The Honickman Group finds recruitment costs escalate after implementing RPO, but for SVP of HR, the costs are more than repaid in business results.
If you follow conventional wisdom about outsourcing recruitment services, then you know cost savings are a primary driver for turning to a third party. But when soft drink bottler The Honickman Group turned to an outsourced solution, it more than doubled its recruitment costs to more than $1 million.
A case of RPO gone wild? Actually, for the Mid-Atlantic bottler, whose headquarters are based in Pennsauken, NJ, the outsourcing engagement has been transformational, according to company officials. Positions are filled more quickly, vacancies that used to plague Honickman during its peak seasons are no longer left unmanned, and the quality of candidates has improved as well. Under a variety of measures, the engagement appears to be wildly successful. Still, what about that gigantic spike in recruitment costs?
Ask most SVPs of HR whether more than doubling their recruitment costs is acceptable, and you might get an earful about HR’s imperative to cut costs for their organizations. But ask Jeff Stanley, Honickman’s HR leader, and he’ll give you an earful on why it was money well spent and how HR is really having an impact on the business.
Indeed, recruitment had not an inherent strength of the organization, which makes about 600 hires a year—most of those during its peak season spanning from April 1 to Labor Day. Like any bottler, the company’s staff includes vehicle mechanics, warehouse workers, drivers, sales professionals, and others who help the family-owned business serve up more than 60 brands such as Snapple, Pepsi, Sunkist, and others. Covering an area stretching from New York to Virginia, Honickman operates 23 warehouses in the region.
Before Stanley joined the company, Honickman relied on a blend of internal (for the rank and file) and external recruitment (for higher-level employees) capabilities. Stanley lamented that the company didn’t have an effective process, nor did it have the technology to support its recruitment efforts. As a result, hiring managers, already stretched for time, defaulted to serving as their own recruiter.
“We just weren’t recruiting effectively. We had jobs open for months. There were times we were just hiring people with a pulse,” he said.
The unfilled positions were having an impact on business. Stanley said the company grew increasingly concerned about losing accounts due to poor customer service, and leadership at the company was painfully aware of the risks of an ineffective recruitment process.
“The [recruitment] service before was so horrendous that our management was ready to step up to make the investments,” said Stanley, who joined Honickman a little more than a year ago. “Clearly, our costs are higher, but the savings from filled positions more than paid for themselves.”
Prior to joining the Honickman Group, Stanley said he worked with an RPO provider during his tenure at chemical specialties manufacturer ICI Uniqema. There, the company relied on the provider to handle a spectrum of services for higher-level positions, from placing ads to performing sourcing evaluations to helping finalize a candidate. So when he landed at Honickman, he knew the company could benefit from an RPO solution.
With a recruitment budget of $400,000 in 2006, the company decided to step up its spend to $1 million through the WorkPlace Group engagement in 2007.
Sure it’s a significant spike in its recruitment spend, but Stanley said the added investment has paid dividends. In implementing a structured outsourced process that includes end-to-end services, the company has benefited from installing the Hirebridge applicant tracking system, a huge improvement over its previous Excel spreadsheet approach. The WorkPlace Group is responsible for managing the ATS; all candidate sourcing, screening, and assessment activities including employment branding; interview scheduling; offer management; metric tracking; and job-market competitive intelligence.
Following the implementation, the company has cut the average vacancy time of 12 weeks in half. Furthermore, the quality of hires has risen sharply because assessment tools and better job descriptions were developed. By hiring better qualified employees, Stanley said HR is helping to retain its customers.
“Clearly the [additional] $600,000 we spent on this is going to be covered by reduced turnover, higher quality candidates, and retained accounts that would have been lost by not serving them properly. There’s no question in my mind it will more than pay for itself,”
So even as most companies turn to RPO for cost savings, others realize its most important value is the impact it has on the business case. And for Honickman and Stanley, recruitment outsourcing has become an invaluable tool of the times they can drink to.