Grainger needed an efficient way of accessing a consistent supply of high-quality staff. The solution? Recruitment Process Outsourcing.
W.W. Grainger was growing rapidly last year, chalking up record sales of $5 billion (an increase of 8 percent) and earnings per share of $3.13 (an increase of 27 percent). Its employee base was also growing rapidly immersed in the first year of an expansion program designed to improve customer service, Grainger was aggressively adding people to serve its 1.5 million business customers. The only problem with this stellar growth was the capacity of the companys staffing delivery model, which was struggling to fill nearly 600 jobs across 400 U.S. branches and 9 distribution centers within a 12-week timeframe.
Grainger, an Illinois-based distributor of facilities maintenance and repair products like motors, safety gear, lighting, and material handling tools, met the demand for workers by bringing on board more than 30 independent staffing contractors. With high hourly rates for each contractor, this option was not the most cost-effective, but it did assist Grainger in meeting its intense staffing needs. More importantly, it taught the company a lesson in a core value of recruitment process outsourcing (RPO)cost-effective talent acquisition.
In this era of topsy-turvy economic cycles and the aging of the Baby Boom generation, talent acquisition has become more demanding, competitive, and ever more difficult to manage cost-effectively. To solve these challenges, Grainger is partnering with RPO vendor Spherion to ensure it hires the right people in the right place at the right time to improve service to its customers. While the agreement between the companies only covers the talent acquisition needed within a portion of Grainger’s functional departments and business units, the services provided constitute a full soup-to-nuts solution that will help drive Grainger’s talent acquisition activities. Spherion will provide the candidate selection and recruitment strategies and tools from A to Z, to help our hiring managers be more efficient in bringing on the very best talent, says Ellen Hirsch, director of HR and global staffing at W.W. Grainger, Inc. Our customers depend on us to have the facilities maintenance products they need on hand with knowledgeable representatives to steer them to solutions quickly.
Spherion Corporation is a comprehensive talent acquisition company that provides multiple talent solutions ranging from temporary staffing services to more complex RPO partnerships. In recent years, many organizations talent acquisition strategies and delivery models have been impacted by September 11th and the economic downturn that followed, devolving internal recruiting resources to minimum skeleton crews as hiring volumes fell sharply, explains Stephen Clancy, vice president at Spherion. These organizations are now embracing new strategies and delivery models to meet their growing talent acquisition needs, including leveraging contract recruiter resources, implementing applicant tracking system technologies, heavy usage of temporary labor, or looking to more comprehensive and agile RPO solutions.
Such was the case at Grainger, which turned to Spherion and other vendors last year for recruiting resources to meet its growing workforce demands. This outsourcing engagement whetted the company’s appetite for a more robust RPO solution, one that would give it access to a larger database of job candidates, effectively manage the costs of hiring, and offer more sophisticated technology to manage and measure recruitment efforts. RPO creates greater efficiency in the staffing process, reducing the cost per hire and decreasing the time to fill a position, says Hirsch. It offers better alignment with our business objectives and strategies, and increases the quality, diversity, and timeliness of candidates.
DEARTH OF TALENT
Grainger estimates that the total market for its product and services is more than $100 billion. A core business strategy is to grow its share of the market by 5 to 7 percent in the next five years, largely by taking away share from local and smaller specialty competitors. A key component of that strategy is their market expansion program, where they are enhancing their presence in the top 25 metropolitan markets and key secondary markets. The program fuels the ongoing need to increase access to top-quality talent across the country knowledgeable workers who can engage its customers with a product line that has more than 500,000 facilities maintenance products and repair parts.
The needs of the business have continued to put pressure on the staffing model, says Hirsch. When a recruiter is handling upwards of 20 jobs, they become less effective, particularly as the need to fill jobs accelerates. Moreover, it used to be an average of 65 days to fill a job here; its now less than 45 days per fill. As our business demands pinched us, wed add contract recruiters to assist our internal team, but thats a very expensive model. Gradually, we found that RPO offered a cost-effective means to acquire high talent, with Spherion doing the whole staffing model from cradle to grave. But, our decision was really about quality getting the right skills aligned with roles and competencies so we are
Using Spherions RPO solution platform, Grainger ultimately will achieve what Spherion calls a Total Workforce Acquisition (TWA) strategy. TWA is predicated on integrating the entire workforce life cycle via a single-service delivery model that ties together the onsite expertise and management of all vendors, talent assessments, direct recruiting, applicant tracking, and consolidated invoicing and reporting. Spherions heritage as a 56-year old staffing and recruiting company, with more than 2,150 recruiters working at its 700 branches nationwide and an overall employment base of 330,000, gives it the necessary expertise to provide a TWA solution, which Spherion believes is the talent acquisition delivery model of the future.
Recruitment is coming to the forefront as far as processes that a company may want to outsource, says Lisa Lovas, Spherion senior vice president of national accounts. We’ve done some emerging workforce studies with Harris Interactive on the job market, looking at the changing tides of tomorrows workforce, in terms of changing workplace expectations and employee values. The upshot is that talent is more demanding and scarce. (See Sidebar.)
Consequently, Grainger believes few options other than RPO will provide the highest quality talent needed by corporations. We essentially outsourced to Spherion on a contractor basis last year and it worked for the time needed, so we thought Why not look at outsourcing as a going-forward strategy? Hirsch says. We pulled together a small team internally, partnering with finance to cost out the model to see if it made sense or not. Everything indicated this was the best way to take cost out of the equation and continue to bring in the best of the best.
Grainger went out to the market with an RFP about seven months ago and considered three vendors. Spherion was selected because we felt they culturally fit our organization and would deliver on their commitments, says Hirsch.
As the project implementation team at Grainger evaluated the RPO solution, it decided to initiate the process by testing it in only part of the company. We identified a number of different businesses and functional departments within the organization that were very interested in this and would be our early adopters, Hirsch explains. We are testing RPO in these areas, and if everything works according to plan, were open to rolling out the RPO strategy more broadly. This is about becoming more efficient at hiring the best talent.
SERVICE AND TECHNOLOGY
Once in place by September, the RPO solution calls for Spherion to provide the following services to Graingers hiring managers:
___ Source the qualified exempt and nonexempt candidate pool
___ Screen candidates through appropriate tools to determine fit
___ Coordinate testing as appropriate
___ Schedule interviews and travel as appropriate with hiring managers and candidates
___ Manage the feedback process
___ Offer administration
___ Coordinate the background and drug screen process through Grainger vendors
___ Maintain applicant tracking logs, requisition, and candidate files
We see Spherion as essentially an arm of Grainger, says Hirsch. They will provide all the candidate selection and recruitment strategies and tools to help our hiring managers attract the highest quality talent, including specing out what the job is, identifying the sourcing strategy in terms of how to get talent in, setting up interviews, conducting the firstpass interviews, presenting candidates who are qualified for the role, getting feedback from hiring managers, handling the second level of interviews, weeding out candidates, and then, in the final round, creating the offer and working with the hiring managers to conduct background investigations.
Aside from cost-effectiveness, another factor in sealing the deal was technology the sophistication of Spherion’s systems, as well as the fact that the technology spend would be leveraged across many customers. Spherion draws from a candidate database of 3 million candidates and processes approximately 5 million candidates a year for clients. Grainger hiring managers will be able to wield tools like Spherions integration of PeopleClicks applicant tracking system, which provides access to 40 Grainger recruiters and 420 branch managers. This resource is in addition to Spherions 2,150 fulltime recruiters and 150 rapid response virtual recruiters who are employed when clients must make volume hires during peak periods.
Spherion’s RPO solution also includes a command and control tool called RAP (Report and Analysis Platform) a data warehouse that gives our clients a complete view of the talent acquisition process, says Clancy, the senior executive at Spherion responsible for the Grainger implementation. Specifically, RAP allows companies to measure the RPO solution in infinite detail and from multiple business and stakeholder perspectives. For example, it can measure time to fill performance versus costs per hire performance versus hiring manager satisfaction. These different data points and perspectives can then be co-related. Many organizations typically fly blind when it comes to their talent acquisition strategy and performance and have no real comprehensive view of their workforce acquisition dynamics. RAP gives organizations real visibility into the performance that a talent acquisition process is providing across the company.
An impediment in the past to outsourcing the recruitment function was the perception by hiring managers of a loss of command and control, which Sperions RAP effectively mitigates, Clancy says. People in the talent acquisition business at companies felt they would lose control if the recruiting process was outsourced, he explains. Our report and analysis platform allows someone to go in and cross-reference all kinds of data, such as diversity and whether or not the hiring performance is consistent with service level agreements, 24 by 7. That kind of granular detail and visibility brought all together is a first in the RPO field.
Hirsch says the service level agreements are still being worked out between Spherion and Grainger, at present. But she notes that both companies have agreed on an expected return on investment. We’ve analyzed the ROI and it indicates that we will be able to take out some pretty significant costs from the business, she says. She concludes, though, that in the long run, RPO is about more than just saving money. Because Spherion has so many arms within their core business from researchers and recruiters to outplacement and search capabilities we will truly have the opportunity to hire the best and brightest to serve our customers, Hirsh says. And that’s what this is all about.
EMERGING WORKFORCE TRENDS
Companies may be wise to make talent acquisition a strategic priority, since knowledgeable workers are becoming increasingly scarce in the labor marketplace and many are eager to move to other companies that provide career advancement opportunities and work/life balance options. The Emerging WorkforceR Study, conducted by RPO vendor Spherion Corporation and the polling firm Harris Interactive, indicates that most employees will remain with an employer only if they believe that staying will enhance their careers and if they are given the flexibility to meet their personal priorities. As employees seek greener pastures, companies are faced with a dearth of job candidates. National unemployment levels are falling fast, with jobless claims dropping to less than 340,000 this year, according to the U.S. Bureau of Labor Statistics (BLS). Although the labor force grew by 50 percent since 1980, U.S. Bureau of Labor Statistics indicates it will grow only 16 percent by 2020, says Lisa Lovas, Spherion senior vice president of national accounts. The BLS also anticipates that 24 million people will exit the labor pool within the next five years, translating into 10 million more jobs than workers to fill them. As a result of these monumental demographic shifts, employers will be faced with a major challenge just to find candidates for their open positions. Another concern is the skill of the labor pool. According to the Department of Labor, 75 percent of future jobs will be knowledge-based, yet only 30 percent of workers in the next decade will be college graduates. These sobering studies indicate that attracting and retaining skilled workers will become increasingly difficult. Knowledge workers who remain in the workforce are undergoing drastic changes in their attitudes, motivations, and values, says Lovas. Our Emerging Workforce Study indicates that a majority of workers are confident in their ability to find a new job and many are quite comfortable earning a living as a free agent, Lovas notes. Perhaps the most startling fact from our research is that 40 percent of workers would like to make a job change in the next year. With an average turnover cost of $55,997, business leaders are looking at more than $600 billion in aggregate turnover costs in the next two years. Yet according to the Saratoga Institute, 57 percent of companies do not have a job retention strategy in place and only 35 percent have specific retention or turnover goals. It is little wonder why a recent Conference Board survey of CEOs indicates that 79 percent of CEOs at companies categorized as most successful rated the availability of talent as one of their top concerns something to think about for those responsible for overseeing the recruitment process.