruitment of the firm. Armstrong (2010) criticised the

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sources of recruitment does not have any influence on the firm. Opposing this, Arnolodo (2012)
stated recruitment sources has significant influence on effective recruitment because it deals with
handling the human resources in a firm.

Source of Recruitment

Internal Recuritment External Recruitment

Figure 1: Sources of recruitment

Source: (Bartel, 2009)

2.3. Internal Recruitment

2.3.1. Definitions of internal recruitment

Sheila and Paul (2009) stated internal recruitment as a recruitment practice where the job
vacancies are filled by promotion or lateral transfer, a process where job position is changed
without a significant change in employment facilities. Sheila and Paul (2009) argued internal
recruitment is a simple process of fulfilling the employee needs from the internal source of the
organisation. Nzukuma and Bussin (2011) stated internal recruitment as the process fulfilling
employee needs by positioning existing employees in a new position within the organisation.
Opposing this, Pilbeam and Corbridge (2012) stated internal recruitment is not just appointing
current employees in new positions rather it refers to the process where new employees are
recruited from the transfer, promotion and job posting of existing employees, reference of the
existing employees, former employees or previous applicants.

2.3.2. Types of internal recruitment

2.3.2.1. Existing employees

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According to Rotella (2010), the business organisation gets a huge number of efficient
employees from recruiting the current employees in a new position in the organisations. Pilbeam
and Corbridge (2010) argued promotions and transfers of employees who currently work in an
organisation are an efficient source of recruitment. Supporting this, Armstrong (2010) stated
employees who are recruited by means of promotion and transfers turns in to efficient employees
as they have familiarity with the organisation, build good morale, become ambitious. Nzukuma
and Bussin (2011) criticised Job posting and Job Bidding are the efficient sources of recruitment
from existing employees as it involves less cost in the recruitment process. Keshav (2013)
argued promotion and transfers of employees in better position make the employee more
motivated to work towards the organisational goals.

2.3.2.2. Employee Referrals

Sheila and Paul (2009) stated organisations can get potential candidates from the
recommendations of current employees in an organisation. Sheila and Paul (2009) stressed that
most of the job is filled by the word-of-mouth recommendations from the existing employees.
Ballantyne (2013) criticised employee referrals for candidates in recruitment sometimes creates
nepotism which eliminates the chance of getting potential skilled employees who are not
referred. Supporting Sheila and Paul (2009), Keshav (2013) argued most of the manager get
high-quality employee-referred candidates as existing employees usually refer better candidates
and hesitate to refer candidates who might not have potentiality. Williams (2014) stated
recruiting through advertisement is more costly than employee referrals in recruiting employees
and also provides efficient workers most of the time.

2.3.2.3. Former employees

According to Sherman and Snell (2010), former employees are a good source of internal
recruitment. Ullins (2010) criticised workers who once left their job don’t perform well after
returning back into the job again and results in poorer employee turnover. Opposing this,
Arnolodo (2012) argued former employees know the organisations well and they tend to be more
loyal when they return to the job again. With previous experience, a former employee turns into
an efficient employee. Williams (2014) stated organisation feel safer when employing former

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employees again into a new job position as the performance of the former employees are already
known to the recruiters. Besides, the organisation knows well about strengths of the former
employees and this makes the organisations employ the former employees into the right position
where he can work well and increase productivity.

2.3.2.4. Previous Applicants

Armstrong (2009) stated the previous applicant who applied for a job earlier can be a good cheap
and good source of employees. Townley (2011) criticised previous applicants are not included in
the category of internal recruitment. Opposing this, Arnolodo (2012) argued though approaching
the previous applicants is not a true source of internal recruitment but it can be used as an
internal source because it has the similar characteristics like an internal source such as quick
response, cheaper than other external sources. Odiorne (2014) stated though the previous
applicant who failed to get elected are more qualified for the unskilled or semi-skilled job
organisations can appoint these candidates in professional openings.

2.3.3. Importance of internal recruitment

Nzukuma and Bussin (2011) stated organisations can reduce the labour turnover rate of potential
employees through internal replacement. Nzukuma and Bussin (2011) argued the well
performed employees in the organisation can be reassigned in the area where the employee has
expertise. This will increase the retention rate of employees and will reduce the cost associated
with appointing new employees. Keshav (2013) added internal recruitment reduce the time
consumption of filling a vacant position. Keshav (2013) argued organisation find it difficult in
tight job market where skilful workers are insufficient, therefore, the job position may remain
vacant for long which may cause potential loss of performance for the company in a competitive
environment. This is reduced by internal recruitment as existing employee can be transferred,
promoted or newly positioned into the vacant position in a short time. Storey (2015) criticised
Keshav (2013) and Keshav (2013) by stating that internal recruitment provides the organisation
with limited choice of skilled candidates as it eliminates the involvement of skilful fresh

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applicants for the job. Storey (2015) argued internal recruitment doesn’t tap fresh skilled
applicants outside the firm which results in loss of potential candidates. Besides, this gives the
automatic right to existing employee to promote into senior position without judging the quality
of the employees. Opposing this, Williams (2015) stated internally recruited employees might
offer cost reduction in managing human resources the performance of the employees is already
known to the recruiter. Williams (2015) argued internal employees made a number of
accomplishment which assist in more accurate assessment of professional skills and experiences
of the employees.

2.4. External Recruitment

2.4.1. Definitions of external recruitment

Beardwell and Claydon (2008) stated external recruitment as the process where organisations
recruits candidates from external source. Beardwell and Claydon (2008) argued that external
recruitment is a recruitment practice where job vacancies are filled by outsiders who are not
present employees of the employer. Arnolodo (2012) criticised the rejected applicant who are
contacted and recruited is sometimes fallen under internal recruitment. Ballantyne (2013) argued
previously rejected employees when apply and recruited in a particular organisation without
being contacted by the company is fallen under external recruitment. Ballantyne (2013) further
explained organisation when uses outside sources like advertisements, e-recruitment, campus
recruitment, walk-ins etc. to attract and recruit employees is usually called external recruitment.

2.4.2. Sources of external recruitment

2.4.2.1. Advertisement

Branine (2009) stated advertisement is the most common media of external sources of
recruitment where candidates applied by seeing the advertisement of the job vacancy in a
particular organisation. Branine (2009) argued advertisement has a communication power, if
designed creatively, to attract more responses from the job seekers. Arnolodo (2012) criticised
advertisements requires huge investment which is very costly to implement. Opposing this, Bassi
and Ludwig (2011) stated advertisement is the most effective method of attract potential
customers from distant places as advertisement reaches to people in distant place through print

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and electronic media. Bassi and Ludwig (2011) recruiters need careful attention with the wording
of advertisement and make it in way that does not show discrimination.

2.4.2.2. Campus Recruitment

Sheila and Paul (2009) stated campus recruitment is a traditional method recruiting employee
outside the organisation. Sheila and Paul (2009) organisations can recruit talented fresh
candidates from recruitment through job campaign in college or university campus. Supporting
this, Tom and Waterman (2012) stated organisations can employ young innovative mind in the
business through campus recruitment. Keshav (2013) criticised the candidates from campus
recruitments lacks in experience which becomes tough for the organisations to select employee
based on academic performance though it is not a good measure to evaluate performance of an
employee.

2.4.2.3. E-Recruitment

Bassi and Ludwig (2011) stated E-recruitment as an effective external recruitment tool where
organisations posts job vacancy information in organization's public website or some other job
portals. Bassi and Ludwig (2011) argued organisations focuses on E-recruitment process to
attract, screen and track candidates, select and offer jobs or reject the applicants. Supporting this,
Wickens and Hollands (2012) stated e-recruitment is the cheapest method of external recruitment
which requires only one-twentieth of cost of other external recruitment methods. Williams
(2014) criticised candidates may find e-recruitment process difficult which would avoid potential
candidates. Besides, a large number of applications are gather who have unhealthy job profile.
Odiorne (2014) argued some organisations face difficulty in integrating the internet with the
existing recruitment system which may cause the requirement process slower.

2.4.2.4. Employment Agencies

Sutherland and Diane (2009) stated employment agencies provides skilled and desired
candidates for a job position in a particular company. Sutherland and Diane (2009) argued
employment agencies are the fastest method of recruiting suitable employees in desired positions
as the agencies keeps a huge list of qualified applicant in their database. Sims (2012) argued

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employment agencies complete most of the task of recruitment such receiving applications,
screening, aptitude test etc. on behalf of the recruiters for a small premium. Pilbeam and
Corbridge (2012) criticised negligence of employment agencies sometimes provides the
recruiters with unskilled employees. Some agencies take much premium from the less qualified
applicants to forward their applications to the recruiters which avoid the potential skilled
employees.

2.4.3. Importance of external recruitment

Bartel (2009) identified external recruitment provide organisations an access to a large pool of
employee which increase the probability of getting more qualified candidates for a particular job.
Bartel (2009) argued recruitment outside the organisation enables the organisation to focus on
more competent players and recruit them based on their accomplishment which makes it easy for
the organisation to sustain in the market competition. Supporting this, Tom and Waterman
(2012) stated organisations gets fresh outlook on the industry in which the organisation belongs
by making external recruitment. Odiorne (2014) criticised external recruitment involves
candidates into new environment and it sometimes gets difficult for them to adapt. Williams
(2014) argued external recruit is an indicator of an organisation’s failure that is couldn’t attract
its existing employees and motivate them through promotion and career development. Williams
(2014) further added external recruitment increase the employee turnover rate as the employee
recruited from external sources think that career development is not at all possible within the
firm.

2.5. Selection procedure

According to Armstrong (2010), selection is the process of choosing from a group of applicants
those individuals best suited for a particular position in an organization. Armstrong (2010)
argued the selection procedure is mainly focused on identifying and employing the capable
candidates for specific operation. Supporting this, Williams (2014) stated recruiters need to
screen, conduct selection test, check reference and background, and take interview and physical
examination under the selection procedure to find the best employees from a large pool of
employees. Storey (2015) criticised, selection procedures don’t pay off better if human resource
management planning is poor. Storey (2015) argued inefficient policies for managing human

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resources sometimes utilise informal sources of recruitment which results in inappropriate

posting of candidates.

2.6. Organisational Efficiency and Effectiveness

According to Bartel (2009), organisational effectiveness largely depends on successful
management of human resources within the organisation. Bartel (2009) argued organisational
performance largely depends on employee performance, therefore, organisational efficiency is
also dependent on efficiency of the employee. Supporting this, Sims (2012) stated organisation
with low employee turnover and higher employee commitment usually performs efficient
business operations. Wickens and Hollands (2012) criticised lower employee turnover eliminates
the involvement of fresh talented candidates in the organisations. Supporting Sims (2012),
Williams (2014) stated organisations with lower employee turnover keep the experienced
employee into the sensitive business operational segment. This make the current employees
committed to achieve the organisational goals. Storey (2015) further explained that efficient and
committed employees lead to successful business operation which results in higher operating
income and net income.

2.7. Effectiveness of internal and external recruitment on organisation

efficiency
Branine (2009) stated the organisations provide more concentration on Human Resource
Management approaches in the business to fulfil the organisational objectives and materialise the
strategic plans of the business. Armstrong (2010) argued employee recruitment and selection is
an essential part of managing the human resources because the nature of the recruitment pursued
in HRM approach is highly influenced by the labour market condition and the company’s
strength in the market. Townley (2011) criticised employee recruitment has less impact on the
result of good management of human resource management. However, Arnolodo (2012) stated
employee recruitment is an important part of human resource management because an effective
employee recruitment process collects the right person for right place in an organisation.
Arnolodo (2012) argued internal recruitment is more fruitful than internal recruitment as it uses
less time, money and effort. Internal hires incur almost zero cost for employee selection and
ensure protection from downside risk. It is because the new hire is already known the employer

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and employee is accustomed with values and culture of the organizations. But, Ballantyne (2013)
argued that it seals the path to infuse upside potential from new knowledge, ideas, skills and
diversification that might have come from hiring employees from outside sources. At the same
time, internal recruitment can work as intense motivation to existing workforce regarding their
work security and promotions but it can damage productivity from complacency-employees can
stop making hard effort from job security. Odiorne (2014) stated inter recruitment results in
lower turnover, however, external recruitment has poor influence on employee turnover.
Moreover, it can’t motivate the employees and as a result, the employees fail to give
concentration on the work resulting a fall in the performance. This also negatively affect the
efficiency of the organisational performances.

2.8. Conceptual Framework

The researcher has developed the following research conceptual framework to show graphically
how the recruitment methods might help increase the organisational efficiency.

Types of
Organisational
Recrutment
Efficiency
- Internal Selection Procedure - Employee Turnover
Recruitment
- External - Employee
Commitment
Recruitment

Figure 2: Research Conceptual Framework

Source: (Own)

The conceptual framework of the research shows that business enterprises use both internal and
external sources to recruit employees. Employees are recruited from internal sources like
promotion and transfer of present employees, employee referrals and former employees. On the
other hand, employees are recruited from external sources like advertisements, campus
recruitments, employment agencies etc. Attracted candidates from both internal and external

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sources are recruited after they get selected. Internally and externally recruited employees to
influence in employee turnover rate and employee commitment. When employee turnover
reduces and employee commitment increases, the overall efficiency of the firm increases.

2.9 Summary
This part has critically analysed the existing literatures regarding the recruitment procedures and
organisational productivity. The researcher has critically discussed the advantages and
disadvantages of these two recruitment methods and its sub-methods. The factors of the
organisational efficiency have also been discussed. Finally, a conceptual framework has been
drawn to graphically present the analysis.

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Chapter 3: Research Methodology

In this part, the researcher has discussed the methods and strategies that have been followed in
this research work. The research Onion model developed by Saunders (2013) has been followed
in selecting the appropriate methods and strategies for this research. The researcher has also
showed the data collection and analysis plan. Finally, the researcher has tried to increase the
reliability and validity of the research work and shown how the ethical issues would have been
met.

3.1 Research Philosophy

Before beginning any research, the first task of a researcher is identifying and describing the
philosophy that is going to be followed in the research. The research philosophy is important in
every research for refining and specifying the method that will be used in the research, assisting
the researcher in investigating several usable methodologies to avoid irrelevant task and showing
creativity in procedure selection that was never used any particular study. Researcher philosophy
is divided into two sub sections and these are epistemology and ontology (Denk, 2015).
Ontology refers to the view of a researcher regarding the nature of reality, particularly in where
the objective reality exists (Collins, 2010). On the other hand, epistemology is the research
philosophy where the researcher analyses present market data to make a comparison to get
hindsight about the present situation. Epistemology is categorised into two other sub sections
such as Interpretivism and Positivism. Positivism is the researcher philosophy where the
researcher keeps an affirmative thought regarding the research topic and provide concentration
on being objective, not subjective. In contrast, Interpretivism is the researcher philosophy where
the researcher holds questionable relationship on the research topic.

The researcher has used positivism philosophy under epistemology to conduct the research. The
researcher has chosen epistemology confirming that the researcher has used market data to
analyse and conduct the research. The researcher is mainly intended to investigate the
effectiveness of external and internal recruitment in the banking sector of UK. The researcher

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has followed the positivism philosophy as it has reduced the probability of error and conflicts
with the findings. The researcher has used secondary in numeric form. The researcher has
rejected ontology as it is not a research for scientific experimentation. Besides, the researcher did
not use interpretivism as it involves data analysis in descriptive format. As the researcher will
analyse the data in numerical form, positivism was selected as the best philosophy for the
research.

3.2 Research Approach

Research approach is known as the process of finishing all the tasks in a research. The researcher
approach is divided into two sub categories such as inductive approach and deductive approach
(Saunders, 2013). Deductive approach is the research process where the researcher at first review
published literatures, findings and theories to develop a new hypothesis regarding the
relationship of the research topic and then investigate the hypothesis to test the relationship of
the research topic (Collins, 2010). The researcher uses market data to test hypothesis and confirm
the relationship of the research topic in deductive approach. In contrast, inductive approach is the
research process where the researcher uses personal observations on the research topic to
develop tentative hypothesis and analyse to build a new theory on the research topic.

The researcher has used the deductive approach in this research. In this research, the researcher
has investigated the effectiveness of external and internal recruitment in the banking industry
which required the researcher to investigate market data on the research topic. The researcher has
reviewed previously published literature, findings and theories to develop the hypothesis, and
then analysed the data to test the hypothesis. Finally, the researcher has shown findings regarding
the relationship of the research topic. The researcher did not follow inductive approach as the
researcher has no intention to use personal observation to develop a new theory. Therefore, the
deductive approach helped the researcher to analyse market data to investigate the relationship
between the effectiveness of internal and external recruitment, and organisation efficiency.

3.3 Research Method

There are two major research methods and these are quantitative and qualitative research
methods. The quantitative method is followed when the researcher collects and analysee the

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numeric data (Willian et al., 2014). In quantitative method, the researcher can take make
statistical calculations from the collected numerical data. On the other hand, the qualitative
research method is followed in order to conduct a descriptive analysis (Collins, 2010). In this
method, the researcher collects data in the narrative form with a view to explore the case or
describe related theoretical issue.

The research method for this study was mixed method, a method which combines quantitative
and qualitative method. It was because, though the quantitative method makes it easy to calculate
data, it poses threats to make an in-depth analysis from descriptive data (Lancaster, 2015). As
this is basically a non-experimental qualitative type of research, so incorporating qualitative
description is be important. Moreover, the research actually tried to investigate the internal
recruitment and external recruitment methods and identify which method is more effective in
increasing employee efficiency. The researcher required descriptive information to analyse the
recruitment procedure of the companies while the numeric information could present the
efficiency of the organisations. The use of quantitative method would fail to reflect the
recruitment information of the companies while the use of qualitative information couldn’t
provide data regarding the employee efficiency. And therefore, for the betterment of this
research, the researcher has followed the mixed method.

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3.4 Research Strategy

There are three major research strategies and these survey, experimental and case study. The
survey strategy is followed in case of collecting primary data (Saunders, 2013). A couple of
correspondents in the population is selected and distributed with a questionnaire form and the
correspondents require filling the questionnaire. On the other hand, in the case study, the
researcher investigates a case and explores descriptive data for conducting a research (Collins,
2010). The experimental strategy is followed when the researcher compares between two or
more variables.

In this research, the researcher has followed the experimental strategy. The researcher couldn’t
follow the survey strategy because primary data was not investigated in this research. The use of
case study constraints the researcher into one case but the researcher had to investigate five
companies and hence the case study strategy hasn’t been followed. The experimental strategy is
applicable in both the quantitative and qualitative method and this is the only strategy to support
the mixed method of the research. This is another reason why the researcher has followed the
experimental strategy. However, the major reason of utilising this strategy is the aim of the
research which requires investigating the comparative advantages of the variables. The
researcher will conduct experiments to these two majors and will determine the best method to
select the employees.

3.5 Data Collection and Analysis Method

The researcher has decided to collect secondary data rather than collecting the primary data for
this research. The primary data are collected from the origin where the data is created. On the
other hand, the secondary data are already established and analysed data and have already been
used for similar or other purposes (Saunders, 2013). The researcher has decided not to collect the
primary data because collecting information from the human resource department from different
banks was a time-consuming process. Moreover, collecting, managing and analysing the data
would be difficult for the researcher. The researcher collected the secondary data because the
information regarding recruitment and selection of the organisation can easily be found in
different newspapers and websites of the company. Moreover, the efficiency of the firms has
been determined using the information on net operating income and net profit which had to be

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collected from the annual report or website of the firm. The researcher has collected the
secondary data both in numeric and descriptive form. The information regarding the recruitment
process of different banks has been collected in descriptive form while the information of the
profit and net operating income has been collected in numeric form. The website of these five
companies was the main secondary source from where most relevant data were collected.

The researcher has analysed the data using different figures and charts. The line graph has been
drawn for the net operating income and net income to indicate whether the organisational
efficiency has been increasing or not.

3.6 Sampling Method and Size

The research has aimed at investigating the effectiveness of recruitment methods in the banking
industry where 154 banks have been operating a business in the UK under different categories of
banking business (The Independent., 2015). But collecting information from all these banks were
impossible for the researcher and hence the researcher has selected a sample following the
convenience sampling method. There are other methods too and the probabilistic method was
avoided by the researcher in order to select those bans which might be representative of the
population. The researcher has selected top rated five banks which are supposed to be
representative of the entire population. In addition, the annual report of these companies
provided the numeric information regarding the net income and net operating income. The
researcher again followed the convenient sampling method to select the numeric information for
three years from 2014 to 2016 annual reports of these companies. Following the probabilistic
methods might require collecting information of past data which would be failing to represent the
current scenario and hence the researcher has followed the convenient sampling method.

3.7 Reliability and Validity

One of the major task for the research workers is to ensure reliability and validity of the research
work. If a research work isn’t considered reliable or valid, the purpose of the research doesn’t get
fulfilled and it becomes valueless. The researcher has tried to increase the reliability and validity
of the research work. The researcher has increased the reliability of the findings by collecting the
data from the websites and annual report of the companies. The researcher didn’t collect data

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from a very past date and thus has ensured its validity. The use of figures and charts has
increased the clarity of the research findings. And thus, the researcher has increased the
reliability and validity of the research.

3.8 Ethical Considerations

The researcher has tried to meet all the ethical issues while conducting the research. The
researcher has taken permission of the university authority for conducting the research. The
management of these five companies from which the data have been collected has been assured
the academic purpose of conducting this research. The researcher has ensured this research
wouldn’t be used to humiliate the management of these organisations. Finally, the researcher has
followed the plagiarism rules while writing up the research work.

This part of the research has mentioned which methods and technique the researcher has
followed while conducting the research. It has clarified the data base and data sources for this
study. At the end, the researcher has ensured the reliability and validity of the research. The
ethical issues have also been identified which the researcher has tried to meet in this research.

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Chapter 4: Result and Discussion

4.1 Discussion of the Data Sources

The research aims at investigating the comparative advantage of internal and external
recruitment on improving the business performance in the banking industry in the UK. The
researcher has selected five top rated bank in the UK and has tried to collect data from different
secondary data sources. Since the mixed research method has been followed in this research, the
researcher had to collect both the descriptive and numeric data. The researcher collected
descriptive information regarding the recruitment procedure of these mentioned banks. The data
would be reflecting the recruitment and selection procedures of these banks. On the other hand,
the researcher collected numeric data from the annual report of the banks. The numeric
secondary data includes information regarding the deposit collection, loan disbursement,
operative revenue, net profit etc. The increasing trend of these information will be evidential for
indicating better performance of the organisation. The researcher has selected last five years
information from the annual report of the banks to collect the secondary numeric information. In
the following parts, the researcher has presented the data in different graphs and charts and has
discussed the findings.

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4.2 Results and Findings

As discussed earlier, every kind of organisation recruits the employees in order to strengthen the
existing workforce which can contribute to the overall organisational efficiency and productivity.
The researcher has investigated five banking organisations and these are HSBC, Standard
Chartered Bank, Barclays bank, Lloyds bank, Citi bank etc. banks and has tried to collect
information regarding their recruitment procedure. The investigation on the Independent (2015)
newspaper showed that Barclay’s banks repeatedly advertises for recruitment and this indicates
that the company ask candidates from the external sources to apply for different posts. The
columnist also stated that this bank recruits employees following different external recruitment
tools such as advertisement, campus recruitment, consultants, e-recruitment etc.

4.2.1 Recruitment Procedure of Barclay’s Bank

Chen (2017) stated that the organisations usually recruit employees from external sources for the
initial level of job. He addressed the recruitment of Barclay’s bank and added that the company
always looks for employees from the external sites for the initial level of jobs in the form of
management trainee or probationary officer. But Barclay’s bank seeks applicants also for the
higher posts in the firm from the external sources (shown in Appendix- figure 8). The company
was found to ask applications for the post of business relationship manager, customer service
mortgage specialist, diamond cash management executive, direct relationship manager, team
leader etc. and these are comparatively higher post of an organisations and mostly the
organisations are seen to internally recruit the employees for these posts but Barclay’s bank was
found to recruit for these posts from external sources. This is evidential to indicate that Barclays
bank follows the external recruitment procedure to select its employees.

4.2.2 Recruitment Procedure of HSBC and SCB Bank

The recruitment procedure for HSBC bank in the UK has also been investigated and it was seen
the company recruits’ employees mainly from the internal sources. DeVaro (2016) was found to
state HSBC doesn’t usually offer application from the individuals from external sources. The
company has been seen to go in line with the standard chartered bank. The large multinational
organisations don’t usually recruit employees from the external sources (Arnolodo, 2012). The
researcher investigated on the website of HSBC and saw no recruitment offerings for the external

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applicants. Cober and Brown (2010) said the multinational organisations recruit students for the
internship program and if the students seem to have potentials, the company directly offers them
job (also addressed in Appendix figure-9). Although they might be seemed as an external party,
they already possess the culture and environment of the organisation and hence they can be
considered as internal party of the organisation. HSBC and Standard Chartered selects
employees in this manner. Keshav (2013) said HSBC and SCB don’t even offer employees for
the posts of management trainee from the external candidates rather they recruit employees from
the internship program they allow students to attend. This information has been adequate to
indicate that HSBC and Standard Chartered Bank follows internal recruitment procedure while
selecting employees for the vacant post.

4.2.3 Recruitment Procedure of Lloyds Bank

The Lloyds bank’s recruitment procedure has also been investigated and it was seen the company
offers employees from the external sources in order to select them for the vacant posts. In Figure
10 in the appendix, the researcher has shown that Lloyd’s bank offers application for personal
banking adviser, modelling manager, customer service assistant, senior risk analyst, robotic
process automation consultant etc. posts and they have shown their interest to recruit the
employees from the external sources. Lloyds bank has offered a lot of employees for all the
vacant posts in the firm in the UK. Armstrong (2011) also stated the retail and commercial banks
usually require less employee’s comparative to the requirements of the multinational banks and
other larger banks. He mentioned Lloyds bank as an example of retail and commercial bank and
provided evidence mentioning that Lloyds bank follows external recruitment procedure in order
to select the employees for their organisation. He conducted a survey in 2010 and found the bank
at that time had 76% employees working in a branch in London who were recruited for their
current post from external sources. This information can provide adequate evidence that Lloyds
bank follows the external recruitment procedure in order to select the employees for the
organisation.

4.2.4 Recruitment Procedure of Citi Bank

The researcher investigated the website of Citi bank to see how the investment banks in the UK
selects the employees. Citi is offering for investment banking analyst from the external sources

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(Citi.com, 2017). Beardwell & Claydon (2008) mentioned the investment banking organisations
recruit employees who have better financial knowledge and hence, the companies feel interested
to recruit employees from competitor firms. Beardwell & Claydon (2008) conducted a research
on the investment bank in the UK and stated 64% employees of the bank has been directly
recruited from other organisations where the employees gather experience. The experienced
employees later switch to their preferred investment banks because these banks allow applicants
from the external sources. Citi Bank N/A follows the external recruitment procedure to select the
employees for filling the vacant posts.

4.2.5 Organisational Efficiency

The research mainly aimed at analysing which one between the external or internal recruitment
procedures becomes effective for the organisation. The effectiveness of these procedures can be
determined by analysing the efficiency of the firms. The researcher has stated the loan
disbursement, reception of deposits, operating profit, net profit etc. are some important factors of
measuring the organisational efficiency. If these factors increase, the organisation is said to have
increasing efficiency and vice-versa.

Barclay's Bank (in £million)

25000

20000

15000

10000

5000

0
2014 2015 2016

Net Operating Profit Net Profit

Figure 3: Operational Efficiency of Barclay's Bank

Source: (Barclay’s.com, 2017)

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The researcher has investigated the annual report and website of Barclays bank and it was seen
the company has been making higher operating and net profit (shown in Appendix figure-13).
But growth of the earning of this company is very low. Although the net operating profit showed
a positive trend line, the net profit has been fluctuating every year.

HSBC (In $Million)

16500

16000

15500

15000

14500

14000

13500
2014 2015

Net Operating Income Net Profit

Figure 4: Operational Efficiency of HSBC

Source: (Hsbc.co.uk, 2017)

The researcher then investigated the income statement of HSBC bank and the net operating
income and the net income of the firm has been increasing (shown in Appendix figure-14). The
curve had a positive slope upward and hence this indicates that the efficiency of the firm has
increased over time.

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Standard Chartered Bank (in Billion Rs)

1200
1000
800

600
400

200
0
2015 2016
-200

-400

Net Operating Income Net Income

Figure 5: Operational Efficiency of Standard Chartered Bank

Source: (SCB.com, 2017)

The researcher investigated the annual report of the Standard Chartered Bank and it shows the
company has faced reduction in the net operating income but its net loss has also potentially
reduced. The evidence has been attached in the appendix in figure 15. The slope of the profit
curve indicates that the company has been facing increase in efficiency.

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Lloyds Bank (in £million)

9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2014 2015

Net Operating Income Net Income

Figure 6: Operational Efficiency of Lloyds Bank

Source: (Lloydsbank.com, 2017)

The findings of the research show that Lloyds bank has been able to increase in the net operating
income but the net profit has potentially reduced. This reduction in the net profit has been
considered as the inefficiency of the management board. The evidence has been added to figure
16 in the appendix.

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Citi Bank (in $million)

1600
1400
1200
1000
800
600
400
200
0
2014 2015

Net Operating Income Net Income

Figure 7: Operational Efficiency of Citi Bank

Source: (Citigroup.com, 2017)

The researcher finally investigated the efficiency of the investment banking firm, city bank. This
multinational investment bank has been facing reduction in both the net operating income and
net income. The negative slope of the profit curve indicates the inefficiency of the firm.

However, the Standard Chartered Bank and HSBC bank have only been facing efficiency in the
recent performance while the Lloyds bank and Citi bank have faced negative efficiency although
the other commercial bank, Barclay’s bank has been able to experience a little increase in the
efficiency.

4.3 Analysis and Discussion

In this part, the researcher has discussed the findings found from several secondary sources. The
researcher has analysed both the quantitative and qualitative data and discussed here comparing
with the findings of several other research papers. It has increased the depth of the data.

In the first objective, the researcher has tried to investigate the costs and benefits of the internal
and external recruitments in the banking industry. The researcher investigated and found the
internal recruitment doesn’t require much money to expand for selecting the employees because

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the employees remain within the organisation. The findings also support the banking
organisations like to recruit the employees from internal sources because it saves money of the
firm. The finding has been found similar to the statement of Ballantyne (2013) as he mentioned
the banking firms require sending the new employees to the training course and it highly costs
the firm. He further said the internal recruitment doesn’t let the organisation send the employees
to those training sessions and thus it reduces the costs of the firm.

In the second objective, the researcher tried to analyse the type of recruitment practices for
different levels of jobs in different banking organisations. The researcher has found different
banks are following different types of recruitment procedures to recruit employees for filling the
vacancies. Chen (2017) mentioned different organisations have different types of cultures and for
this, the organisational procedures for selecting the employees become different as well. This
statement has been found similar to the finding of this research. The finding shows Barclay’s and
Lloyds bank, two commercial banks follow the external recruitment procedure while the
standard chartered bank and HSBC bank follow the internal recruitment procedure. The only
investment bank was found to recruit externally to employ the individuals for its posts.

The researcher found Barclay’s bank and Lloyds Bank follow the external procedures for
selecting the employees for the vacant post. The researcher has investigated the website of those
firms and found the companies offer employees from the external sources. The finding has been
found similar to the statement of Peter et al (2009) since they mentioned the culture of the
national commercial banks is not centralised and therefore, they recruit employees from the
external sources. They also said if the companies were centralised, they would never recruit from
the external areas but employ the internal people to fill the vacant post.

The researcher has found HSBC to follow the internal recruitment procedure. Following the
same path, the Standard Chartered Bank is also found to follow the internal recruitment
procedure. Williams (2014) said the multinational large organisations try to develop the
employee skills from the very beginning of their starting a career and keep these employees for
different important posts in the organisation. He also said these organisations don’t recruit the
employees from the external sources because it might hamper the organisational efficiency as the
new comers might come from a completely different culture and might fail to cope up in this

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firm. The finding has been similar to this statement since the researcher found HSBC and
Standard Chartered Bank lets the employees attend the internship training program in the
company and the attractive and efficient students are offered a job after the internship tenure.
Moreover, these organisations fill the vacant posts by promoting the employees or transferring
the employees between different departments. This finding has been found similar to the
statement of Cober and Brown (2010) that the organisations usually fill the vacant posts by
promoting a subordinate employee to the upper post or conducting a horizontal transfer between
different departments. It helps the organisation secure the organisational culture by not letting
others enter in the firm.

The Citi bank has been found to follow the external recruitment procedure for selecting the
employees for the vacant post. Although Citi Bank is a multinational large institution, the
company doesn’t remain conservative in selecting the employees for the vacant posts. The
finding has been found contradictory to the statement of Williams (2014) as he focused on
maintaining the culture in the multinational institutions. The researcher found similarity in the
statement of Armstrong (2011) with this finding since he mentioned the investment banks try to
recruit employees who have the better professional knowledge and financial expertise and they
are often found to attract and recruit the employees from the competitors.

However, the researcher has found the organisations nowadays are considering the environment
and cultures in the organisation while recruiting employees. But there are some universal
principles in the human resource department in every organisation that the HRM department
should employ lower divisional posts with external recruitment and higher divisional posts
through internal recruitment. However, this research finding was not found similar to this
thought. Rather the researcher has found the findings indicate that the organisations follow the
myth of either recruiting from internal sources or from external sources. This might increase the
constraints of selecting the most efficient employees for the firm, but the companies are
nowadays getting strict in maintaining this issue.

In the third objective, the researcher has tried to investigate the comparative advantage of
internal recruitment and external recruitment in the case of increasing organisational efficiency.
The researcher analysed the information regarding the net operating income and a net profit of

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the firm and found that the efficiency of Standard Chartered bank and HSBC has increased a lot.
The efficiency of the Citi bank and Lloyds has reduced although Barclay’s bank has found a
slight increase in the net operating income and net income. The researcher has tried to link these
two issues in this research work. The researcher has mentioned the effective procedure of
recruitment helps an organisation to select the most talented and efficient employees for the firm.
When the efficient employees work for the firm, the operation of the firm improves and the net
operating income increases. In addition to this, the net profit of the firm also increases in case of
applying the efficient recruitment procedure. DeVaro (2016) said the internal recruitment
procedure is more effective in recruiting and selecting the most efficient employees for the firm
and it increases the organisational efficiency. The finding of this research has been found similar
to the statement of this specialist since the finding shows the Standard Chartered Bank and
HSBC have been able to increase their efficiency. Keshav (2013) also said the employees are
already known to the culture of the organisation and hence they don’t require more time to cope
with the organisation. It smoothly increases the efficiency of the workforce in a very short time.
However, the finding has been found contradictory to the statement of Beardwell & Claydon
(2008) since they mentioned that the external recruitment is the most effective recruitment style
since it helps selects the most efficient candidate for a post. The employees are selected from a
thousand applicants who have better expertise. They also mentioned since the employees are
mostly efficient who are selected through the external recruitment style, the performance of the
organisation should also be improving and it must be increasing the organisational efficiency.
But the findings show a completely different scenario. The organisations which have followed
the external recruitment style such as Lloyds Bank and Citi bank has failed to increase the
organisational efficiency. Barclay’s bank has been able to increase the efficiency but the rate of
improving the performance isn’t up to the mark comparative to the improvement in performance
found in Standard Chartered Bank. And therefore, analysing all these information, the researcher
has finally concluded the discussion stating that the internal recruitment procedure is the most
effective recruitment and selection procedure in the banking industry in the UK. If the
organisations recruit the employees internally, the cost of recruitment and other issues will
reduce as well. The employees will remain known to the organisational culture and hence, will

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take no time to cope with the organisational environment. As a result, the performance of the
employees will contribute to the overall organisational efficiency.

The researcher has investigated the top rated commercial, investment and multinational banks in
the UK and has collected the data. The researcher used several graphs and figures to analyse the
data and conclude the research saying that the internal recruitment is more effective than the
external recruitment in increasing the organisational efficiency.

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Chapter 5: Conclusion and Recommendation

5.1 Conclusion
The research aimed at investigating the comparative advantage between the external and internal
recruitment procedure in the banking industry in the UK. The researcher has actually tried to
analyse which of these recruitment methods is more effective in influencing or increasing the
organisational efficiency. Since the researcher was interested to find the influence in the UK
banking industry, the researcher thought it better to investigate the banking organisations in the
UK. The researcher investigated five banking organisations and these are Barclay’s bank, HSBC,
Standard Chartered Bank, Lloyds bank and Citi Bank. The Barclays bank and Lloyds bank are
commercial banks, Citi bank is the investment bank and the other two banks have been
considered as the multinational banking organisations. From the literature discussion, the
researcher has found an information that the organisation nowadays follows the recruitment
procedure for selecting employees depending on the culture of the firm. And hence, the
researcher has selected five firms having three different cultures. However, the major function of
this research was to determine the comparative advantage of external and internal recruitment
procedures in selected the employees for the firm to ensure increasing organisational efficiency.
The researcher has developed four objectives and has been able to obtain all the objectives after
the completion of the research work.

In the first objective, the researcher tried to investigate the comparative cost and benefits
of the internal and external recruitment procedure. The researcher found the internal
recruitment procedure is less costly because it doesn’t require posting advertisements, arranging
written or other tests, arranging interviews etc. that the organisations require completing the
external recruitment procedure. The researcher also found that the employers can easily find their
employees from the vacant post since the employees remain within the organisation. On the
other hand, the external recruitment procedure is helpful in recruiting the most efficient
employees since the employees need to work hard for getting the job and the organisation can
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employ the most efficient applicant from them. But the comparative analysis showed the
organisation can also employ the efficient employees from the internal sources. The banking
organisations train its employees and make them efficient and hence selecting an employee from
another department or through promoting a subordinate for the vacant post can also bring
efficient employee.

In the second objective, the researcher has tried to investigate the recruiting procedures in
different levels in different banking organisations. The researcher found usually the
organisations select employees for lower designation from the internal sources in the form of
management trainee or probationary officer. And for recruiting employees for filling the vacant
post of higher designation, the organisations follow the internal recruitment procedure. But this
research has shown the selection of the recruitment procedure depends on the culture and
practices within the organisation. The multinational companies focus on maintaining their own
culture and hence don’t usually recruit employees from the external sources. On the other hand,
the investment and commercial banks are concerned about the efficiency of the employees and
try to recruit the best employees from the external sources. And thus, different organisations are
following different recruiting method to select the employees.

In the third objective, the researcher has tried to analyse the best recruitment method for
selecting employees which might help increase the organisational efficiency. The researcher
has determined the efficiency of the banks by considering their net operating profit and net
income. The researcher has found the multinational organisations have increased organisational
efficiency. On the other hand, the efficiency of the commercial and investment banks has
reduced. The researcher has related these two issues and commented that the internal selection
process has helped the multinational banks select the employees with low cost saving the time. It
has helped increase the operation of the firm. Moreover, the reduced cost has been financially
benefitting the organisation. As a result, the internal recruitment has helped the organisations to
increase the net operating profit and net income. On the other hand, the commercial firms and
investment bank which have followed the external recruitment sources has been failed to
improve the efficiency. And thus, the researcher, after analysing all these research findings, has

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concluded the research stating that the internal recruitment procedure is more effective than the
external recruitment in increasing the organisational efficiency in the UK banking sector.

5.2 Recommendations
The researcher has found the internal recruitment is the best-chosen recruitment method to select
the employees but following the external procedure can also beneficial for the company in
eradicating the constraints of the internal procedure. In this part, to obtain the fourth
objective, the researcher has recommended the organisation some issues to implement that
will help improve the overall recruitment method to help increase the organisational
efficiency. The recommendations are-

 Although the researcher found the internal recruitment is more effective in improving the
organisational efficiency, the external recruitment can also improve the performance of
the organisation. At the introductory level, the organisations let the students attend
internship program and offer the effective students to attend the job. But the researcher
has recommended following the external recruitment procedure in that case. Because
waiting until the end of the internship tenure will require much time and the external
recruitment will help reduce the wastage of that time period.
 The researcher found the organisations follow the internal recruitment because they are
concerned about maintaining the culture of the firm. The researcher recommended
following external procedures to select the employees and train them in such an
environment which can be similar to the environment of the specific firm. It will help the
employees keep pace with the culture of the concerned firm and will ensure no mixture of
another culture in the organisational environment.

The researcher has made the following timeline to implement the recommended policies within
the specified time period. The recommend time plan is presented below,

Table 2: Recommended Policy Implementation Plan

Recommended Policies Timeline

  1 2 3 4 5 6 7 8

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Personalization of communication                

Embrace Versatile and Non-conventional                

recruitment procedures

Identifying the vacancy within the                

organisation

Selecting the employees from internal                

sources

Selecting the employees from the external                

sources

Evaluation and Control                

5.3 Scope for Future Research

The researcher has tried to remove all the limitations but has yet to eliminate all the constraints.
But this research has great significance in the banking industry because most of the banks remain
in confusion and waste time in selecting the best recruitment method. And therefore, this
research should have a more definite conclusion for which the researcher has recommended to
continue analysing on this topic. The researcher has recommended the future researchers the
following issues that will help increase the reliability of the future research work.

 The future researchers could include more relevant secondary data investigating more
relevant sources.
 The future researchers could collect primary data too because it will help collect the most
relevant data regarding the recruitment procedure followed in the firms and their
organisational efficiency.

Recruiting the employees following the right method has great significance and this research has
illustrated it thought the study. The findings supported the internal recruitment is the best

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procedure to follow. But the researcher has recommended following both the procedures
considering the scenario. It will help improve the recruitment and selection method along with
increasing the organisational efficiency.

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Appendix

Figure 8: Job Offerings of Barclay’s Bank

Source: (Barclays.co.uk, 2017)

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Figure 9: Internship Offering for Students in HSBC

Source: (Hsbc.co.uk, 2017)

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Figure 10: External Recruitment Offerings for Lloyds bank

Source: (Lloydsbank.com, 2017)

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Figure 11: External Recruitment Offerings for Lloyds bank

Source: (Lloydsbank.com, 2017)

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Figure 12: External Recruitment Offering of Citi Bank

Source: (Citigroup.com, 2017)

Figure 13: Operating and Net profit of Barclays Bank

Source: (Barclays.co.uk, 2017)

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Figure 14: Summary Income Statement of HSBC

Source: (Hsbc.co.uk, 2017)

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Figure 15: Income Summary of Standard Chartered Bank

Source: (Scb.com, 2017)

Figure 16: Income Statement of Lloyds Bank

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Source: (Lloydsbank.com, 2017)

Figure 17: Income Statement of Citi Bank

Source: (City.com, 2017)

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