PRICE OF EXCLUSION: THE ORGANIZATIONAL AND MANAGERIAL CONSEQUENCES OF SKILLS MISMATCH AND INEFFICIENT TALENT ALLOCATION: - A THEORETICAL FRAMEWORK FOR STRATEGIC HRM, PERSON–JOB FIT, EMPLOYEE PRODUCTIVITY, JOB SATISFACTION, TURNOVER, AND ORGANIZATIONAL PERFORMANCE

Abstract

Choosing the appropriate person for the appropriate position is a key decision in human resource management (HRM), as it can impact employee attitudes, employee performance, retention, and organizational expenses long after the individual is hired. This paper offers a new interpretation of the original “price of exclusion” as an organizational/managerial issue of talent mis-allocation. The core point is that there is a measurable difference between the value of an employee in a job that fits their skills and the value of the employee who is not in a fit job. The paper presents a theoretical model linking recruitment effectiveness, person–job fit, job satisfaction, employee productivity, turnover and organizational performance. Concepts of human capital theory, assignment theory, person–job fit theory, signalling and screening perspectives, strategic human resource management and job-mismatch research are all combined in one framework. They argue that the quality of the recruitment process and accurate assessment of skills affect person–job fit, which in turn has an impact on job satisfaction and productivity; these factors ultimately impact the turnover and performance of the organisation, and exclusion has a compounding effect on the mismatch, with limited access to the right role. Organizational cost of mismatch is expressed as productivity losses, superfluous supervision and coordination expenses, hiring and induction expenses, foregone turnover, and lost human capital. The importance of person–job fit, skills mismatch, strategic HRM, employee performance and retention to organizational outcomes is also supported by recent research. The macroeconomic dimension is seen as a secondary extension: aggregate misallocation matters because misallocation at the firm level may add up accross firms and sectors. Finally, the paper presents managerial implications for the competency-based recruitment, structured selection, realistic job preview, internal mobility, training, job redesign, HR analytics, retention management and periodic fit audits.