RPO & Staffing

Integrated Employment Provisioning

Spherion delivers a total workforce acquisition solution.

by HROT Staff

A global technology company was one of the few IT firms that actually grew during the most recent IT industry slump. Millions of users rely on the companys IT infrastructure solutions servicing businesses, government agencies, and educational institutions. The firm needed to develop a more reliable, scalable, and cost effective talent acquisition process and resource that would support expected growth prospects in the next decade. They were faced with critical business issues such as an out-of-balance HR focus; heavy, expensive reliance on outside hiring agencies; limited control of contingent labor; and increased dependence on sophisticated, but disconnected high-maintenance systems.

The technology company decided to streamline its talent acquisition process with Spherions Total Workforce Acquisition (TWA) solution. The partnership mitigated the clients need to use multiple outside hiring agencies and ended its relationship with multiple vendors for staffing services. TWA delivers both RPO and staffing solutions via an integrated, dedicated, delivery infrastructure made up of onsite recruiters with access to Spherions national network of 2,150 plus recruiters, its virtual recruiting resources, and its recruitment transaction center.

Spherion has assumed responsibility for the employment process services in the clients new employee provisioning services strategy. Hiring volume is expected to grow by about 20 percent each year over the five-year term of the contract. They will also manage and support the clients college recruiting program and provide administrative support for intern hires, executive hires, and internal promotions. Spherion has also implemented its KnowledgeSphere technology platform to enable the employment solution functions, employee assimilation process, and the reporting/tracking for all the partnerships services. This includes the integration of Peopleclicks Recruitment Management System (RMS). In addition, all information within the technology platform and process, and other applicable source systems from the client, is integrated to KnowledgeSpheres Reporting and Analysis Platform (RAP). Both RAP and RMS will be Web-based to enable all authorized users access via the Internet.

Strategically, the solution has created a scalable, hiring manager client-focused, talent-acquisition services system and process to support strategic, financial, and operational growth objectives. The solution is governed by a 24/7 metrics and reporting structure to ensure performance and results.

The TWA partnership has produced tangible results. There are baseline operating costs savings of 40 percent, and the client is on track to cut outside agency usage by 60 percent during the first three years. The arrangement also implemented lower standardized pricing for contingent labor, minimized the number of contingent labor providers, established quality standards, and streamlined the talent-acquisition process for hiring managers and candidates.

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High-Tek Hiring

StorageTek selects RPO to build a better team.

by Russ Banham

Months into the due diligence on a strategy to outsource employment recruitment processes, project managers at global technology company StorageTek had reached the point of interviewing providers when they read an article in this magazine listing 13 vendors offering end-to-end recruitment process outsourcing. One of the companies especially caught their eyeKenexa Corporation.

Unfortunately, no request had been sent to Kenexa for a proposal on the job candidate sourcing and acquisition project. Meanwhile, the deadline for determining a provider loomed. We were at the stage of interviewing final candidates, says Cindy Fiedelman, staffing operations manager at Louisville, Colorado-based StorageTek Corp., which markets innovative storage solutions that protect a companys critical business information.

In fact, the company had whittled down the list of candidates to two when they decided to interview one more company. They called us out of the blue one night and said they had read an article in HRO Today called The Lucky 13, in which we were checked off as a buyers choice, comments Elliot Clark, chief operating officer of Kenexa. We were brought in at the eleventh hour to explain our value proposition.

Kenexa scrambled to put on a good show, preparing a one-hour presentation that stretched to more than four hours after the curtain rose. They thoroughly evaluated our approach to recruitment process outsourcing and change management, says Clark. They looked at how detailed our methodologies were as far as outsourcing process maps and guidelines. They talked to our IT people. And then they asked about our 24-hour operating model, a no sunset concept where our overseas locations provide research and candidate name generation to our 250 North American recruiters.

Clark says the discussion over the model sealed the deal. As we described the concept, one of the people in the StorageTek delegation started laughing and said this was how they did applications development work around the globe, he notes. I think we all felt cultural synergy. Fiedelman agrees: The chemistry seemed to click. They were the kind of people we knew we could work with. A deal between the companies was signed in the fourth quarter of 2004, and service to StorageTek began on January 1. The multiyear agreement calls for Kenexa to assume responsibility for managing the North American staffing operations below the executive level at StorageTek, although the original concept anticipated for the near future by both companies was to roll out the RPO strategy worldwide.

Like many large employers, StorageTek (with 2004 revenues of $2.2 billion) was attracted to an outsourced recruiting model because of the need to fill job ranks quickly and cost-effectively with high quality applicants. Several recent surveys paint a dire picture of companies unable to fill rapidly diminishing employment ranks with the best-of-the-best. According to the U.S. Bureau of Labor Statistics (BLS), 24 million workers are expected to exit the labor pool by 2010, and within the next three years, BLS projects that 10 million more jobs will be available than workers to fill them. Another survey, by The Conference Board, indicates that 79 percent of CEOs rate availability of talent as their number one concern.

To address these ominous issues, StorageTek sought to liberate its HR professionals from sporadic, time-consuming recruitment tasks to focus on more strategic staffing needs and partnering initiatives. Outsourcing fit the bill neatly: Kenexa is now accountable as the single source for StorageTek staffing operations, applicant tracking, and data management. They are also responsible for engaging and educating StorageTek managers to better understand and execute their role in the recruitment process.

Weve been through two iterations of recruitment models at StorageTek to try to meet the needs of the business, says Roger Gaston, StorageTek corporate vice president of HR. A lot of people think we went to employment process outsourcing because of the cost savings; while cost reduction was a component in our decision making, it was not the biggest reason to consider RPO, Gaston confides. The real value was our ability to access a state-ofthe- art recruitment system and dedicated processes for resume search, Web search, Web crawling, candidate screening, and applicant management that could enable StorageTek to achieve its objectives of reducing time to fill and to increase the quantity and quality of our applicant pool. This technology was not going to be high on the priority list at StorageTek, in terms of allocating resources to acquire it or in the queue for our systems people to work on internally. We wanted best-in-class recruitment capability, and outsourcing was the way to get that now.

Recruitment process outsourcing (RPO) is currently one of the hottest areas within HRO. The strategy offers companies more than the opportunity to access a providers state-of-the-art job candidate database. RPO also provides entre to highly trained and sophisticated job recruitment professionals who can quickly fill workforce ranks with top talent.

During peak hiring periods, organizations must use external resources like extensive advertising, agencies, or independent contractors, who may not be available for the next peak period, Clark explains. This causes costly knowledge transfer. By outsourcing, companies have more flexibility with infrastructure costs than with internal resources where costs are fixed. The costs of staffing professionals assigned to an organization are shared with other clients during periods of the year when the organization is doing little hiring or is in a hiring freeze.

StorageTek had been hunting for a world-class recruitment process for the past five years. The company, with more than 7,000 employees located in 32 countries serving more than 17,000 customer sites worldwide, had tried introducing both centralized and decentralized models to reduce the time to fill open positions in its direct sales force, field service organization, and R&D engineering staff. Both recruitment strategies ultimately fell short in delivering against business needs and expectations.

Initially, we had a very centralized recruiting function for our global business positioned out of our headquarters in Louisville, just outside of Boulder, Gaston explains. We decided to decentralize that model and push our recruiters out in the field closer to their clients. When we looked at the effectiveness and productivity in what we were accomplishing, closing jobs quickly with quality people, we realized we werent meeting the needs and requirements of the business. We needed to consider other options.

At the time, StorageTek was in the thick of examining HR outsourcing to increase productivity and reduce the hands-on transactional elements of the HR processes. We had decided to change the face of our entire HR organization into a business partner focus. This demanded a reconsideration of the time and resources dedicated to the transactional elements of HR, Gaston explains. As we began exploring the components of our business that would benefit from outsourcing, the recruitment process jumped out at us. We created a Six Sigma black belt project around recruitment to arrive at the root cause of our inability to effectively support the organizations recruitment needs. While several actions were identified from this black belt project, consideration and exploration of outsourcing the recruitment process was at the top of the list.

Fiedelman says the Six Sigma effort identified different processes for improvement within recruitment and on-boarding (the post-hiring activities involving new employees). The biggest issues we faced were cycle timethe time to fill jobs here had become inordinateand consistency in the process, she explains. We needed to do things the same way across the organization. We also had issues regarding candidate quantity and the quality of the candidate pipelines. Our ability to have a strong number of solid candidates available for open positions was lacking. We often were in a reactionary mode and would only address these issues as needs came up. From a cost perspective, this was a problem.

Another problem was the need to hire expensive external recruiting agencies on an ad hoc basis to meet hiring demands at peak periods. On average, StorageTek hires roughly 1,000 people a year. When you rolled all these concerns together, says Fiedelman, outsourcing offered the long-term solution that made the best sense.

Kenexa was chosen as the provider for its technology platform, specialized expertise, and variable cost recruitment model. They scale their model appropriately to our spikes in hiring, Fiedelman says. They assign a team to usa set number of people. As our demand goes up or down, they manage through that without it costing us more. Our hiring managers still make the hiring decisions, but it is Kenexas responsibility to refer and manage this hiring.

Kenexa also demonstrated the ability to target appropriate job candidates. In addition to posting notices on job boards or in newspapers or on career sites, they had the capability to create target lists and do proactive calling into organizations where we knew we wanted to hire people, Fiedelman says. That was the big kicker. We had a hard time finding other companies with that capability.

Kenexa offers a broad menu of services, including sourcing, vendor management, and hiring process management. StorageTek opted for a full solutionstaffing department management, on-site staffing support, multi-channel sourcing strategy, development and execution, employee referral program administration, direct recruiting services, talent management, applicant tracking, and employee engagement measurement. We are their entire staffing organization in the United States below the senior executive level, says Clark. Its a comprehensive solutiona complete RPO.

StorageTek joins several major RPO customers at Kenexa, including Microsoft, Amgen, Corning, and Schering Plough. Kenexa began life as a privately-held, pureplay executive search firm in 1987 before transitioning into a provider of large scale recruitment project management five years hence. Today, it employs more than 550 people worldwide at its U.S. headquarters in Wayne, Pennsylvania; Asia headquarters in Hyderabad, India; Europe headquarters in London; and its employee research center in Lincoln, Nebraska. The company went public June 24, 2005.

The process for hiring at StorageTek today begins with a formal job requisition made by a business unit or functional department using Kenexas technology platform. Once the requisition is approved, the hiring manager meets with Kenexas on-site recruiter to scope out exactly what is needed, Fiedelman explains. This information is delivered back to the sourcing center at Kenexas Wayne headquarters. Their people now begin early discussions with candidates. A slate of people is then submitted back to the on-site recruiter who takes the next step in the interview processdetermining with the hiring manager who to bring in for the interview, given certain metrics around the number of people they need to see for every search. Once the hiring manager meets the candidates and the selection is made, a recruiting team from Kenexa puts together all the administrative components of the job offering, equipping the new hire to be ready for the first day of work.

StorageTek anticipates the RPO agreement will be cost neutral for the first couple years, and then begin reaping dividends once the new process becomes routine. Its already beginning to click in terms of hiring managers understanding the true value of a recruitment partner, says Gaston. Plans are being discussed as to the dynamics of rolling out the strategy worldwide, although they are potentially complicated by the recent announcement that Sun Microsystems is buying StorageTek for $4.1 billion. Sun has an RPO agreement in place with another outsourcing provider. Our plan has been to start here in the United States and analyze the potential for a global rollout, says Gaston. We felt the complexities of going global right out of the gate were more than StorageTek wanted to bite off.

Clark is hopeful that the relationship with StorageTek will continue beyond domestic shores. We were in the midst of putting a timetable together (for a global strategy) when the merger was announced, he notes. But, weve had some great outcomes with them so far, and Im optimistic. I know Sun also is a company that appreciates outsourcing and is undergoing a significant HRO effort. We look forward to the opportunity to work with them.

Whether or not the engagement becomes worldwide, the RPO endeavor remains significant for several reasons. Says Gaston, A significant portion of our employees are in the United States, and that is where weve had the biggest push in the last year and a half as far as recruitment to meet the needs of both a growing Sales and Services organization and a highly technical Research, Development and Engineering organization. Like all big projects, this is a work in progress. 

In implementing the recruitment process outsourcing project, StorageTek and Kenexa pulled together a team of project managers and technology implementation consultants, which launched an exhaustive 90-day process of planning, mapping, and measuring. We looked at data and systems, basically the reports that StorageTek previously had generated, and then mapped out all the technology and the data interchanges between their HRIS system and our applicant tracking system, says Elliot Clark, Kenexa chief operating officer. The idea is to have our system seamlessly update their HRIS system every night.

Once the mapping was completed, the project team assembled a change management plan that was rolled out across the company in road shows with key executives. We believe that any service providers world should be about living inside the customers world, Clark says. What people buy from Kenexa is speed, cost reduction, and quality, but what we sell is process, execution, and measurement.

The road show introduced the planned changes and solicited feedback. StorageTek has very tight product development cycles and a lot of what the executives were concerned about was speed of execution, Clark notes. They wanted to know if we could fill jobs quickly with high quality people and measure this to be sure it took place. We had several executive sessions that culminated in very detailed service level agreements.

The SLAs are proprietary, although Clark says they are tied to two tiers of metrics. The first tier includes routine metrics like average time to fill a job, cost per hire, customer satisfaction, and various diversity indices. The second tier pulls business outcomes data, which is analyzed by Kenexas statisticians at its employee research center in Lincoln.

Their job, in part, is to evaluate the correlation between hiring practices and business outcomes, Clark explains. They measure things like the relationship between job retention and profitability, using data on absenteeism, workers compensation claims, job turnover, etc. With their analysis, a new hire will be correlated against certain outcomes that can be translated into business dollars.

Since implementing the full RPO in January 2005, StorageTek has seen significant improvement in those processes and metrics that are easily measured in weekly and monthly timeframes. Overall, both parties are pleased with the progress of the relationship and look forward to seeing the positive impact on long-term profitability of the organization.

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The Birth of the RPO Alliance

From opportunity to industry, RPO continues to flourish.

by Jason Berkowitz

In July of 2003, Randall Mehl of Robert W. Baird & Co. identified recruitment process outsourcing (RPO) as one of the most significant emerging opportunities in HRO. Since then, the industry has grown rapidly. The latest sign of the growth and maturity of the industry is the formation of the first nonprofit, nonpartisan industry group dedicated to RPO.

In March of 2005, the Human Resources Outsourcing Association (HROA) announced the formation of the RPO Alliancea group of HROA members who provide RPO services. Between March and June, the RPO Alliance grew from a handful of providers to more than 20 companies, with more joining every week. The RPO Alliance represents a broad cross-section of companies ranging from large, end-to-end, enterprise RPO providers, to vertically specialized companies, to project staffing providers, and even executive search firms. These companies have come together to help professionalize this rapidly growing and evolving industry.

I was appointed by the HROA to act as interim chair of the RPO Alliance, with the charge of organizing the group and setting its early direction and goals. As such, Ive sought and received input from many in the industry and have uncovered some of the following issues that are driving the initial efforts of the HROAs RPO Alliance.

The term RPO has only gained widespread use in the last year or two and lacks a clear definition. Does RPO mean only the total outsourcing of a companys recruitment process? Is a search firm or employment agency providing RPO? Does hiring contract recruiters fit into RPO? Does outsourcing just one facet of recruitment, such as resume screening, fit into RPO? There isnt an agreed-upon answer to these questions. Everyone in the industry has their own definition of what RPO means, but we can all agree that RPO comes in a number of shapes, sizes, flavors, and colors. To address this need, the RPO Alliance is developing an organizing schema and understandable terminology to describe what type of RPO a company provides and what type of RPO a buyer seeks.

Before embarking on any outsourcing initiative, it is important that the buyer has a quantitative grasp of what is driving their current state so that a business case for outsourcing can be built. In recruitment, current-state data should include a detailed understanding of the current direct and indirect costs, metrics of hiring time and quality, hiring-process mapping, and hiring projections and turnover/retention. Many buyers have a hard time efficiently gathering or analyzing such data. The RPO Alliance is preparing a variety of free, downloadable tools online to help buyers gather and analyze data in preparation for evaluating the viability of RPO as a strategy.

While companies have been using search firms and temporary staffing agencies for years, the idea of larger-scale or integrated RPO is relatively new. As a result, many companies are still using outdated evaluation and selection processes to pick their providers. For example, Ive seen RFPs for RPO that were clearly based on templates for buying contingent labor or IT consulting or even payroll services. By trying to fit the square peg of RPO into the round hole of an inappropriate RFP template, the buyer ends up investing unnecessary time reviewing a mountain of provider data irrelevant to the RPO program, while missing other data that is highly relevant. The RPO Alliance is developing best-practices recommendations around the evaluation of RPO providers, including guidance on when the RFP is or is not the best way to evaluate providers. We are also putting together templates and sample RFPs that will help buyers gather the information they need and rank providers according to their suitability to the specific project.

As the RPO Alliance continues to expand, we will undoubtedly tackle other issues in addition to the ones described above. I would welcome hearing from buyers and providers alike about the issues you feel we should address as the voice of the RPO industry. Drop me a line with your thoughts and you can take part in the ongoing dialogue about RPO and its place in the toolkit of serious HR executives looking to improve performance and control cost in the face of a tightening labor market.

Jason Berkowitz is a founding member and the current interim chair of the RPO Alliance, as well as a board member of the HROA. Jason is cofounder and VP of Business Development of Hyrian, a provider of enterprise-wide RPO exclusively to the Fortune 500. Jason can be reached at jberkowitz@hyrian.com.

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A Sweet RPO Package

Case Study: Hershey foods find success with RES.

by HROT Staff

After a thorough review of their Human Resources Strategic Plan for 2000, it was determined that in order for Hershey Foods Corporation to continue to attract and retain a talented, diverse workforce, it would need to implement new methodologies and state-of- the-art technology. Hershey has long been a household name when it comes to candy, but we needed to work on becoming an employer of choice, said Kerrie Wolfe, Manager, Strategic Staffing and Employee Integration, Hershey Foods Corporation. Not certain that their goals could be accomplished by only utilizing their internal resources, Hershey began researching available outsourcing capabilities, and by August 2001, they narrowed the list of vendors down to four and began the request for proposal process. Then in September of 2001, Hershey announced an Early Retirement Program that left their HR department sparse outsourcing the recruiting function couldnt have come at a better time with the selection of RES in February of 2002.

A month later, RES and Hershey began a complete assessment and analysis of the existing staffing processes and programs. Meanwhile, a team of three diverse RES recruiters was assigned to the Hershey program. Their task was to contact all hiring managers who had current job requisitions and determine where they were in the hiring process. The recruiters received approximately 75 requisitions within the first two weeks. Some of these jobs were in the final stage of the hiring process and required only administrative support, not RES recruiting expertisebut many did. A variety of recruiting strategies were developed to fill these requisitions with qualified applicants, including Internet postings, networking, the Hershey career site, and radio advertising.

Hershey also needed a fully-capable applicant tracking system (ATS). Such a system captures and tracks necessary data that allows reporting on a variety of performance initiatives such as time to fill, cost per hire, applicant source, etc. Understanding and reviewing these metrics is critical to evaluating the continuous design of a program and recognizing its overall success. The RES technology is amazing. It allows for a much more efficient flow of data as well as a quick glance at our performance initiatives, says Wolfe. I always know where we are excelling and where we have opportunities. Utilizing the information being gathered from the ongoing procedural assessment, the technology team began collaboration with Hershey to launch the development of a fully-customized ATS system.

Within five months, the system had been tested and was ready for launch. With the new system, hiring and HR managers would have the ability to input their open requisitions into the system, candidates and applicants would be managed, and RES dedicated recruiters would then review and interview qualified applicants to filter down to the top three to five, best fit applicants for hiring managers. With the entire recruiting process now online, all applicants (internal and external) could be reviewed in a single system. Managers were now able to review completed job applications, online questionnaires, and recruiter interview notes all in the new ATS. Applicants are fully processed through to the hire, and then all data is transferred to the Hershey HR database. Once a requisition is closed, the process does not end. The hiring manager would receive an e-mail alerting him or her to complete a customer survey on their experience with the system as well as the recruiter. Because retention is key, a survey is also sent to the new hire at three- and six-month intervals to track their performance and experience in the job.

During the first year of the relationship, the RES Hershey Talent Team assisted Hershey in managing and filling more than 400 positions. RES and Hershey agreed that the first year would be used to gather the data necessary to set a benchmark for future measurement and process improvement. With reductions in cost per hire of more than 30 percent and a reduction in time to fill of more than 19 percent, the new Hershey/RES recruitment solution was successful in its first year of implementation. Having one centralized process for all salaried hiring online, has moved Hershey into the forefront of the competition for talent, notes Wolfe. We have one central database so the hiring decision can be made more effectively, and we have full tracking and reporting capability as well.

Today, RES and Hershey continue to adjust the program as lessons are learned and improvement opportunities are recognized. Implementation of this system at Hersheys Chocolate World Visitor Center is planned for the future, as well as a planned migration to a new HRIS system, which is currently in development.

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Verity Finds True Savings With RPO

Case Study: After a major acquisition, this software company acquired some help for its hiring staff.

by HROT Staff

Verity Inc. is successful in enabling organizations to maximize the return on their intellectual capital investment with intellectual capital management (ICM) solutions, but they were in need of a hiring solution in the form of RPO. During Veritys formative years, the software developer managed their talent acquisition through a combination of in-house recruiting resources and external agencies. In early 2004, Verity acquired Cardiff Software. The purchase created new complexities around process, systems, geography, and culture. Further contributing to this complexity, Veritys tenured internal recruiting staff departed from the organization. Verity was left with a significant number of open positions, and largely dependent upon generalists and hiring managers to fill open positions with the support of external resources. Veritys cost per hire was estimated to be in the range of 17 to 19 percent (the national average is 14.6) with no tracking of metrics associated with hiring manager satisfaction or time required to present or hire candidates. Verity had more than 20 open jobs that were critical, with an additional 20 open positions across the organization. They turned to Accolo for help.

In January 2005, Accolo and Verity executed a long-term contract with defined service level agreements (SLAs) and an additional on-site Accolo consultant who serves as the program manager. The implementation of SLAs ensured Verity receives top-tier recruiting service. SLAs measured time to introduce the hired candidate, hiring manager satisfaction, candidate satisfaction, and cost-per-hire, and includes components related to quality, speed, and cost, and contains meaningful penalties and bonuses for results. Through Accolos unique recruiting methodology and proprietary enabling technology, Verity was able to reduce their recruiting costs to 8.8 percent of compensation hired, time to introduce to 5.2 days, and determine that hiring manager satisfaction had improved significantly. In less than two weeks, Verity had a complete integrated recruitment department delivering results on all jobs. This consisted of on-site staff, a technology backbone to drive referrals and manage all applicant tracking, inclusion of all candidate sources, and a high degree of hiring manager TLC. There was also a measurable reduction of agency usage, resulting in estimated cost savings of $175,000 in Q4 2004 alone. RPO introduced standardization of the recruitment process including diversity sourcing for all jobs and tracking for EEOC complianceallowing Verity to limit exposure to legal actions.

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Back to the RPO Future

Industry experts give their insight into the future of recruitment and recruitment process outsourcing.

by Denise Doig

A few years ago, recruitment process outsourcing (RPO) was just another acronym being thrown around. Yes, there were a few early adopters who had the foresight to outsource their recruitment needs to an outside provider. But the past year has marked an explosion in the industry on multiple fronts: More companies are taking the plunge and outsourcing some or all of their recruitment processes; more staffing and recruiting companies are broadening their services to offer end-to-end RPO; and HR professionals are establishing associations, like the RPO Alliance and RPO Association, to develop standards and best practices.

What is the drive for this RPO growth? With U.S. job unemployment at its lowest point in four years, many of the hiring freezes and downsizings that were instituted due to the economy are being rolled back. Companies large, small, and in betweenare desperate to find the right people as quickly as possible. Many of these companies are seeking relief from the headaches associated with finding qualified candidates, scheduling the interview process, screening potential hires, assembling offer packages, bringing new employees on board, and simultaneously keeping record of the entire process. They are turning to RPO, which has been shown to save time, money, and aggravation. This years first RPO Bakers Dozen is a perfect example of the change in the industry. Many of the providers on the list can boast of an increasing number of contracts with broader and better results.

With predictions that the United States is facing a labor shortage sooner rather than later, the recruiting and staffing field will more than likely be affected. But in what ways? Brian Margarita, CEO of TalentFuse, states, Recruiting and staffing should be very well situated to grow a lot, as long as we can find the internal talent who are going to find the candidates for our clients. As baby boomers rapidly approach retirement, there needs to be a well-educated, well-trained, and skillful labor force to take their place. There has been great debate if future generations will meet the necessary qualifica- tions for employment or if America will increasingly need to look to overseas workers to meet workforce needs.

Steven Berchem, VP of Communications and Research for the American Staffing Association notes, There just arent enough skills in this country to meet the growing needs of businesses and some of that comes back to our education system. There are two parts here: Do they have the skills and do they meet the customer requirements?

How can companies and recruitment professionals prepare themselves for these inevitable changes? As it becomes increasingly difficult to find qualified candidates, companies and their recruitment partners will have to think of innovative ways to search, source, screen, and hire employees. With the coming labor shortage, companies are not going to be able to be reactive in terms of how they go about identifying candidates. Being on job boards and doing the things they have traditionally done are just not going to work for them anymore, says Terry Terhark, President of The Right Thing. Theyre going to have to develop strategies that are a bit more far reaching and a bit more proactive in terms of going after those candidates who meet their profile. Companies and recruitment providers alike have to be prepared for this change in the availability, demographics, and quality of potential employees.

When asked how RPO providers might address the potential labor shortage, Berchem had several suggestions: Employers are going to have to look to seniors or older workers to fill their needs. Older workers may not want to work full-time, they may not want to work on a continuous basis, and they want breaks in their time. Employers are also going to have to look at recruiting for a more diverse workforce, particularly with Spanish-speaking populations. Other strategies include alternate workforces such as contingent, home workers, and temporaries.

In late 2004, IDC released a study about the increased use of home sourcing, which found that there were 100,000 home-based workers or remote agents in the United States and that number was growing. The airline Jet Blue, for example, began with 30 virtual employees in December 1999 and, less than six years later, that number has increased 30-fold to 900 home agents. Companies are seeing increases in productivity, work quality, and retention, and employees are satisfied with the flexibility that home sourcing allows. Another area of rapid growth is the contingent workertemps, consultants, or contractors who are brought on temporarily for specific projects. Contingent workers are expected to make up 25 percent of the U.S. workforce in the next five years. With the inclusion of home-based workers and contingent workers, there will be a growth in the talent pool.

RPO offers an opportunity for companies to better reach this pool of candidates, if, notes Karen Browne, Vice President of Operations for PeopleScout, the RPO providers learn how to source, screen, and manage these types of candidates. While the increase in the candidate pool is really going to be helped by the home employee, the one thing that RPOs are going to be required to do is also to have the technical ability to assess the talent in terms of the recruiting strategy. Of course, there are some drawbacks to this alternate workforcesuch as tracking employee time, managing work quality and performance, and legal issues such as workplace safetybut one of the advantages of outsourcing is that providers take on part of the responsibility for some of these issues.

Another growing staffing trend is temp-topermanent arrangements. Due to negative hiring experiences or an interest in flexibility, some organizations want to test drive potential employees. There is tremendous interest on the part of customers in temp-to-hire arrangements, so that businesses are using staffing firms as a way to not only recruit employees but also try them out in their roles first before actually making a hiring decision. Thats shown a lot of growth this year and promises to continue, says ASAs Berchem.

Although many of the first adopters of RPO were global giants (like Kellogg and Hershey), RPO is not for the enterprise market alone. With the industry offering a growing pool of RPO providers, who now have measurable results and client references, many mid-market businesses are matching themselves with mid-sized or even regional providers.

What were hearing from large and small staffing firms is a shift away from an emphasis on the high-volume, low-margin business to greater emphasis on mid- and small-market employers. There is greater opportunity for growth there. With that shift in [consumer] interest, the sales interest will follow, says Berchem. According to Browne, RPO providers are also having increasing experience working with mid-market buyers, We see more mid-volume employers, and even our high-volume employers are moving us into some of the mid-volume positions.

Terhark has some tips for mid-market buyers looking to outsource their recruitment functions. As long as the company can do its proper research in terms of what specifically theyre looking for, in terms of outsourcing, they should be able find a provider that meets their philosophical as well as their real needs. Sometimes the larger firms arent the best to serve the mid-sized company, but there are plenty of firms out there who do high-quality work and will be more than happy to work with mid-sized organizations.

As RPO continues to grow and evolve, advisors recommend that potential buyers take the time to make sure their arrangement is best suited to their needs. Clearly define your organizations needs and goals. Then find an experienced provider who can not only meet those needs but also take you to the next level as your organization continues to grow. And buyers beware: A big name doesnt necessarily mean big resultslook for companies that can give you references that are applicable to your company (size, scope, industry, and/or culture.)

Perhaps most critical to successful RPO and improving your companys workforce and employee retention is having a good understanding of your current recruitment processes and future needs and goals. Companies should be well documented in what they hope to achieve through outsourcing, states Terhark, meaning that they should have good process already. If they outsource a bad process, their provider may have some of the same bad results. He also emphasizes that cost should not be the main driver in RPOits access to a better talent pool and improvements in efficiency. Browne adds, Its important for organizations to piece off what they are going to outsource, clearly understand what is the return on investment in terms of partnering, and make sure that they partner with someone who is very clear and metric based.

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The Baker’s Dozen: Recruitment

The Top 13 RPO providers

by Denise Doig

Since 2003, HRO Today has compiled a list of the top recruitment process outsourcing (RPO) providers. RPO covers a wide space in HRO. On a broad level, RPO includes recruitment, staffing, and search. But a closer look reveals the related areas that make up RPO: sourcing; screening; testing; interviewing; background checks and drug testing; hiring; coordinating offer letters; on-boarding; maintaining applicant tracking logs, requisition, and candidate files; and training all fall under the full-service RPO umbrella.

As our faithful readers already know, making lists is one of our favorite pasttimes. So its no surprise that this year we have kicked it up a notch. As RPO gets bigger and better, so does our coverage of the market. In the past, listings of the 13 major RPO players included the usual suspects and excluded some interesting up and comers. During our first year, we identified the whales in RPOs water, and even left some space for the guppies. Last year, we expanded on this concept by contacting providers who offered nationwide RPO services, had at least one major client, and placed, at a minimum, 100 employees through RPO. We also surveyed buyers to find out what their needs were.

This year, we upped the ante and decided that 2005 would be the year of the Bakers Dozen. This time around we have taken a more scientific approach. By including actual rankings with real numbers, we have compiled the top 13 full-service RPO providers some new, some old. These are the 13 outsourcers who are engaged in areas of full-service RPO. We contacted 23 recruitment providers to gather some key data and facts about themselves and their major competitors, which helped to determine the final 13. We also included some interesting user feedback, a variety of case studies, a look at what to expect for the future of RPO, and an introduction to the new RPO associationthe RPO Alliance.

Methodology: This list was developed by contacting 23 of the largest RPO providers and requesting the following information: number of full-service RPOs that they executed in 2004; estimates on the number of full-service RPOs their top 10 to15 competitors executed in 2004; and a ranking of their top 10 to15 competitors by market size. For those companies that could provide us with accurate audits of their 2004 recruitments (required for publicly traded companies under Sarbanes-Oxley), that number was the final number used in determining the rankings. For those companies that were privately held and could not provide independent audits, we averaged the number they provided us with the overall average of their competitors estimates (industry average) to determine a final number of employees placed through RPO. We then compared their rank based on the average number of employees recruited with their rank based on their competitors estimates of market share. This enabled us to ensure that, although the final number of recruited employees may not be exact, the RPO companys relative rankings within the list are. 


Employees Placed Through RPO: 28,000


Kenexa is a global provider of employment process outsourcing (EPO) offering outsourcing, employee research, and software to help companies hire and retain a productive workforce. Kenexa manages staffing operations and recruiting campaigns for Fortune 500 and mid-sized companies, managing some of the employment process or the entire staffing processes. Kenexa provides single-source accountability rather than partnering with external sub-contractors, avoiding potential issues that can arise from the use of multiple providers. Kenexas EPO strategy reduces operating costs, focuses on the core of the business, creates a variable cost structure, improves quality, expedites speed to market, fosters innovation, and accesses best in class expertise and technology.

RPO Client(s): Schering Plough, StorageTek, Corning, Microsoft, Teva Pharmaceuticals USA

Services: Requisition Development, Sourcing, Screening, Process Management, Administration, Skills Testing, Behavioral Assessment, Applicant Tracking, Employee Referral Program Administration, Employment Advertising Strategy, EEO Program

Development and Reporting, On-Boarding and Ongoing Retention Programs.

Most Common Metrics: Time to fill, cost per hire, diversity indices, source effectiveness, employee referral, funnel ratios, compensation metrics, and workforce planning metrics.



Employees Placed Through RPO: 15,000


HRfirst, a Kelly Services company, is a recruitment process outsourcing and consulting company that provides flexible, innovative recruitment strategies and technologies that improve and accelerate the hiring process, saving clients time and money.

RPO Client(s): Large companies in a number of different industries including an international beverage distribution company, a Fortune 100 financial services company, and a pharmaceutical giant

Services: End to End Hiring Programs–appointment of a dedicated program team; design and install a customized candidate sourcing strategy; hiring process re-engineering; recruitment technology assessment and recommendations; integrated applicant tracking and requisition approval processes; management of all candidate and hiring community communications; candidate offer management; conduct all post-offer screening activity; establishment and management of hiring program partners; and complete ongoing management of client hiring program. Customized Mission Critical Hiring Projects–augmenting the clients internal recruitment function; outsourcing of hiring for specific skill sets or geographic regions for clients (usually for a specified time period involving volume hiring conditions); consulting and program management services; technology consulting; workforce planning consulting; assessment consulting; management of client employee referral programs; management of campus recruitment programs; management of leadership development programs; and design and management of employee retention programs.

Most Common Metrics: Cycle time to hire, requisition span, aging, diversity of applicant flow, cost per hire, effectiveness of hiring source, and client and new hire satisfaction.



Employees Placed Through RPO: 12,000


Spherion is a publicly traded corporation with more than 2,150 recruiters operating throughout 700 locations in the United States and Canada. Their broad-based experience in staffing, recruiting, and workforce management is founded on an in-depth understanding of the workforce and the issues that drive performance. It is these core competencies that Spherion offers to clients who want to more effectively plan, acquire, and optimize talent to improve their bottom line. Spherion has the ability to deploy various RPO delivery models, ranging from low-touch engagements based on standardized sourcing and recruiting workflows, to co-sourced and high-touch models consisting of customized hiring processes, Spherion or client-specific technology, and potential full ownership of an end-to-end hiring process. Their flexibility is further enhanced by the ability to work within multiple technology environments, including Brass Ring, Peoplesoft, eRecruit, Taleo, Recruitmax, and others. Spherion has been delivering clients BPO since 1990 and RPO solutions since 2001.

RPO Client(s): Eastman Kodak, Agilent, Citrix, 180 Connect, W. W. Grainger, Capital One, Cisco

Services: Solution Consulting Methodology and Business Case Development, Due Diligence and Implementation, Sourcing and Pre-recruitment Pipeline Services, Screening, Assessment Testing, Behavioral Interviews, Scheduling and Interview Administration, Background Investigation and Compliance Management, Offer and On-boarding Management and Orientation Training, 24/7 Report and Analysis Platform, Process and Performance Management, Applicant Tracking System (ATS) Technology Integration Policy, Total Workforce Acquisition, Account Governance.

Most Common Metrics: Source effectiveness; time to fill; interview to hire ratio; offer acceptance rate; time to start; diversity; pay rate analysis; user satisfactionresponsiveness, addressing problems, documentation, slate quality, candidate experience; business relationsease of doing business, account management, account support; and cost containment and cost reduction goals.



Employees Placed Through RPO: 8,300


Hyrian provides nationwide, end-to-end, long-term RPO programs exclusively to Fortune 500 and Global 1000 companies. Hyrian covers the entire recruitment process from job design, requisition management, sourcing, applicant screening, background checking, and on-boarding, and even post-hire employee retention. Their programs are transformational rather than transactional in nature, allowing companies to improve the quality of hires as well as service levels to hiring managers and candidates, while reducing cost. Hyrians Distributed Recruiting model combines supply chain, capacity planning, assembly line, and quality-control practices adapted from the manufacturing industry for a scientific and proactive approach to large-scale, complex recruitment. Because Hyrians programs are all large and long-term, they are all custom-built, seamless, and branded for the client.

RPO Client(s): UnitedHealth Group, American Express Financial Advisors

Services: Strategy, Sourcing, Screening, Selection, and Start. Represent approximately 30 discreet steps in the hiring process.

Most Common Metrics: Overall cost (staffing efficiency ratio), cycle time (requisition approval to offer acceptance), offer-toacceptance ratio, source effectiveness, hires per month, and requisition agings. Additionally, Hyrian maintains an internal quality assurance department to measure the quality of processes. Quality assurance staff gather satisfaction data from the end-user (hiring managers) for reporting on recruiter responsiveness, professionalism, speed, flexibility, and overall service level.



Employees Placed Through RPO: 5,350


Yoh HR Solutions is a unit of Yoh, a leading provider of high-impact talent and outsourcing services in the United States with more than $415 million in total sales. Operating from more than 80 locations in North America and Europe, Yoh delivers long- and shortterm temporary and direct placement of technology and professional personnel, as well as managed staffing services, for the telecommunications, scientific, information technology, and engineering communities.

RPO Client(s): General Electric (Yoh currently supports five business clusters representing nine major business units in more than 200 domestic locations), Andrew Jergens Company

Services: Recruitment Strategy Design, Job Posting, Sourcing/Mining/Networking, Advertising, Recruiting, Slate Development, Interview and Travel Logistics, Candidate Data (EEO-1) and ATS Administration, Visa Processing, Job Folder/Candidate Disposition, On-boarding/Orientation, HRIS On-boarding, HRIS Administration, and Co-op and Intern Program Management.

Most Common Metrics: Cost per hire, cycle time to fill, and percentage of candidate diversity per slate.



Employees Placed Through RPO: 5,200


Entrenched in recruitment process outsourcing for more than 10 years, StraightSource brings a tradition of success to the recruitment processfrom pre-hire to post-hire. The company fortifies the HR function with increased value, reduced costs, improved hires, and more control. Their flexible service delivery model is designed to consistently execute a high-quality recruitment process so that client organizations are synchronized to meet ever-changing recruitment and hiring needs.

RPO Client(s): UnitedHealth Group, Express Scripts Inc., Allstate Insurance Company S

ervices: Recruitment Strategy, Job Analysis, Selection Process Design, Selection Process Validation, Candidate Generation, Applicant Processing/Selection, Search, Recruitment Management System (RMS), Recruitment Administration, Background/Drug Screening, EEOC/DOL/OFCCP Compliance and Reporting, WOTC Tax Credit Reporting, Contingent/Temporary Labor Consulting, Metrics/Analysis.

Most Common Metrics: Financial, retention, hire quality, fill rates, cycle time, hiring ratios, and channel effectiveness.



Employees Placed Through RPO: 4,150


The RightThing, Inc. has provided end-to-end recruitment, staffing, and employment process solutions and recruitment process outsourcing services in the HR marketplace for more than 15 years. The RightThing was founded in 2003 by the original Selective Staffing team, which was acquired by Aon Consulting in 1988. The RightThing is focused on assisting organizations in accomplishing their hiring goals and objectives through streamlining the administration of the front end of the hiring process through outsourcing or providing staffing process re-design work. They work as an extension of the clients HR team to meet hiring demands. The RightThing provides exclusive hiring services to Fortune 2000 companies for a wide-range of hiring needs. They have worked within more than 10 industries for 200 client companies to process more than 12 million candidates in North America.

RPO Client(s): Cyberonics, Merck & Co., Kelloggs, Abbott Labs, Waste Management, GE, TAP Pharmaceuticals, U.S. Steel, Sky Financial, Cardinal Health, Pfizer Pharmaceuticals, Velcro

Services: Staffing, Process Consulting, Candidate Recruitment/Sourcing, Applicant Intake, Screening, Testing, Interviewing, Candidate Correspondence, Data Management/Reporting.

Most Common Metrics: Candidate satisfaction, overall cycle time, hiring manager satisfaction, and interview-to-hire-ratio.



Employees Placed Through RPO: 4,000


Headquartered in Houston, Texas, RES is the recruitment outsourcing division of Bernard HODES Group. RES was an early adopter of RPO and entered the fields of recruitment outsourcing and applicant management in 1983. With outstanding talent, innovative processes, powerful creativity, and state-of-the-art technology, RES produces exceptional results for a wide variety of clients. Whether utilizing RES as a complete recruitment services outsourcing provider, or choosing from an array of project options, buyers are assured of customized, quality service based on best practices.

RPO Client(s): Kellogg Company, The Hershey Company, Comerica, Hexion Specialty Chemicals (formerly Borden Chemicals)

Services: Hiring Process Re-Engineering, Staffing Technology, Recruitment Marketing/Branding.

Most Common Metrics: Quality, speed, efficiency, cost per hire, time to submit, time to fill, fill ratio, and customer satisfaction.



Employees Placed Through RPO: 4,000


This global HR Services company is active in temporary and permanent staffing, outplacement, career services, and HR outsourcing. The Adecco Group operates from more than 6,000 offices in 70 countries and territories, servicing hundreds of thousands of clients and around 4 million temporary associates each year. In 2004, Adecco generated revenues of 17.2 billion euros. The Adecco group is comprised of three staffing and career management services divisions: Adecco, Ajilon, and Lee Hecht Harrison.

RPO Client(s): General Electric, Renault, Robert Bosch, Citicorp

Services: Screening, Testing, Candidate Administration, Requisitions, Hiring, Database Management, Sourcing, Training, Supplier Management.

Most Common Metric: Success rates, attrition rates, process efficiency, user satisfaction, and candidate satisfaction.



Employees Placed Through RPO: 3,500


Futurestep provides specialized services to clients looking to outsource some or all of their HR recruitment functions worldwide. With fully integrated, single-source solutions, Futurestep leverages its proprietary Enterprise Recruitment Methodology, world-class technology, and international brand to transform the clients current processes. Operating as the clients internal recruitment function, Futurestep will work closely with the client to improve the recruiting efficiencies of quality of hire, speed of delivery, and cost containment. Improvements are measured and monitored through real time metrics then tied to strict service level agreements. On an ongoing basis, Futurestep will act as a strategic partner in continuously recognizing best practices to tactically elevate the client internal processes and to promote the company as an employer of choice.

RPO Client(s): Confidential


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Time Warner Selects Pilat HR Solutions to Manage Talent

LEBANON, New Jersey (June 14, 2005) – – Pilat HR Solutions, a leading provider of talent management consulting and software, announced today the signing of an agreement with Time Warner Inc. (New York, NY), a leading global media and entertainment company, to provide them with HR PulseT, a web-based human resource system. This configurable software will provide Time Warner with an enterprise-wide succession planning solution.

“This agreement underscores the enterprise-wide capabilities that the HR PulseT software can address

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Time Warner Selects Pilat HR Solutions to Manage Talent

    LEBANON, N.J., June 14 /PRNewswire/ — Pilat HR Solutions, a leading
provider of talent management consulting and software, announced today the
signing of an agreement with Time Warner Inc. (New York, NY), a leading global
media and entertainment company, to provide them with HR Pulse(TM), a
web-based human resource system. This configurable software will provide Time
Warner with an enterprise-wide succession planning solution.
    “This agreement underscores the enterprise-wide capabilities that the HR
Pulse(TM) software can address

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