RPO Without Raising Your Debt Ceiling
Presented By: Doug Douglas - National Engagement Manager at Stark
HR.com RPO Virtual Conference - July 18,2011
Today, our topic is RPO Without Raising Your Debt Ceiling. During our time, we will be looking at:
RPO – Enlighten Me
Recruitment Process Outsourcing. This phrase burst onto the recruiting scene in the past 10 years or so, but the concept of it has been around for much longer. It was consistently used in the 1970’s during Silicon Valley’s very competitive market for high tech labor – it was very hard to find good, qualified, and available talent. RPO was still dramatically different back then from what it is today. RPO in the 1970’s was basically companies buying lists of potential candidates from a recruiting firm – like a sourcing list.
In the 1980’s and 1990’s, Human Resources Outsourcing (HRO) became popular by companies outsourcing part of their processes like benefits or payroll to a third party company. This would be companies like ADP, Paychex, Gevity, etc.
Then right around the early 2000’s is when companies seriously started considering outsourcing their recruiting efforts because it was such a significant cost for companies to run internally. The earlier movements with companies beginning to outsource various smaller parts of their business made them more comfortable with outsourcing a larger and very expensive piece of their business as well.
RPO today is when a company will outsource all, or part, of their recruitment needs to another company who specializes in locating, qualifying, and delivering candidates to the hiring company to consider. RPO packages can vary though from one engagement to another:
Why has RPO taken on such a bigger name in the past few years? Why do people see the benefits of it now?
Well, the labor markets are just different today than they were in the past:
RPO solutions can help companies improve their overall recruiting quality, costs, speed, and service. It saves companies, on average, 50% when compared to contingency search fees. Even if a company is not using contingency recruiters, cost savings opportunities are still present. The RPO provider should be well established in various industries and know where to find more qualified candidates. When you combine this with their recruiting expertise, stellar processes, and technologies, RPO providers should simply perform better.
Apart from the cost of contingency recruiters, here are other significant costs associated with the search for a new employee:
One thing is for certain, it costs you FAR more than a job posting on Craig’s List or Monster for every opening your company experiences.
Seven Steps to Success
The benefits of a RPO engagement to an organization will vary based on the uniqueness of each company and its current situation, but there are seven results of successful RPO engagements that are typical regardless of the company (if you have partnered with a good RPO provider):
1) Reduced attrition levels – I worked with one oil & gas customer who experienced a reduction in their attrition rates from 47.8% to 13.4% in their first year alone. This is done by having a very precise screening process established and providing managers with only qualified candidates to consider. When the managers have solid candidates, and many of them to choose from, they can make a better hiring decision instead of sometimes settling for someone. The cost savings found here more than paid for the RPO engagement.
2) Reduced costs per hire – One example is that an RPO provider can negotiate better rates with vendors than a single company might because of the volume of work that they do. While some companies may pay $500 for a job posting, a recruiting firm might be able to negotiate that price down 80% or more.
3) Reduced time to fill - The ability to have a dedicated team that repeatedly works with the same managers and divisions gets to know the types of people that the manager is drawn to. This eliminates the need for presenting as many candidates once that trust has been built. One thing that I have found to be consistent for me is that the recruiters just get to know those individual managers and the unique or special requirements that one has compared to another. Where the recruiter might present 7-8 good candidates at the beginning of an engagement, a few months or a year down the road – they will only need to submit 3 candidates to get a hire because they just know what that manager likes. I have even gotten to the point with some managers where they trusted that I knew their profile so well that I could send over one candidate and say “Here’s your hire.” and they would immediate interview them to verify and hire them.
4) EEO Compliance standards are met – Companies can work with the RPO provider to establish a consistent, repeatable, scalable process that meets their company’s EEOC standards. It is important that all candidates go through the same screening and hiring process, and that those steps are documented to minimize any legal risks that could come their way. With the technologies that a RPO provider has in place, many/if not all of the details around compliance can be automated, time-stamped, and saved for potential future audits.
5) Increased quality of hires – With a customized solution that touches the things that matter most to your company, a RPO provider will establish screening processes that will funnel down the mass number of candidates to only the most qualified. A good RPO provider will be looking at every aspect of the recruiting process and be able to recommend solutions that will ultimately improve the quality of hires. There are some industries out there that currently feel like they just need to throw a warm body into a role thinking that “somebody is better than nobody.” That approach is just throwing money away. One thing that we have done is go in and hold Interview Training Sessions with potential managers and make sure they know what to ask, why to ask, what NOT to ask, and how to evaluate a candidate. This has helped tremendously in some cases. By the way, 90% of HR leaders surveyed say that it is critically important that they improve the quality of hires that they make – but only 40% measure it.
6) Standardized recruitment process established (ultimately improving the company brand) – As mentioned before, your RPO provider should be able to customize a solution to fit your organization. Everything should be considered from the formatting of job descriptions, the messaging involved to a candidate applying to the position, automated messages that update the candidate throughout the process, the information that is presented to the hiring manager to consider. Everything is carefully considered to maximize the most of the recruiting experience, as well as leave candidates – even those declined – with a good feeling about your company. You have to look at your recruiting activity as a form of branding because it is.
7) Accurate metrics to help measure success – You and your RPO provider can agree to certain Performance Metrics that must be met and that reports be run regularly to show where you are having great success, where things might be bottlenecking, and where things need to be improved. Measuring things like the number of days open / days from candidate presentation to hiring manager feedback / feedback to interview / days in onboarding stage / average time to fill / average cost per hire / all of these metrics can be helpful to you in running a successful RPO engagement.
RPO Improves Your Brand
We have probably all heard the phrase “unintended consequences.” This is when we have made a decision and just didn’t anticipate all of the consequences of that decision beforehand. I think HR leaders, and recruiting specifically, have an unintended consequence that some aren’t even aware of. It’s when candidate’s sees your job posting and gets excited about the possibility of joining your team, only to take the time to go through your application process, screening process, assessment process, or even interview process only to fall into a black hole and never hear anything else from you. The unintended consequences can be numerous:
Companies don’t always consider the fact that they are being evaluated by the candidate. It only hurts your company when a candidate applies for a position and never hears from anyone inside your organization. It only hurts when timely feedback is not provided after completing a questionnaire or having a phone interview. It hurts when they take the time to prepare for an interview, only to wait for weeks to hear if they were selected. Sometimes candidates actually do spend hours preparing for an interview – researching the company and knowing it inside and out, researching the person who is going to be leading the interview, buying a new suit or dress, getting a haircut, etc. They do this with the anticipation that the company is authentically interested in them and with the assumption that they will have the courtesy to provide them with an answer.
RPO providers should be building into their processes opportunities for the candidates to be reassured and valued. They just want to know where they stand – even if it’s bad news, it’s better than no news. When your company values them enough to keep them posted through this stressful time in their life – IT POWERS YOUR BRAND!
Nick Burkholder, founder of Staffing.org says, “The single greatest improvement opportunity area for organizations is candidate communications.”
Selecting a RPO Provider
There are many RPO options out there for you to choose from. It’s hard to know what you would be getting in them just by reading their websites. This is a very important decision and you need to consider providers carefully – not just looking at the company, but at the individuals that you will be partnering with. Here are some things that I would suggest you look for when deciding who will serve your company:
Transitioning to a RPO engagement will always carry some risks, but with some careful planning – you should be able to minimize these risks.
I worked with a manager one time named Vince. He had been with the company a long time and he was being forced to use our recruiting firm by his VP. We had a conference call with him where we sat and listened to him for 20-30 minutes tell us how this wasn’t his idea, that it wasn’t going to work, and that we would never be able to find the kind of people that he would be interested in. He went on to threaten us by saying that when we didn’t find someone for this role that he would try his best to get us fired and spread the word throughout the rest of the organization of our shortcomings. We heard him out and let him get his frustration out.
I then said, “Vince, I hear what you’re saying and I understand your concerns. Maybe we won’t be able to find someone that you’ll like, but I want to give it a try anyway. Why don’t you tell me exactly what you’re looking for and let me see what I can do?” He spent the next 10 minutes describing what the perfect employee would look like. I told him I appreciated the information and that I was going to do my best to find someone that he would like – and we hung up.
3 hours after we hung up – Vince checked his email and saw the candidate I presented to him 2 hours before. Vince called me and said that he would like to interview that candidate. I had him go in the next day and Vince hired him on the spot. That candidate ended up becoming his best employee. He gave him 3 raises in his first year, and Vince even paid for his daily commute out of his own pocket because he didn’t want to risk ever losing this employee.
That came to a happy ending and Vince became one of my biggest fans through that experience. He recommended me to everyone. BUT WHAT IF I HADN’T FOUND HIM A GOOD CANDIDATE? WHAT IF HE WANTED ME TO BE FIRED FROM THAT ENGAGEMENT BECAUSE I DIDN’T PRODUCE? Would there have been an executive with that company that would have defended us and stood their ground against Vince – knowing we were having great successes in other parts of the country?