Despite having massive infrastructure and enormous resources, three global enterprises found RPO was the answer to the age-old problem of staffing. Now, their success can be yours, too. Read on to find out more.
Your organization is hemorrhaging. For each day a vacant position goes unfilled, you’re losing money, customer satisfaction, product development time, market share, and ground in a whole host of other areas. The tight ship you’re helping to run is taking on water.
No need to panic, you think, because you can always add recruiters. Problem is, recruiters themselves are in high demand these days, and even when you can find them, you’re staring at six months of training time before they become productive to your organization. Moreover, your needs are spread out across a broad array of geographies, further complicating your task. Before you cry SOS, think three other letters: RPO—recruitment process outsourcing.
With outsourced recruitment services benefiting hundreds of companies worldwide, you, too, can get a hand bailing water before your ship is underwater. Just ask Metropolitan Life Insurance Company, Unisys Corp., and Vodafone U.K.
These three global organizations have found that replacing highly decentralized recruitment processing models with an end-to-end outsourcing solution has resulted in lower staffing costs, greater flexibility, and access to better talent. And talent acquisitions leaders there recently shared their secrets for a successful RPO engagement with HRO Today.
Each company opted to outsource all or virtually all of the elements that typically go into recruitment, a long list that begins with a manager requisition and ends with a new employee in place. In between are sourcing, screening, applicant tracking, interviews, offers, new hire packets, reporting, surveys, and so on. Some of these functions may have been handled internally; some outsourced to third-party recruitment agencies. Shedding them all to a single outsourcing service provider is the new trend.
Another is global end-to-end recruitment process outsourcing. Companies like these three have operations in multiple geographic regions of the world. Each has expressed interest in enlarging their RPO models to a global footprint which, in turn, has compelled their providers to consider and/or implement alliances and partnerships with overseas counterparts (see Moving Toward Global RPO sidebar).
The advantages of comprehensive RPO are many. At Vodafone, which outsources staffing and recruitment functions to Alexander Mann Solutions, the engagement provides central coordination of staffing processes to reduce the burden on the business users. Previously, managers essentially hired contractors on a decentralized basis, administering all aspects of the supplier relationships and contractor engagement process themselves—not the best way to spread the news about candidates or leverage expense. The large, London-based telecom services provider—it has 200 million subscribers worldwide, a $72 billion market capitalization, and 62,000 employees—wanted to introduce consistent processes, reduce costs, and acquire the best possible talent to join the company.
In the first 12 months of its RPO engagement, which was inked in April 2005, Alexander Mann hired 1,200 contractors and 1,100 specialist for Vodafone. The provider has assisted in saving the client more than $8 million, according to Alexander Mann. Pleased with the outcome, Vodafone is in the process of extending the relationship to cover its recruitment needs in Germany.
Anna Tomkins, resourcing operations manager for Vodafone U.K. in Newbury, cites flexibility and scalability as the main advantages of the engagement. “Alexander Mann can scale up more quickly or scale down more quickly than we can in-house,” Tomkins explained. “They simply draft people from their other accounts to come over and handle the recruitment.”
The provider has 22 people on-site at Vodafone headquarters in London. Tomkins noted that this number goes up or down based on Vodafone’s staffing needs, fluctuating on a weekly basis. “Today, we have 22; tomorrow it could be 100,” she said.
Tomkins has been with the company only a short time but has previous experience with end-to-end RPO through her last employer. “I’m used to operating with resourcing partners and can absolutely say that for the right organization it works in the right circumstances,” she said. “The goal is to find a partner that matches up to your needs and is flexible. The market changes so rapidly from a recruitment point of view that you need to have a provider looking at the next assessment models and be willing to evolve in that direction.”
Alexander Mann has evolved over the years to incorporate myriad services. “As we built our footprint in Europe with earlier clients like Computer Sciences Corporation and Capgemini, we were able to leverage their capabilities,” said Steve Leach, Alexander Mann practice director in London. “Gradually, we grew as we increased our engagements and now operate in 61 countries, although our primary strengths are in Europe and Asia Pacific, from Singapore to Australia, Thailand, Japan, and Vietnam.”
The provider opened its first operating center in New York last year to tend to a very large international financial services clients with U.S. operations, he noted.
Lynne Gardner, the firm’s client director, said a key objective of Vodafone was “to stay ahead of its competition by developing a greater skill base in its organization—people with a broader range of skills. We’re working with them to manage all the specialist hires within their consumer and enterprise areas, including sales, product management, branding, supplier functions, HR, procurement, and technology. We support their forecasting, picking up everything from signed requisitions for talent to sourcing, selection, competency assessment, and offer management.”
Alexander Mann began its relationship with Vodafone by handling only IT hires in October 2004; it then broadened this agreement in April 2005 when it
replaced an incumbent outsourcing provider handling other staffing needs.
“The business Vodafone is in is hugely profit margin-sensitive, so they were really hunting for a provider that could reduce its costs and, thereby, enlarge the margins,” Leach said.
RECRUITING NEEDS AT METLIFE
In the past decade, insurer Metropolitan Life has grown rapidly, gaining global prominence in insurance and financial services. While corporate leaders at the New York City-based company recognized the importance of skilled talent at all levels within its organization, it sought a better means to acquire it.
“Recruiting for the right mix of skills needed in the corporate environment today is a highly competitive process in an increasingly complex labor market,” said Roger Taylor, MetLife vice president of strategic staffing. “When we took a proactive look at how we would acquire and retain talent in the near future, we realized that simply adjusting current practices would not keep us ahead. We needed a fundamental change.”
That change was end-to-end RPO provided by Spherion Corp. The potential rewards of this strategy seemed significant, from increased efficiencies of cost and cycle time to improved quality of hires. Most importantly, centralized staffing through an outsourced model would give the insurer the strategic focus to maintain its competitive edge in the market for talent.
Previously, MetLife followed a traditional internal recruitment process. “A line level manager would go to an internal HR professional and say, ‘I need someone,’” Taylor explained. “That HR person would develop the requirements, post the job, perhaps manage a search vendor, collect and filter responses, and provide a list of finalists for the manager to interview. Or the manager might just decide to recruit for the position on his or her own.”
MetLife determined that the administrative activities and data management associated with this recruiting process were both time-consuming and distracting for its HR generalists and line managers.
“While these recruiting tasks were certainly critical to our ability to attain needed skills, in a decentralized model the process wasn’t necessarily the most efficient or effective,” said Taylor. “Additionally, much of the activity was geared to active candidates and less to finding passive candidates. We wanted to increase our focus on that passive candidate, the person who is successfully contributing to another organization.”
He added that HR generalists and line managers don’t necessarily have the skills or the time to focus on passive candidates.
Above all, MetLife wanted to free its HR people from the mundane tasks involved in the recruitment process. “We had several hundred HR folks doing all the recruiting, which takes up enormous time doing what is essentially tactical, administrative work,” Taylor said. “We had people who were not necessarily the most qualified doing the recruiting. We weren’t maximizing our capabilities in terms of moving candidates around from one job to another because there was no communication in our decentralized model and no ability to do metrics tracking.”
Enter end-to-end RPO, via Spherion Corp., in the first quarter of 2006. The engagement covers staffing in the U.S. and Canada. So far, Spherion has filled nearly 5,000 positions at MetLife in the past 12 months (the “go live” date was June 2006), including both exempt and non-exempt hires, but excluding the company’s insurance agents. The rollout of the five-year, end-to-end outsourcing contract is on a phased-in basis. Spherion has 70 recruitment professionals on site at MetLife.
“The list of hires runs the gamut from IT to underwriters, accounting, finance, claims, call center, clerical administration—pretty much everything other than sales,” noted Patrick Beharelle, senior vice president of RPO at Fort Lauderdale, FL-based Spherion. “MetLife has nine lines of business, and we rolled out our services by business unit over a period of months and are now fully phased-in. We’ve installed an applicant tracking system called Peopleclick that tracks job candidate flows, allowing us to track the number of candidates screened, schedule the interviews, select those to provide offers, track those who accepted, and so on—a true end-to-end process.”
By moving from a decentralized to a centralized end-to-end RPO model, MetLife is achieving visibility to candidate sourcing and hiring data across the entire enterprise on many levels.
“When a client engages in an end-to-end RPO solution, it can be transformative,” says Beharelle. “Your candidate experience is improved because there are fewer handoffs along the way, as is your sourcing, scheduling, offer administration, etc. It’s just a more seamless process for the hirer and a better candidate experience. It’s also more cost-effective, given the ability to scale up or down based on the ebbs and flows of the organization’s hiring volume.”
He said companies are reevaluating their talent acquisition processes around the candidate experience. The goal is to spare a candidate from having to undergo numerous interviews initially and then be called again months later for more. An end-to-end, standard set of processes can improve candidate quality and experience, and he contended that this is critical in the war for talent.
“We’re achieving the strategic focus that will help us retain the talent and skills we need to stay at the forefront of our industry.” Taylor said, adding that while quality of hire has been an elusive metric for most organizations to capture, the ability provided by outsourcing to gather data consistently across the organization has opened doors to “acquiring an actionable, objective set of both pre-hire and post-hire metrics.”
DOING THINGS RIGHT
At Unisys Corp., a Blue Bell, PA-based provider of IT services, Brian Krueger, vice president of global recruiting, wasn’t initially sold on the advantages of end-to-end RPO. Even after his boss, Pat Bradford, the company’s senior vice president of HR, asked him to look into RPO, he doubted it would in any way offer an improvement over Unisys’ traditional, internal staffing process.
“I’d been looking at RPO for awhile, and my first response was that no one could do it better, faster, and cheaper that we can,” Krueger recalled. “We had a very well-run recruiting organization and had done a lot to bring down costs. Indeed, one of the highest productivity areas in the HR organization was recruiting. Our recruiters were hiring more than 200 people per year per person—an excellent metric. Yet, I agreed to go down this path because my boss asked me to do it, though I went down it reluctantly.”
Although Unisys is an outsourcing service provider itself in the IT area, Krueger firmly believed an external provider couldn’t improve on the job performed by his staff. Nevertheless, he dispatched an RFI out to 18 vendors, following it up with RFPs to 14.
“In the back of my mind always was that we’d go through the motions, but the outcome would be the same—we’d continue with our internal model,” he said.
Through the vendor selection process, Krueger needed to keep things confidential to prevent the loss of his prized recruitment staff.
“Outsourcing is a scary word to people, prompting them to get their resumes together, so I did the RFI alone with no assistance,” he said. “I pulled in the results and reviewed them with my boss, who discussed them with the CEO, who was in full support of the possibility of change. I figured still that I’d end up disproving the path toward outsourcing.”
Corporations sometimes can’t keep secrets, but Krueger was able to execute both the RFI and RFP under cover. In November 2005, the selection process was winnowed to a short list of four providers. In a tie for third was The RightThing of Findlay, OH.
“They almost didn’t make the final cut,” said Krueger. “We really figured one of the top two would get the engagement. When we took away the requirement for the recruiter to be on site when hiring took place, they rose to the top of the list.”
Still, Krueger hadn’t been convinced end-to-end RPO was best for Unisys. “I sat down with [Bradford] and said ‘Here is the one we unanimously recommend as No. 1,’” he recalled. “I then said, ‘let’s switch gears and compare what they can do for us versus what we’re already doing internally.’ She agreed, and as I undertook the comparison, it began to dawn on me that they actually could do it better, faster, and cheaper. They offered the flexibility and agility to do things that we could not do internally.
“If we had won a large contract, for example, we did not have the ability to quickly and cost effectively scale up our internal staff. It took us on average three months to get the requisition approved, interview the person, and perform the final hiring. Outsourcing this took far less. Scalability changed my mind.”
Unisys now spreads its hiring risks across all the other companies that partner with The RightThing in what Krueger calls the benefits of a “pooling effect.” Like the other companies profiled here, outsourcing also offered the ability for Unisys to attract optimal talent.
“We have a pretty great recruiting operation here that was certainly best-in-class, but at the same time we realized there were other companies out there that we could learn from,” Krueger added. “By outsourcing, we were given the opportunity to learn from a greater knowledge base of best practices. Even though I went into this reluctantly, I got religion.”
Rather than The RightThing dispatching its employees to Unisys, the company instead transitioned 12 of its recruiting staff to the provider.
“We have more than 500 people here that can be deployed quickly on accounts based on the changing needs of our clients,” said Terry Terhark, CEO of The RightThing. “Scalability is the real value proposition of end-to-end RPO, given that most companies are not well-equipped to scale up and down quickly to meet their staffing and recruitment needs. Unisys is a perfect example of this, with projects coming out of the blue that require them to staff up quickly. We’re experts at this.”
Told of Krueger’s initial skepticism to invest in an outsourcing model, Terhark chuckled.
“Even though Brian was doing truly great things there, we were able to bring some new advancements and techniques to his operation, as well as improved processes and better technology,” he said. “We’ve done over 200 implementations with 200 clients over the years and have amalgamated their best-of-breed practices with our own deep expertise, configuring a solution that met Brian’s needs. Thankfully, he was open to exploring alternative religions.”
Whether the business is IT, telecom, insurance, or the industry you’re in, outsourced recruitment is proving to be a valuable supplement to any HR organization’s human capital management tools. While it may not be a good fit for everyone, for those seeking a scalable solution that can better standardize and centralize recruitment functions, it can help keep their heads above water in the war for competition.
|MOVING TOWARD GLOBAL RPO|
The path that end-to-end RPO is taking is leading toward global engagements. Companies want it; now the onus is on service providers to figure out how to provide it.
The problem before the providers is creating a global footprint to address the need. Not only are there wide variances in labor laws in different countries, there are legal and political issues and a broad cultural divide to breach. Three options are available to providers—acquiring overseas providers, engineering alliances and partnerships with them, or attracting clients that already have robust recruitment and staffing systems in place in unfamiliar markets. Different strokes for different providers.
“Many providers believe it is unrealistic to provide services globally for RPO,” conceded Patrick Beharelle, senior vice president of RPO at Spherion Corp.
“Consequently, the only way global end-to-end RPO will materialize is through alliances and partnerships of the best-of-breed providers in each country. Our view is that we can deliver excellent services in North America, and would prefer to partner with other top providers in Asia-Pacific and Europe, rather than build an organization there ourselves.”
Other providers have a similar view.
“The industry is definitely moving toward a global RPO model, and we have three RFPs for this right now that we’re responding to, one of which is Unisys,” said Terry Terhark, CEO of The RightThing.
“This is all relatively new, with the first request coming about a year ago. Right now there is no one provider with a global footprint. We expect to build this footprint through partnerships and alliances with companies that have similar expertise. The partnership model is the way this will be built for clients, not that we aren’t exploring acquisitions as another possible venue.”
London-based Alexander Mann Solutions also anticipates providing global end-to-end RPO in the very near future .
“Our idea is to go into each country, do the due diligence of what is happening over there, and then adopt the existing processes. We have found that the best way to do this is to take over our clients’ existing recruitment processes on a country-by-country basis. We’ve now implemented two major global solutions, one spanning the U.S., Asia and Europe with Credit Suisse, and the other spanning Asia and Europe with another client, Hewlett-Packard.”