n an era of retiring talent and mounting pressure to fill positions more quickly, study finds most employers are still not familiar with RPO.
The rest of the world shares your recruiting pains. That was the result of one study conducted by Kelly HRfirst and HROA Europe, which last June set out to explore how companies are meeting their recruitment needs and their view of recruitment process outsourcing (RPO).
The Global RPO Report 2007 surveyed senior HR managers in small, medium, and large companies in 25 countries with responsibilities that spread across 89 countries.
Seventy percent of respondents noted they were encountering difficulties recruiting staff as a result of a healthy global economy, slowing population growth, and the pending departure of baby boomers from the job market. An acute and ongoing shortage of skilled labor is likely to make this an interesting situation for some time and a challenge many companies will have to face head-on.
Accompanying the growing shortage of workers, demand for skilled labor is alive and kicking in most of the companies surveyed. Almost half of respondents said they had planned on hiring more than 100 permanent employees last year, while one-third said they would hire more than 100 temporary employees. Some 18 percent expected to hire more than 100 university graduates.
The competition for talent means that employers have to go back to the drawing board and revisit how they attract and retain workers who are vital to their businesses. According to the survey, a sharp tightening in labor markets has placed recruitment at the forefront in determining business strategy and success. HR managers are facing problems in critical areas such as the quality of candidates, time-to-hire, and hiring process efficiencies.
Indeed, the shortage of professionals is infiltrating the ranks of HR workers, and the pressure is on to meet demanding recruitment benchmarks. Many HR departments are feeling the strain: 40 percent say they have two or fewer internal staff members devoted to recruitment; more than 50 percent of companies surveyed are devoting no more than 25 percent of their HR staff to recruitment efforts.
The more HR departments become involved in meeting key strategic goals and metrics, the more important recruitment plays in the company’s success. The survey found that median cost per hire was €3,000, with some HR managers reporting a per-hire cost of more than €10,000.
While many businesses have avoided skills shortages in their own regions by off-shoring work to lower-cost countries such as China and India, even these parts of the world are experiencing increased cost pressures and shortage of trained people. This means companies that hope to hire the best talent will need to broaden their hiring efforts to an international talent pool.
According to the survey, nearly three-quarters of companies expected to use recruitment firms to acquire anticipated hires in 2007. The overwhelming majority will use them for sourcing, screening, and testing of candidates. Large companies are more than twice as likely to use a recruitment firm as smaller organizations.
Slightly more than half of respondents said they were familiar or very familiar with RPO. Approximately one-third reported being somewhat familiar and fewer than 10 percent had not heard of RPO.
More than half of the survey respondents currently outsource some or all of their HR functions. The vast majority said that they would definitely consider outsourcing their recruitment in the future, with the goals of reducing the time-to-hire, lowering the cost of recruitment, and rationalizing multiple sources of recruitment.