Confused about RPO? Don’t worry, you’ve got plenty of company. If only providers could tone down their marketing hype to truly define recruitment process outsourcing.
Recruitment process outsourcing (RPO) is an acceptable term for consultants, sourcing advisors, industry analysts, and pundits alike. However, practically speaking, it appears as though the acronym RPO is somewhat less defining to buy-side and sell-side recruitment practitioners.
Even though you’ve probably read dozens of articles on RPO and attended at least as many conferences, ask yourself this question: What is RPO? Then ask 10 of your colleagues the same question. If you are surprised with different definitions, then I am certain that you’ll find this month’s column intriguing.
THE PROBLEM WITH THE TERM
HRO leaders created this acronym because at the time it seemed reasonable: the transfer of management and ownership of internal permanent recruitment operations to a third party on an ongoing basis. However, every imaginable staffing company—temporary, contingent, search, recruitment automation technology vendors, off-shore resume processing vendors, and even some job boards—now call themselves RPO firms because it is on the forefront of most strategic HR conversations. So many have reclassified themselves as RPO that today, at the outset of most conversations with clients about RPO, I spend as much as 30 minutes discussing, “how do you define RPO?” and the differences between one service and another. This is troubling, and only getting worse.
The real question is this: does the state of the RPO industry today represent what we thought RPO would be? This is a highly debated topic with no right or wrong answer, but the short answer is no. Let me draw a parallel to payroll outsourcing.
Would you consider a customer who performs in-house payroll for 11,000 workers and “outsources” payroll processing and preparation for 900 workers, in four job categories, fewer than 20 weeks a year as someone who outsources payroll processing? If a colleague said she outsources payroll, would the above scenario come to mind? Probably not. This doesn’t happen in a very mature payroll outsourcing market, but in the recruitment outsourcing market, it happens every day.
When we distill the RPO acronym, it’s no wonder we find ourselves puzzled. We understand recruitment, and by now we hopefully understand outsourcing, but process? The recruitment process has at least four major subprocesses: outreach, source, recruit, and hire. Diving even deeper, each major subprocess has at least four to five subprocesses.
To continue with the payroll processing analogy, can you imagine a company outsourcing to a third party the preparation of data while still printing its own checks and wanting the service provider to prepare and send out quarterly tax returns but the company retains processing and mailing of W-2s? Analogously, this very thing happens in recruitment outsourcing every day.
The state of RPO today would politely be categorized as co-sourcing, or just sourcing, let alone outsourcing. The number of real recruitment process outsourcing programs is actually very small and hard to spot because everyone is calling everything RPO.
For example, engaging three service providers on a contingent fee basis to staff two financial shared-services centers with a total of 242 people is not recruitment outsourcing; this is called a project, with a definitive start, end, and a deliverable.
Some recent buyer sentiment surveys rank recruitment as an HR function high on the list of likely functions to outsource. Conversely, of all the outsourced HR services, it has the lowest customer satisfaction—less than 40 percent. Certainly, buyers point their fingers at service providers and vice versa, but what’s really at the heart of this dilemma is an immature business.
For customers to be more satisfied, they need to better understand what they are buying. Unfortunately, in this new global economy, service providers aren’t going to change their guerrilla marketing tactics so the onus is on the buyer to figure out what they are buying.
RPO is not a bad term; it’s just that more accurate ways of talking about buying recruitment are available. For example, recruitment as a service can be invoked when we refer to buying management and fulfillment of certain recruitment functions. We can say recruitment products or solutions when we are looking at buying 30 candidates on a fee-per-hire basis or an applicant tracking system bundled with candidate assessment, screening, and EEO reporting capabilities. We can then reserve recruitment outsourcing (dropping the process portion) for when we are talking about true transfer of management and ownership on an ongoing basis.