When it comes to recruitment process outsourcing (RPO), clients are looking for providers who can work with them strategically to accomplish specific talent acquisition goals. For some these goals might include greater hiring volume or improved quality of hire; for others, effective RPO might mean having a faster time to fill or greater diversity in the candidate pool. Beyond these strategic requirements, however, clients are looking for something more. They want providers who can quantify their success and express it through metrics.
And for good reason! Metrics can be helpful in determing whether an RPO provider is worth the investment. In fact, Korn Ferry Futurestep and HRO Today’s survey on RPO metrics found that “customers are more likely to be satisfied with their RPO if it offers metrics for reporting and decision-making— and by investing in the relationship with year-over-year improvement initiatives, they can continue to be as satisfied with their RPO.” The study, Measuring Up? What Companies Really Think About Recruiting Metrics and How They Could be Improved in the Future, also found that clients with a more sophisticated understanding of data reported higher levels of satisfaction with their RPO. Still, measuring the effectiveness of RPO services can be a daunting task. Today, most clients look to standard metrics such as cost per hire, time to fill, retention, and the ratio of interviews to offers to determine whether or not their provider is working for them. The big question in the industry now, however, is: “Are these metrics enough, and do they hold providers accountable to providing superior service?”
As the market has matured, more and more organizations are answering “no.” “I think the metrics that we’ll look at in the future…have moved to more delivery when needed,” finds Michael Spear, director of talent for Gategroup, a global provider of airline products, services, and solutions. We’re actually going into the next generation of that where we’ll really lean on our provider to be a partner. Essentially, we’re going to give them staffing volume numbers and headcount volume numbers trending throughout the year and then providing turnover reports and hiring reports so that they’re really managing the entirety of that process.”
And it’s in these numbers that organizations will be able to determine the quality of service—another next generation metric. “It starts by defining really crisply how the customer defines success and quality,” says David Pollard, senior vice president of Talent Fusion by Monster. Whether it’s turnover reports or time to productivity, Pollard recommends developing a scorecard based on metrics that are critical to organizational process in order to quantify quality.
Other metrics that align with scorecards to evaluate service quality include:
• Customer satisfaction
• Candidate experience and candidate satisfaction
• Business impact of RPO hiring
• Throughput ratios, such as submit-to-interview and interview-to-hire
• Turnover within the first 30, 60, 90 days, etc.
If nothing else, this list illustrates that quality of service is not really one metric but rather a series of metrics compiled to create a bottom line. The ability to provide that bottom line should be universal, but the exact formula for success will, as Pollard explains, depend on organizational needs. After all, a company whose RPO goal is cost savings will view the process differently than a company who is looking to add diversity to their hiring pool at any cost.
“It really depends on the client company’s specific objective(s) when moving to an RPO,” says Sue Marcus, senior vice president of RPO client services for Randstad Sourceright. “For example, if the client’s goal is to drive improvement in the timeliness and quality of hire, metrics such as vacancy rate, time-to-fill, requisition aging and hiring manager satisfaction could all be key metrics that would help measure ROI. On the other hand, if the customer is looking to compress costs and maintain the current level of service, cost-per- hire should be a measurement utilized, as well, as key operational metrics illustrate how service has been maintained and/or improved.”
Needless to say, when developing a quality of service scorecard, ensure all parties are in agreement of the necessary components and that every piece reflects the desired outcomes of the RPO engagement.
As general manager and vice president of key accounts for Korn Ferry Futurestep, Trish Healy knows this all too well. “Effective RPO programs start with the business strategy and aligning their recruiting benchmarks with the company’s business mission,” she says.
Healy provides a few examples of how metrics vary depending on business strategies. “If a company is in startup mode, one of the more important metrics is the quality of hire, and what’s needed are agile people who can innovate. While cost is always important, if the right people aren’t onboard to start, the company won’t get off the ground. If a company is relocating, time to fill will be important. Virtually an entire workforce has to be built by a defined time period. Operations won’t continue if key positions aren’t filled. If a company has a consolidation or shared services strategy, one of the most important metrics is cost per hire. The main reason to consolidate is to save money.”
Metrics that are paramount to one client might be less important to another or possibly not worth measuring at all. For example, in certain industries, such as food service or retail, turnover is expected, and high turnover will not be considered as much of a problem as it would be in a field that requires more skilled or specialized workers.
It is also important to have a solid governance function and to review the RPO program and make changes as needed. “Communication in any environment is key, but I think in our environment specifically, you get a lot of pushback where the operations will try to blame the RPO provider and say ‘well, we didn’t get this [result]’ or ‘they’re not giving us the right people,’” says Gategroup’s Spear. “The best way to combat that is to have that broad communication and full scope transparency into what the RPO provider is doing. I found that having weekly conversations and onsite reviews quarterly at minimum.”
This type of relationship—one founded on open communication and the desire for constant improvement—can be the foundation for success in the RPO space.
While quality of service is a significant point of interest on the road map towards better RPO, it is not the only metric that matters in today’s marketplace. As the industry continues to grow and change, experts project that other metrics will become increasingly important.
Diversity of hires is likely to be a more important metric now that more and more employers are realizing and embracing the value of ethnic, gender, and thought diversity in the workplace. Number of referrals may also take a place in the spotlight because of the way it reveals a company’s reputation among candidates, as will quality of candidate relationship metric.
Cory Kruse, president of Novotus, believes there will also be a larger focus on what he calls hiring velocity. “One metric that we report on and talk about, especially for higher-volume industries like consumer retail, is hiring velocity, which means you get your metrics down as far as interview-to-hire or identify-to-interview metrics and then reverse engineer that to find out how many people you need coming in at the top of the hiring funnel at any given time,” he says. “A lot of people aren’t measuring that yet.”
The new ones—is that the data needed to learn about hiring velocity is likely already being collected. There is so much hidden value in data and as RPO engagements mature, organizations will continue to learn and grow their talent acquisition strategies based on metric-driven decisions.