Four leading providers talk about buyer needs, maximizing the RPO process, how to collaborate, and other intangibles to make the relationship a success.
Brandt Hamby (BH) is executive vice president of business development for StraightSource. He was previously VP of operations and helped build and manage a service delivery model that supported successful RPO engagements.
Anne Nimke (AN) is co-founder, president, and chief operating officer of Pinstripe, a recruitment process outsourcing provider that designs, builds, and manages talent acquisition and management solutions.
Ladd Richland (LR) is president and CEO of CRI, a provider of RPO services. He co-founded the company in 1997 and has more than 20 years of experience in fostering and building high-growth companies.
Wendy Wick (WW) is manager, strategic support for Kelly HRfirst International. She has successfully managed high-volume, comprehensive salaried and hourly hiring programs for the past 10 years. She is currently launching Kelly HRfirst internationally and has implemented HRfirst in the Netherlands.
Recruitment process outsourcing (RPO) is one of the fastest growing segments of HRO. The benefits are demonstrable to the users, who not only get sourcing support but also a myriad of other gains to help make HR more strategic, react more quickly, and help cut costs. But the RPO waters are still murky, and to help users better navigate them, we asked some of the market’s leading providers to discuss the state of RPO, how to help providers submit more useful RFPs, what buyers look for, and the future of recruitment process outsourcing.
HRO Today: What are you seeing buyers looking for now that they weren’t looking for 12 to 18 months ago? What specific services are they asking for in their RFPs?
BH: The number of requests for “componentized” RPO services has definitely increased, specifically in the areas of candidate sourcing and applicant processing. Companies are rapidly investigating RPO solutions to address the increasing competitive pressures of identifying top talent and quickly selecting the right talent. Whether it means handing over the “work” to the provider and keeping strategy internal or utilizing the RPO provider as a change agent, RPO is being considered more often as a potential solution. I think an interesting trend in RPO is the increasing number of companies that request services on top of their ATS (applicant tracking systems). A growing number of organizations are realizing that ATS technology in itself is difficult to deploy. By bundling services around technology through RPO, organizations can gain immediate access to results without the cost outlay of an enterprise system.
AN: At Pinstripe, we find that buyers are looking for a range of benefits that include strategic, operational, economic, technology, human resources, compliance, and risk reduction. First, clients want the ability to focus on the big picture, the long view, and all of the interrelated systems that talent acquisition and retention encompasses. These are strategic HR benefits of a strong RPO relationship. Secondly, with an upgrade in the overall level of talent acquired, operational benefits accrue to the organization. Third, working with a strategic RPO provider, a client is looking for access to best practices in process and world-class technology. Fourth, clients are looking for increased compliance with a significantly lower administrative burden coupled with an overall increase in flexibility with reduced risk. Finally, economic benefits in terms of cost savings are a given. We find they are simply the ticket to entry nowadays. What clients are really looking for are the value-adds that RPO can bring.
Additionally, we find that the RPO market is dividing into two camps in response to the wide range of services that buyers are requesting: transformational suppliers and transactional providers. In their own ways, providers on either side can be effective, depending on what the client company is trying to achieve.
LR: Buyers have always focused their review of providers in three main categories: quality, speed, and service. Although these remain the primary qualifiers, we find that buyers choose providers who will guarantee number of hires, actively involve clients in RPO team selection, and have relevant industry experience (specialization). Additionally, CRI has seen, over the past 12 months, more companies outsourcing candidate screening and selection as well as sourcing. The top five requests in RFPs include: candidate sourcing (active/passive), candidate screening/selection, assessment administration, applicant tracking, and employment process management.
WW: In the past 12 to 18 months, we’ve seen RPO buyers increasingly ask for total workforce management and increased accountability within the recruiting function. Buyer awareness and desire to manage their temporary, contingent, and permanent workforce through a single point of contact is on the rise. The buyer community sees that it can achieve rich talent pools, simplified processes for hiring managers, and cost reduction by managing a workforce rather than a type of employee. Accordingly, we are seeing increased requests for integrated workforce management tools as well as requests for management of diversity initiatives, sourcing and screening, interview and candidate management, offer processing, compliance management, reporting, agency and vendor management, etc.
HRO Today: What is the motivating factor behind these companies looking for RPO? Cost savings, access to technology, process realignment?
BH: Most recently, it seems RFPs are focused on cost savings (by design), but profess to want process realignment/business improvement (as stated). But, the actual motivating factors include all of the above and are dependent on the buyer’s current strategy, infrastructure, and tolerance for change.
AN: Cost, access to world-class technology, best practices in business process, change management and transition, improved quality, and speed are all factors that companies consider when looking to enhance the performance of their employment function and workforce.
Clearly, cost savings are a critical part of the equation, but what is most important when considering cost is that both the buyer and provider look at the total cost related to the acquisition, hiring, selection, and retention of a high-quality and high-performing workforce. This is critical when assessing both pre- and post-program costs and defining SLAs. A grave mistake can be made when “price” rather than total cost of ownership of the solution is used in the selection and the management of the partnership.
LR: Although the initial incentives for evaluating RPO are improved cost savings and efficiencies, our clients have realized RPO delivers increased industry competitive advantage. An organizations’ ability to attract and retain great people, adopt and scale recruitment best practices, and increase their speed to market are measures of both market leadership and share. Simply put, the ultimate business benefit is that RPO allows an organization to hire quality people faster.
WW: RPO buyers are motivated by cost savings and the desire to focus HR on business initiatives other than recruitment. By outsourcing recruitment to experts, HR has obtained a commitment to demonstrate agreed-upon results in efficiency, service level, and reduced costs in talent management.
HRO Today: What are the hallmarks of a good RFP, and what common mistakes do buyers make when preparing an RFP
BH: A good RFP document aligns the RFP questions with the goals and objectives of the program and selects the provider(s) based on how well they meet those goals. For example, if process change or ROI are the primary goals, cost should not be weighted as heavily as proof of value. Cost models may need to be customized. Also, a good RFP process engages the provider in solution definition in order to clearly define the scope of work and document the current business case. Too often, the RFP process actually hurts the buyer in that they don’t engage the provider in discussing and collaborating on what kind of work will be involved, current business case, etc., resulting in an inaccurate buying process. Providers can only add value to the extent a buyer will let them add value.
AN: A good RFP isn’t just about the customer asking questions. A good RFP provides suppliers the information they need to create and price a solution that meets the buyers’ needs.
We’ve seen a number of RFPs that try to gather information on every type of solution available that could potentially meet an organization’s yet undefined program goals. This is burdensome not only to the provider, who may have to submit a response (in a very tight timeframe) that can be hundreds of pages, but also to the buyer’s team, which has to weed through the responses from potentially dozens of providers, only to find the information is overwhelming, makes comparing apples to apples unrealistic, and lacks the real information they need to make an informed decision. There are a couple of common mistakes:
- Using the RFP as an early data-gathering tool with little intent to make a buying decision. A targeted RFI with perhaps a dozen questions could easily accomplish this goal.
- Buyers often fail to quantify what they want in terms of outcomes or how they will measure success. Definition is needed regarding the scope of the program, including volume of positions by job group, number of locations, types of positions, and what parts of the process are included or not, clarification of desired state and vision of the program at year one, two, or three, and current program-specific data and staffing metrics.
- Questions are asked in either a broad, generic manner or, conversely, too narrowly, allowing the provider to interpret the question many different ways and illicit such a broad array of answers that makes comparing providers solution, deliverables, and pricing nearly impossible.
- Finally, buyers often utilize documents (RFPs, contracts, statement of work, or SLAs) previously used for temporary help or consulting services. The content of these documents don’t quite fit an RPO solution. We recommend that buyers also look to other true, outsourced service contracts for model language and SLAs.
LR: Most well-composed RFPs include documented and established baselines for the recruitment function in: number of hires; salary ranges; days to fill; job skill requirements; current recruitment spend including contingent, retained, and internal staff; and hiring manager satisfaction. Many buyers tend to overlook the following critical components of any successful RPO relationship: predetermined return on investment; measurement and valuation; short- and long-term metrics and reporting standards; documentation of best practices and business process; service model; service-level agreements; exclusivity commitments; and buyer’s and provider’s mutual commitment to collaborative relationship. Recruiting is a measurable function that must be benchmarked against all other inputs to optimize RPO relationships. More and more buyers are leveraging metrics and reporting standards to better quantify and manage outsourcing providers. In addition, as more buyers realize that the relationship and corporate culture of their providers are essential to successful outsourcing, increased focus on provider SLAs, exclusivity commitments, and client collaboration are necessary.
WW: The hallmark of a good RFP is one that is written to align talent management with the organization’s goals. Such RFPs are based on knowledge of the organization’s goals, HR trends, and the marketplace. To avoid common mistakes, a buyer should provide detailed information about the current HR and talent management environment and provide RPO suppliers with adequate response time.
HRO Today: What should buyers make available to RPO providers to help them put together better RFPs?
BH: More detail on goals and objectives as well as better data on current state. If the buyer can help the providers better understand where they are today and where they are trying to go, providers can get very creative at providing solutions. The scope of work needs to have as much detail as possible so that there can be a true a peer-to-peer comparison.
AN: Again, a good RFP isn’t just about the customer asking questions. A good RFP provides suppliers the information they need to create and price a solution that meets the buyers’ needs. When an RFP is done well, a supplier can provide customer-specific answers to customer-specific questions in the context of what is currently in place and the vision of the program over time.
To this point, buyers should also have a contact or process that allows the provider to ask clarifying questions that will be answered by a person knowledgeable to give meaningful answers related to the current process, technology, people, and program as well as expectations.
LR: Successful recruitment process outsourcing relationships are a result of collaborative open partnerships. RPO suppliers should provide full documentation and details for the following: full explanation of hiring process; interviews with key hiring managers; long-range strategic workforce plan; list of positions with job descriptions; salary bands and perceived market supply for positions; priority ranking of positions to fill; and certification of recruiters and outsourced employees.
WW: In order to receive responses that fulfill the desired outcome of the RFP, the buyer should describe the organization’s current culture and future objectives. There should be detailed information about historical and predicted hiring trends and volume; the number and location of offices/sites/plants to be supported; types and number of positions filled by job family; current processes, systems, and technology; current spend, etc. By disclosing such detail, the buyer can expect a complete solution and complete cost estimate while preventing unanticipated expenses due to lack of information.
HRO Today: If you had one piece of advice for companies considering RPO, what would it be?
BH: Add tremendous rigor to the process around discovering the goals for your RPO relationship, and select a provider based solely on those goals. Support your decision by investing more time in the relationship once you have selected a provider. If goals are clear and aligned with the buying organization’s strategy, and there is ongoing collaboration between the buyer and provider, success will be imminent.
AN: Outsource for the right reasons. Why do companies outsource any function (whether it is the IT department, their payroll system, their benefits administration, or their cafeteria or lunchroom)? To achieve cost savings, improve delivery, reduce burden and gain flexibility, to manage results not activity, to work with experts whose core business is the function you are outsourcing.
These benefits must still be the motivating factor when deciding to outsource. When selecting an RPO provider, you are choosing a partner. You are entrusting that organization to be you. Right from the start, ensure that there is a culture match. Align the cross functional stakeholders from your organization with the providers team. Build alignment by co-defining goals, roles, and accountability. And agree on appropriate measurements/SLAs and incentives for success and design robust governance and communication/reporting systems. Most deals go bad due to lack of communication and misunderstandings.
Finally, answer the question: What will make me feel that this initiative is successful one year from the date we launch the RPO program?
LR: The most critical component of any successful RPO relationship is collaboration. Evaluate the cultural fit of the provider you choose.
Any RPO provider should be able to create a close, collaborative relationship between your requirements and their implementation of a custom-tailored execution of the recruitment function. You should have “on-demand” access to all the recruitment support you need. The recruitment function should not
decouple the recruitment process from your business operations. Providers should work in total alignment with your corporate objectives. The result: lower cost per hire and faster time to fill. RPO’s ability to supplement the HR department with recruitment best practices, scale, and technology is dependent on how closely they work and learn to operate within your organization.
WW: Any company considering RPO should begin with the end in mind. In other words, prior to the RFI or RFP, buyers should complete their due diligence of people (employee retention, labor costs, productivity, demographics, HR policies and practices), infrastructure (telecommunications, IT policy, facilities), political risk, administrative issues, and internal readiness. Human resources can prove to be a worthy, pro-active business partner that can contribute to the organization’s success by aligning with the organization’s goals and delivering superior results. To do so, a buyer should determine what services and degree of service they want to provide through their own HR team. Subsequently, the buyer should determine the type of RPO/talent management relationship desired and then identify the desired service delivery improvements and governance processes as well as desired cost savings.