A healthcare client case study exemplifies why.
By Gary Bragar
Per NelsonHall’s 2014 RPO market analysis and HRO forecast, RPO continues to be the fastest-growing HRO service line at a mid-teens compounded average annual growth rate (CAAGR) throughout the forecast period of 2018 reaching nearly $6.6 billion. The healthcare sector is set to grow even faster at nearly 20 percent CAAGR and reaching nearly $665 million in 2018.
Zimmer is a global leader in musculoskeletal healthcare with 8,500 employees and provides solutions that support orthopedic surgeons and clinicians to restore mobility and treat arthritis and traumatic injuries. The organization is also a healthcare sector RPO client.
Zimmer represents the fastest-growing segment of the market in terms of size—the mid-market—defined by NelsonHall as companies with between 500 and 15,000 employees. First adopters of RPO were typically large employers, but the mid-market has grown steadily: 20 percent of the market in 2008; 33 percent in 2010; 39 percent in 2012; and 42 percent today. For comparison, the large market is now 55 percent and the small market is 3 percent.
In Q2 2014, Zimmer renewed a three-year, end-to-end RPO contract with ADP RPO (formerly The RightThing, an ADP company) that commenced in Q1 2011. Per NelsonHall, the majority of RPO contracts are three years with an overall average of 3.3 years. ADP RPO performs end-to-end RPO for Zimmer, recruiting for nearly 1,000 annual hires in North America, for both non-exempt and exempt positions, including sales, distribution, and corporate roles. Only university relations and campus recruiting are performed internally by Zimmer, although ADP RPO performs the administration.
Consistent with several of the top drivers for outsourcing RPO as noted by NelsonHall’s 2014 RPO market analysis, Kim Martin, vice president of HR Americas for Zimmer says their organization leverages RPO due to:
- Scalability. As a fast-growing company whose hires have increased from nearly 500 in the first year with ADP RPO to almost 1,000 in 2013 across North America
in the U.S., Canada, and Mexico, Zimmer needed the ability to scale quickly to meet its growing hiring needs—and without the need to worry about hiring its own recruiters.
- Reduce costs. Zimmer was looking to reduce agency spend in order to drive down costs.
- Expertise. The healthcare organization wanted a partner with recruitment expertise and more contemporary solutions to improve process efficiency and effectiveness, including centralization of its formerly decentralized recruiting process.
- Administration relief. Zimmer HR generalists wanted to focus on more strategic and value-added work including talent management and leadership development.
Also consistent with NelsonHall findings of key vendor selection criteria, ADP RPO was selected by Zimmer through an RFP process for the following reasons:
- Dedicated sourcing team with industry knowledge.
- Ability to be a good partner, who is flexible, with engaged leaders. For example, Michael Gruber, division vice president and general manager of RPO operations, attends quarterly business reviews, and Terry Terhark, president of ADP’s talent acquisition solutions division, is always available for direct contact as needed.
- Recruitment capability, including development of talent pools, which have enabled ADP RPO to become successful in meeting Zimmer’s talent needs, says Martin, was instrumental in the renewal decision. “It takes time to build a pipeline of candidates. The RPO model has to compete with the large, small, and niche recruiting agencies. Over the last three years, sourcing capabilities have built a pool of candidates that allows us to meet our hiring needs with very limited use of agencies,” Martin explains.
To date, the following results have been achieved:
- Cost reduction. Reduced agency hires from nearly 40 percent at the beginning of the contract to less than 2 percent within three years.
- Improved process efficiency. Overall hiring increased by 35 percent year-over-year.
- Increased diversity. Candidate slates rose from 24 percent to 30 percent year-over-year.
- Improved candidate satisfaction. Figures grew from 87.5 percent to 92.5 percent (from a 3.5 out of 4 to a 3.7 out of 4).
- Data accuracy. Administrative support achieves 99.6 percent accuracy for interview scheduling and offer letters.
- Increased referrals. A revised employee referral program increased recommendations from 14 percent to 20 percent year-over-year.
- Reduced hiring cycle times by nearly 20 percent.
- Provided better quality candidates based on feedback from the hiring managers. Martin says several lessons have been learned over the course of the engagement. She advises to set the right change management expectations throughout the company, explaining the reasoning behind the engagement. It is also important to state that there will be an initial learning curve by the vendor, but they know recruitment and the industry, and they will be able to come up to speed quickly. Also explain what the new process is going to be and manage expectations. Martin also recommends having the appropriate amount of resources allocated from the beginning and throughout the contract. There is a need for sufficient transition time—between three and six months— depending on size of the organization, number of geographies, the business segment, and/or position type.
It is helpful, Martin says, to have someone internally who has prior outsourcing experience to work closely with the RPO account manager. It is also important to keep the same service provider personnel on the account. They’ve learned your business and hiring manager preferences.
Consider having technology selection in place or determined prior to the start of the contract. It is a steep learning curve to ask hiring managers, HR generalists, and the vendor to learn a new technology while implementing a new recruitment model.
Be sure to have a governance process in place. At Zimmer, this means quarterly business reviews, including by business segment to review metrics, how the partnership is going, and working on process improvements.
The result: Zimmer is looking forward to its next three- year partnership with ADP RPO. As Martin says, “RPO can be a very positive model for companies if you view it as a partnership with a goal of continuous improvement.” Zimmer and ADP RPO outline a set of continuous process improvements activities each year, and currently the organizations are piloting video interviewing to screen and hire the best talent to meet Zimmer’s needs and help reduce travel recruitment expenses.
Gary Bragar is HRO research director for NelsonHall.