Defining RPO: Wading through the Hype

Recruitment process outsourcing is one of the fastest-growing segments in HRO, but it’s also one of the most confusing and least mature. As buyers set out to engage outsourced recruitment services, here’s a guide on understanding the domain from one end to the other.

by Andy Teng

As anyone considering outsourcing knows, comprehending HRO is complex enough without a lot of confusing market hype. But just when you thought the days of smooth-talking salespeople promising 30-percent savings, error-free payroll, and quality service delivery have gone the way of the $2-a-gallon gasoline, they’re making an encore engagement.

This time, however, the hype isn’t around enterprise, end-to-end HRO—it’s around the hottest domain within the market: recruitment process outsourcing (RPO). Without question, the RPO marketplace is teeming with activity. More deals are being cut these days. Proclamations of innovative solutions are issued regularly. And with so many new players entering the market or claiming to be a provider of RPO services, two words rule the day: caveat emptor.

That’s right, you, the buyer, had better beware. Or at least understand what you need and what you’re getting into. RPO, like any other HRO service, comes in many flavors and covers a broad continuum, starting with strategic planning through on-boarding to post-hiring surveying. In fact, an employer could theoretically fill all of her human capital needs without so much as touching a resume. Welcome to the utopian world of outsourcing.

END-TO-END PROVIDERS RARE
Hold on a minute, though. Before you sign your staffing life away, remember those two little latin words. While it’s true that some providers can cover just about all the bases, they are in the minority. In fact, most RPO providers are capable of servicing only a portion of the entire recruitment process, and each has its own sweet spot. Some partner with vendors, whether it’s for sourcing, technology, or just plain ol’ process expertise. Others are just figuring out that slapping RPO after their name may draw more interest. Many recent entrants are simply recruiting or staffing firms fumbling their way through the marketplace in hopes of landing a few contracts to practice on.

And that’s the danger of RPO today—in its infancy, many wild claims are made, too many unseasoned firms are elbowing their way into the door, and just about any kind of contract involving placement is being labeled RPO.

What confuses many HR professional—as well as those in the provider marketplace—is how RPO should be defined. In speaking with numerous providers and buyers, HRO Today has compiled a generally accepted definition of RPO. This was done through rancorous debate as providers jostle with each other for a stake of the exploding market.

To get the provider community’s perspective on defining RPO, we turned to Jason Berkowitz, who heads up the RPO Alliance and is a founder and vice president at provider firm Hyrian. The Alliance is a subset of the HRO Association, the umbrella organization representing some of the largest outsourcing providers in the world.

Berkowitz helped outline the fundamental framework of RPO, and we also solicited the input of a few other RPO providers as well. The result is a comprehensive definition of RPO in its entire lifecycle. We feel this will give buyers an unfiltered, hype-free picture of the state of the art in recruitment process outsourcing.

A fundamental issue remains unresolved, however: how to separate true RPO providers from wannabes. While we can provide definitions, we makes no claims on which companies qualify to be called an RPO. We feel this is too subjective because, as Berkowitz explained in an article in HRO Today last year, the recruitment needs of buyers vary widely, and so do the service offerings. So while one provider might not be able to meet the needs of a customer, it may be a perfect fit for another.

Two other industry insiders—Terry Terhark, president of The RightThing, and Jim Lanzalotto, vice president at Yoh—also gave us their input on the RPO continuum.

Also for this section, we’ve asked a recently retired industry veteran to author his perspective on the challenges associated with defining RPO. Elliot Clark, the former chief operating officer of Kenexa, weighs in on the definition dilemma. (Read more here.)

We hope you find our definition helpful and that it provides at least a neutral explanation of what RPO is. As always, we invite all of our readers to offer their thoughts on this by contacting the editorial staff.

THE RPO LIFECYCLE
SERVICE FUNCTION DESCRIPTION STATE OF THE ART
STRATEGIC CONSULTING Includes recruitment process design,competitive analysis, job design, HRIS evaluation, market expansion support,and technology planning. Providers are demonstrating the valueadd that RPO can bring to an organization through their involvement in the strategic planning phase of a client’s human capital needs.
SOURCING Includes active and passive headhunting, referral handling, candidate tracking,placement and staffing agency coordination, market intelligence gathering, and pipeline building. Best practices are evolving into the provider serving as a master vendor in charge of sourcing candidates from multiple sources—agencies, job boards, referrals, networks, etc.
SCREENING Candidate screening and assessment, building recruiter domain knowledge, and compiling screening tools. An area that relies on a blend of technology and recruiter expertise, RPOs are building more efficient processes to place the most qualified candidates in front of hiring managers.
SELECTION Scheduling of interviews, database updating,compliance checking, logistics support, and offer/rejection letter composition. While the hiring decision remains an internal one, RPO providers help to support managers in a variety of ways to speed the hiring process.
ON-BOARDING Background checking, drug screening, employee orientation, employee record creation and data porting, and on-site and off-site logistics support. A broadened scope enables buyers to transfer many traditional internal onboarding activities to RPO providers, further reducing cycle time.
BENCHMARKING & SURVEYING Follow-up survey, compiling benchmark data, gauging hiring manager and employee satisfaction post hire, and determination of quality of hires. By examining data relating to employee satisfaction, retention rates, and others, RPO providers can improve the recruitment process.
Posted December 10, 2006 in Talent Acquisition

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