RPO moves beyond just cost savings and brings strategic value to the hiring process in this segment.
By Christa Elliott
Midsize RPO deals continue to gain market share as they have proven to help solve talent challenges for organizations with 5,000 employees or between 500 and 1,000 hires per year. RPO has become an incredible tool that can help free HR leaders to play a more strategic role and to focus on broader organizational strategies that may not have been concerns five or 10 years ago. In today’s candidate-driven market, attracting talent with a robust employer brand and on new talent channels is more imperative than ever. In fact, according to CareerArc’s 2015 Employer Branding Study, 75 percent of job seekers consider an employer’s brand before even applying for a job.
With these strategies mission critical for leading organizations, HR managers need to ensure that they are at the top of the talent game.
“In these market conditions, midsize organizations are faced with the decision to either hire and develop an extensive internal talent acquisition staff, continually rely on expensive third-party search agencies, or partner with an RPO provider,” says Elizabeth Black, client services coordinator for Personify. “The properly implemented RPO alternative is more scalable than building an internal team and gives the organization the ability to capitalize on strategies traditionally reserved for larger enterprises such as access to a highly-structured recruiting process; advanced metrics systems; and stronger buying power for sourcing tools.”
In addition to impressive market growth, the past year has brought new offerings in midsize RPO, including hybrid solutions such as partial outsourcing, or proportional RPO solutions to solve specific business challenges. These hybrid solutions will allow RPO providers to cater their services to a wider variety of midsize businesses and their needs.
“The midsize RPO market has seen a number of changes over the past year,” says Jon Langford, director of solution design, sales and marketing for Pierpoint. “One has been increasingly global deals. Whereas midsized deals in the past had a primary or sole focus on North American recruitment, a larger portion of deals are including an international scope.”
Langford cites Shutterstock as an example of a midsize company that has taken on more global deals. The stock photography, stock footage, stock music, and editing tools provider experienced a significant uptick in their recruitment volume early in 2017, and faced with higher recruitment demand, they sought a scalable RPO partner to help support their internal team. They needed a partner experienced in technical recruitment for their software engineering and development hiring needs in both the U.S. and Europe. Their provider, Pierpoint, designed a solution for Shutterstock that incorporated several European recruiters as well as virtual recruiters. As a result, Shutterstock now has the scalable recruitment partner they needed to handle an increase in hiring demand; technology-focused recruitment efforts for technical hiring; and global capabilities to support hiring in the U.S. and beyond.
Although just about any midsize organization can reap the benefits of RPO, Career International Senior RPO Director Gary Li says that companies in the manufacturing, IT, technology, hospitality and pharmaceuticals industries have been some of the earliest midmarket adopters. This stems from the fact that RPO strategy can be an effective solution to talent acquisition challenges including seasonal hiring volatility, the search for specialized candidates, and maintaining quality of hire during periods of growth.
As evidenced by Shutterstock’s circumstance, these trends apply not only to companies in North America, but also globally. Career International knows this all too well. The China-based RPO provider has seen a greater demand for specialized RPO services from midsize organizations, and Li believes that the breadth of services will continue in order to keep up with China and other international powerhouses’ changing needs. Li says that midsize buyers will seek out focused, full-lifecycle recruiting solutions with value-added services, such as employer branding, workforce planning and training.
“Not only international midsized firms, but also more and more local midsized companies characterized as agile and open-minded are more likely to choose RPO service,” he says. “In the future, midsized RPO needs in China will get wider and deeper.”
Many midsize organizations have also had success in reducing cost as well as time to fill. According to Langford, many midsize organizations experience a drop in cost of 50 percent or more after adopting RPO—a direct result of ditching high-cost agency hiring. “The exempt-level hiring that a midsized company looks to outsource is generally a prime candidate for 20 to 50 percent reductions in time to fill through an RPO,” he adds.
In terms of metrics, RPO providers will ideally measure the success of midsize recruitment similarly to enterprise recruitment but pay special attention to fill rate, lead time, quality of hire, and retention. The first two metrics are important to midsize buyers because they illustrate the provider’s ability to deliver rapid results. Meanwhile, the latter two metrics show that the provider can source reliable, high-performing talent—an invaluable asset because in smaller organizations, each employee has a larger impact.
With this growth in midmarket RPO, providers and buying organizations alike have also discovered that this segment has its own set of unique needs and challenges. One of these challenges is rapid growth and ensuring that the talent pipeline can keep up with the needs of the organization.
“Many midsize organizations became midsize quickly through aggressive growth and have not matured to the point of having built even baseline TA programs. This is where a mid-market RPO organization fits nicely and can create immediate success and grow with the company,” says Cory Kruse, president of Orion Novotus.
For those beginning an engagement with an RPO provider, the challenge of maintaining order and transparency as recruitment processes change hands can also be a difficult. According to Black, midsize organizations often operate a centralized recruiting function, and their employees are used to looking to a single, often corporate, entity for recruiting best practices and standard procedures.
Because of this centralized infrastructure, adjusting to and installing an RPO may be more difficult and take longer. Aligning all of the company’s parts and earning trust, Black says, are crucial to seamless implementation: “Due to wide variance among midsize organizations’ talent acquisition strategies, RPO providers must uniquely consider and access the already-established workflows during the implementation stages and decide whether to start process mapping from scratch or adapt the existing procedures into one,” Black says.
Despite the challenges that come before and after RPO implementation, the experts agree that an RPO strategy can bring value. Gaps in knowledge about hiring strategies, market trends, and building an employer value proposition can be compensated for by the RPO provider’s expert insights, but only client leadership can bring the entire team on board. An open and collaborative attitude that starts at the top and works its way down can go a long way and is the greatest indicator of success.
“The success of an RPO program is generally more dependent upon the mindset of the client and its business partners than the type of industry they serve,” Langford explains. “For a successful partnership, an RPO engagement needs to be embraced by the business and field. This means shifting use away from already established agency partners and other means and working collaboratively with the newly selected RPO vendor.”