Sure, they might be vendors, but the words of some of the industry’s largest RPO service providers are aimed at helping buyers align their expectations with the providers’ delivery. If you’re not tired of hearing the word, partnership is indeed the best approach to a successful recruitment outsourcing program.
The acquisition and retention of talent today is one of most organizations’ greatest challenges. Companies that feel their current and future talent is the key to their success are looking at many ways to improve performance of their recruiting, employment, or staffing departments.
Innovative solutions to build a best-in-class recruiting function include: applicant tracking/requisition management and customer relationship management systems; new and creative employer branding; high-performing proactive recruiters who build relationships and are results oriented; recruitment marketing planning that encompasses job boards, interactive media, and passive candidate sourcing; and selection testing. In addition, review of on-boarding and orientation and early loss/turnover analysis are part of the equation. Lastly, how do you know these efforts are working? Staffing metrics and benchmarking continue to gain space in HR strategy planning.
For organizations looking to incorporate these enhancements and considering the best practices to achieve their goals, recruitment process outsourcing needs to be considered as a potential solution. Here is an opportunity to gain some insight on how eight of today’s most successful and growing RPO providers address a few important questions and challenges related to the selection and execution of an outsourced solution.
Q: What is your definition of RPO?
Hyrian: True RPO is outsourcing the control of the entire recruiting process to a third party. It’s the transfer of control of the entire business process that differentiates true RPO from out-tasking, staff augmentation, project staffing, and other non-RPO recruitment services.
Pinstripe: RPO service providers operate as a client’s internal recruitment function for all or a portion of their jobs and engage the candidate through the
sourcing and recruiting process from screening through the accepted offer and beyond. Clients entrust their recruitment function to experts to manage the people, processes and technology related to talent acquisition. However, clients approve the high-level strategy and process and makes all final hiring decisions.
Q: What are the things you look for in a client that tells you they are ready to consider RPO?
Aon Consulting: If a client can answer the following questions, they have thought through how RPO could impact their business:
• Looking forward a year, how will you gauge whether the outsourcing venture was a success?
• What do you intend to do with the people currently performing these functions?
• Do you know the scope of the work you intend to outsource?
• What are the steps your organization will go through to determine the feasibility of outsourcing, the vendor selection process (if applicable), and the timeline to make a decision and begin the implementation process?
• What are the obstacles to success from your perspective?
StraightSource: We look for clients that want to work alongside us to achieve their goals. “Partnership” is an overused term in business, but a true partnership yields the best results in RPO. Central to a partnership is a commitment from the buyer. The provider certainly has a vested interest in success, but so does the buyer. The buyer must be deeply engaged and committed to the ongoing success of the RPO services.
TalentTrack: The first thing we look for is senior leadership commitment. Will it be a true partnership? Secondly, how prepared the client is for change. Are they willing to transform the way they do business? Driving qualified candidate traffic for open requisitions is only part of the answer. Thirdly, we assess the client’s motivation to outsource the solution. This is not simply about risk shifting. Lastly, we want to review current baseline data. We need a picture, a road map of what is already in place. Concurrently, we conduct market intelligence on both the company and the industry.
The RightThing: We go through a formal process to determine readiness. We look for an organizational need for process improvement, some history of measuring the effectiveness of their recruiting organization, openness to outsourcing, and change management. Additionally, we try to identify the core reasons that a buyer is looking to outsource. We look for a desire to improve the process, possess scalability, and gain expertise.
Q: Would you ever turn a buyer away?
If so, why?
Responses ranged from “absolutely” and “sure” to “very rarely.” With little exception this falls into the “it depends” category. Why? Strategic providers of RPO are looking to partner with customers—whether a transformational or transactional relationship. Customers are looking for guaranteed results. Success can be thwarted by the lack of executive support, commitment to change, cultural mismatch, misalignment of values, or unrealistic expectations of deliverables, timeline, and desired future state.
Q: What sort of pre-work should a buyer do before engaging with an RPO provider?
CRI: A buyer should have a reasonable understanding of their strategic needs, current and future recruiting needs, turnover percentages, as well as a mechanism to evaluate any information they might receive from a potential provider. A clear budget range is also helpful in creating the most appropriate solution from the beginning.
Momentum: Buyers should have identified current state and desired state. It is critical that the buyer has involved all the stakeholders and completed the process analysis, including data gathering and goal setting. Additionally, executive buy-in for the entire RPO implementation is critical.
Q: What do you need to know about a prospective client (due diligence) to know how your solution might work for them?
Pinstripe: One of the most important things for us is the client’s definition of success and their perceived map to get there. Through this process, we get a very good idea of what it will be like to work with this company and this team as a client. And the client gets the same view of us. The client must have a clear understanding of where they are and where they want to be and do enough homework to feel confident in this “make or buy” decision. Our favorite clients are those that are so smart, so forward thinking, so demanding (and supportive at the same time), and so committed to world-class practices and results that when we work together we get amazing results because have the same goals and we stretch each other.
StraightSource: Our primary interest is in their desired outcome (future look). Secondary, we need to understand the investment they are willing to make in their recruitment process.
Q: Which groups within a potential client are usually involved in the vendor selection process? Which groups within a potential client do you feel should be involved in the vendor selection process?
Momentum: Ideally, the vendor selection process should include the head of recruitment and staffing, the vice president of human resources, a representative of the hiring
managers, and others responsible for the recruitment functions. The vendor selection process is driven by procurement, functional teams, the staffing organization, and executive champions.
TalentTrack: HR always has a seat in the buying table for RPO services. This minimally needs to be the senior HR officer of the company. Other buying executives have also included the CFO, COO, president, CEO, and procurement and chief strategic officer. By having these types
of individuals at the buying table, decisions will be based on solid, fundamental business principles.
The RightThing: We typically see that staffing, procurement and HR are involved in the vendor selection process. Other groups that should be involved in the process include: key staffing/recruiting individuals, key HR generalists, key hiring managers, and individuals that have been close to the candidate experience. We also will sometimes see legal, compliance and diversity groups as part of the process. We typically like to see some form of executive sponsorship and broad executive buy-in.
Q: What sorts of commitments can you make and not make to a buyer about results?
Aon Consulting: Once a scope and process has been agreed upon, commitments can be made. Making commitments prior to a full understanding of the work is irresponsible and a sign that you’re not dealing with an experienced provider.
Momentum: We firmly believe RPO is not successful without measurable outcomes. During the past 10 years of RPO engagements, Momentum has established a consultative solution, driven by the client’s desired outcomes, that provides financial, meaningful results. We leverage benchmarking and industry and program analysis and commit to SLAs/KPIs with risk/reward components.
StraightSource: Under the right circumstances, we can guarantee quantitative and qualitative results. Some of our most productive relationships began based on a pay-for-performance model. Philosophically, we believe in this model. If we own the results, we have to own the process as well. On the other hand, we cannot make improvement commitments to buyers if their “baseline” data is not accurate or if they are not willing to share that baseline data.
Q: What percentage of your business opportunities are selected through a competitive RFP process? What is the cost to you of preparing a response to an RFP?
For most organizations the answer to this question is related to the strategic business decision related to sales, marketing, and the business
development plan. Answers ranged from 10 to 70 percent. Experience has shown that in a high percentage of cases, organizations that solicit information from providers’ RFIs/RFPs do not make the decision to award the business to any provider. So providers need to think very carefully before investing the resources that are required to respond to a complex RFP.
Costs to the provider to participate in a single RFP can range from $5,000 to $35,000 according to the providers surveyed. TalentTrack offered this observation: RFP and RFI requests are up for the past nine months. RPO visibility has significantly increased in the marketplace. Prospects are being driven down the RFP route by professional associations and professional human capital management consulting firms (sourcing advisory firms as well); their involvement has magnified the client interest level but at the same slowed the sales cycle down by causing more RFPs and RFIs.
Q: How do you feel about the RFP process?
Responses to this question ranged from calling the RPO RFP process very difficult to a necessary evil to efficient. If done well, it can allow the buyers to compare methodology, expertise, depth and ROI. Without question, this process provides education to the buyer, exposes the buyer to a variety of providers/solutions, and offers RPO providers and pretenders an avenue for potential business opportunities. However, it is costly in terms of both buyer and provider resources, time, and money.
Q: What are the features of a well-run RFP process?
CRI: Most important in the RFP process is having adequate time to prepare responses. Of course, a well-written, focused RFP that has a significant degree of specificity and background information will receive a more accurate solution. Additionally, available communication from the buyer during the RFP process is helpful to answer questions that might arise.
StraightSource: First, a well-run RFP process is intent on buying. It is simply used to select the best possible provider for the buyer’s situation. All providers are measured based on an objective and empirical scale but include “soft skill” measurements such as cultural fit. Lastly, it is expeditious. The timelines should be deliberate and adhered to if at all possible.
Q: What are some mistakes buyers make in the RFP process?
Aon Consulting: They focus entirely on the cost and often fail to understand the unique aspects each provider brings to the exercise.
Momentum: We have seen RFPs come out before the client has done an analysis of its current and desired state. In addition, it is critical that executive sponsorship and commitment for change has been established prior to releasing the RFP.
Q: What do you wish buyers understood better about RPO before buying?
CRI: RPO has become a buzz word within the “staffing” industry. RPO is quite different than traditional staffing and should have a complex machine of proven resources with current client examples to be fairly labeled an RPO contender.
Pinstripe: That rather than losing control, they will gain control through our process discipline, our focus on metrics, and our commitment to get them the results they need. This is a partnership where both are jointly responsible for the success
The RightThing: That experience in the space and ability to deliver pure-play RPO solutions are critical for success. Many providers claim to be a recruitment process outsourcing provider, but there are very few firms that have the depth and experience to deliver a world-class solution.
Q: What features do you think differentiate RPO providers?
Aon Consulting: The quality of the provider’s teams, the process controls, and quality of data collected and reported back to the client. Client references—that speaks louder than anything else!
Hyrian: One of the key factors differentiating RPO providers is their genesis, where they come from. Remember four years ago there were a handful of RPOs, and now there are over 200. By looking carefully at the provider’s genesis and experience, you will be able to differentiate between dedicated, end-to-end suppliers and specialists in one area of the RPO process masquerading as a true RPO provider.
Q: How important is industry or geographical experience to meeting a client’s needs?
CRI: The key is process, and good process can be replicated in new industries easier than industry experience can be merged into an entirely different client culture or structure.
Hyrian: In Hyrian’s 10 years of RPO experience, we can definitely tell you that specific industry or geographical experience is less important than most buyers think. Remember, most often the freshest ideas come from outside an industry, and some “outside-the-beltway” thinking can bring new ideas.
Pinstripe: Experience in vertical markets reduces ramp-up time and has other benefits and that is more important than local
experience. Recruiting is a national and local game at the end of the day.
Q: How do you evaluate cultural fit with a buyer?
Hyrian: It’s definitely not something we can do over the phone. We think mutual site visits and a better understanding of each others’ work environment is the most effective way of getting a feel for working with each other. We feel it important to meet the HR people and hiring managers we are serving and have them meet our service delivery people. When we visit with buyers, we make sure as little time as possible is spent with us talking about ourselves without interaction. The best way to see the value and RPO can add is for every presentation to become collaborative, where participants can mutually diagnose and to problem solve.
TalentTrack: We initially attempt to assess cultural fit through existing relationships, networking, market analysis, and research. We validate cultural fit through our pre-service audit. This is accomplished through leadership interviews, focus employee group meetings, questionnaires, surveys, and
The RightThing: The only way to evaluate cultural fit is through true due diligence. As a provider, we learn a lot about the culture of the company through their RFP process and how they respond to questions (or even provide opportunities for questions). We look for opportunities to present at the client location as well as bringing the buyer to our location.
Q: Given the variable nature of solutions available, is an “apples to apples” comparison of RPO providers possible?
This, too, is an “it depends” question. Responses ranged from, “Yes, if the prospect provides complete scope, addresses the preferred solution, and states expectations,” and “No, with custom built solutions, there will always be different values to varying approaches.”
Top 10 Questions a Buyer
• What is your experience as an RPO provider?
•What percentage of the provider’s business is “pure-play” RPO?
• How will the provider serve the client’s needs, and what assurances does the buyer have that the provider will be able to perform as promised?
• What keeps you awake at night about RPO?
• If we work together, where will we be in 1, 3, and 5 years? What is your plan to continue the provision of this solution as our company grows and needs shift?
• How did you arrive at this solution you are recommending for us? Is the solution truly consultative and strategic, or is it simply an administrative fix?
• How will we determine if there is a cultural match that will create a long-term partnership between our company and the provider’s organization? Are stakeholders in each organization in agreement on how best to implement the RPO strategy?
• Is a strong governance model a part of the solution and shared approaches for reaching goals? Are there dedicated teams from both organizations committed to the success of the program?
• What can I expect in terms of ROI?
• What are three similar, referable accounts demonstrating your proven solution?
Anne Nimke is the vice chairman and Jason Berkowitz is the chairman of the RPO Alliance, whose members were all invited to participate in the survey. Providers who participated in the RPO Alliance survey include the following members: Amiee Brizuela, Aon; Ladd Richland, CRI; Berkowitz, Hyrian; Kathryn J. Kelly, Momentum; Nimke, Pinstripe, Brandt Hamby, StraightSource; Kim Davis, TalentTrack; and Terry Terhark, The RightThing.