Blending and blurring is the name of the new game.
By D. Zachary Misko
Back in my day, there was an educational bit sandwiched between Saturday morning cartoons that taught children about the great American melting pot. It celebrated the diverse individuals who flocked to the shores of the United States, worked hard, and helped create the nation as we know it.
Today, the entire world has become an employment melting pot. Borders seem to dissolve as organizations seek out talented individuals. But with workforces shrinking in some regions and the rise of the knowledge worker and the free agent, finding qualified workers becomes an increasing challenge.
The RPO industry is tasked with adapting to this diverse and narrowed landscape. It requires a sea of change in the ways we think about where candidates are, how to connect with them, and what they’re looking for in terms of employment. It also opens doors to reconsider how permanent, temporary, and contingent labor are purchased and managed. And it prompts questions about how RPO providers can become more strategic partners and brand ambassadors.
Today’s global workforce represents a complex mixture of shifting demographics and changing expectations and needs. Soup’s on.
The New How and Where
Finding the right people is a growing challenge for organizations worldwide. The trend of reducing workforces has spread widely across Europe, for instance, as more people leave the workforce than enter it. Central and Eastern Europe remain the only real sectors of positive workforce growth in the region.
It’s not just a shortage of people, but a shortage of talent that the world labor market presents. Lack of skilled labor is the primary challenge for recruiters worldwide. The problem is the worst in the Asia-Pacific (APAC) region, where 67 percent of recruiters report having difficulty filling positions with qualified workers. This presents a particular challenge for the region, as 39 percent of organizations plan to hire 100 or more employees, compared with 30 percent in the Americas, and just 23 percent in the Europe/Middle East/Africa (EMEA) region.
The overwhelming factor that slows or stalls the recruitment process is “quality of hires”. And while permanent and temporary hiring have slowed slightly, graduate hiring has risen slightly, increasing competition in an already-tight recruiting market. The new task of recruiting professionals is coming to grips with a new talent supply chain.
The buzz over social media sourcing continues. The market is being driven by the candidate—the ultimate client—requiring a shift of mindset. Technology has enabled speed to market, and recruiters must go beyond static job postings, phone calls, and networking to find top talent. These elements are all important but can no longer be relied upon, apart from the Pandora’s box of social media.
Nor can recruiters source via social media alone; that approach has proven ineffective. An integrated approach using all of today’s tools to find and engage candidates where they live, work, and play brings sourcing to a new level. Traditional methods such as cold calling and in-person networking, print and brand recognition/attraction, as well as social media, blogs, microbogs, meet-ups, and more are all important components in both the recruiter’s strategy and the job seeker’s arsenal of tools. HR departments are already overwhelmed with their many other demands, which makes recruitment process outsourcing (RPO) an attractive option as providers already have all tools in place to facilitate a comprehensive, integrated sourcing model.
A differentiator among RPO providers will be how in-depth they work with clients to meld all the available recruiting tools, in light of changing candidate realities and expectations. This will require a holistic appraisal that identifies both company needs and candidate preferences. Until now, a request for hire went out, and HR determined whether the position should be full time or contract. The new paradigm asks, “Where is the talent that matches the requisition or need? How does that person want to be employed?”
These have become essential questions. High-demand knowledge workers are crossing over from full-time to contingent in new ways as the free agent concept takes hold.
Workers are increasingly interested in free agent options such as microwork, independent contracting, and project work, and entrepreneurship. The global free agent population accounts for at least 20 to 30 percent of the entire workforce—44 percent in the U.S.—and it’s growing. In the 20- to 30-year-old age demographic, for instance, average tenure on a job is one year, whereas a contingent contract is typically a year and a half. Tenure and stability are no longer the primary considerations for knowledge workers; employers must adapt accordingly.
Of Brands and Strategies
Such modern complexities increase the hiring manager’s burden. Still, for overwhelmed HR departments working within tight margins and fewer staff and resources, outsourcing the recruiting function makes a great deal of sense. RPO has become an accepted way to manage local and global recruiting decisions. The RPO model continues to thrive due to adoption by new organizations. NelsonHall, an analyst and advisory firm in the outsourcing field, estimates that worldwide the RPO market will more than double by 2015, reaching nearly $4.4 billion (see their Targeting RPO report). The model offers dedicated infrastructure and expertise that many HR departments don’t have.
New programs are smaller in scope than in recent years, and legacy programs have reduced hiring volumes. Growth in 2012 is expected to remain on par with 2011 levels, though volume will remain flat. However, the ways that companies use RPO solutions have changed, as organizations are using them for not only hard-to-fill positions but for knowledge workers, customer service, and semi-skilled positions as well. Including all positions, externally and internally, makes most sense—as it is an effective overall process for attracting talent, not just a one-off solution per position.
As RPO continues to gain traction worldwide, buyers begin to see new possibilities, ways to create added value. As research analyst firm Aberdeen Group concludes in its RPO 2011: Rethink Recruitment report, “Organizations are innovating the use of RPO solutions, and using them to solve specific business needs.” Only 17 percent of companies use RPO end-to-end as their recruiting function. Sixty percent use RPO selectively, for only some elements of the process or for particular hard-to-fill roles or projects.
That means good news for results from the likes of this magazine’s Baker’s Dozen Customer Satisfaction Surveys, which dropped in 2009, when RPO use shot up 70 percent. Providers were not able to serve that volume well. Now with smaller programs, time to adjust, and the demonstration of added value, providers are enjoying a rise in customer satisfaction.
Companies are also realizing that the relationship with an RPO provider extends beyond putting bodies in chairs. Providers can identify inefficiencies and help create better processes, standardize processes across locations, scale up or down as needed, and track important metrics, such as quality of hire. The last involves long-term measurement of factors such as performance scores, engagement, promotion, and turnover. All of these factors are linked to the talent acquisition strategy. When an organization’s people are engaged, they likely will refer others to work in the organization. Engaged employees are goodwill ambassadors of the company brand, a key reason that a robust and well-communicated employee referral program can be one of the leading sources of hire.
The HRO Today Forum Europe 2011 named employer branding as a top-five industry game-changer. Because the candidate is now, more than ever, in the driver’s seat, candidate experience is important to an employer’s brand. The brand is what attracts talent to an organization. If an employer’s brand says one thing to the public, yet its talent acquisition and retention strategies say another thing to job applicants, the broken promise could significantly impact the ability to attract and acquire top talent.
A strong employment brand can provide an important competitive advantage, and providers who reflect the brand to talented job seekers can be true competitive differentiators. Most RPO providers now offer employment branding services, but organizations need to vet providers to ensure their ability to deliver corporate messaging, as well as to ensure that their processes facilitate an on-brand, satisfying experience. Creating and executing a strong brand is a key component in a successful talent acquisition process.
The labor market has been significantly impacted by the juggernaut of globalization. Particularly in industries where skills are highly transferable, borders count for little as recruiters seek talent wherever it may be found.
Globalization brings with it the need for global recruiting solutions. Multi-country RPO provides an integrated approach that enables access to global talent, a standardized and streamlined process, scalability and reduction in cost. Consulting and research firm Everest Group’s 2011 Multi-Country Recruitment Process Outsourcing: Hype vs. Reality report defines multi-country RPO as involving deals covering two or more countries. But operating in three states, with a handful of hires per year in Canada, does not meet the criteria of a “global” provider.
The hallmarks of a truly global solution include access to a global pool of quality talent and the ability to deliver that talent in light of differing customs, culture and language. A provider with a global footprint and regional offices can offer the deep regional knowledge that makes recruiting across countries successful for all parties.
While Everest Group reports that multi-country RPO deal volume does not yet keep pace with single-country RPO, trends from their recent report include:
• Nearly half of multi-country RPO buyers cover four or more countries of operation, and EMEA ranks highest for average number of countries covered.
• Buyers include EMEA nearly as frequently as they include North American multi-country RPO deals.
• Besides developed economies—such as the U.S., various West European countries, Japan, and Australia—buyers frequently include some of the emerging economies such as India, China, Brazil, and Russia in multi-country RPO deals.
• The origin of multi-country RPO deals is more broad-based now, with nearly half of such deals originating outside of North America.
Traditionally, HR recommended and ultimately purchased RPO, and procurement purchased temporary and contingent labor. But changes in workforce demographics and attitudes are altering the way some companies evaluate and select a solution to meet their hiring needs. Technology, economic forces, changing expectations, and globalization have all contributed to shifts in where workers are found and how they want to work. Companies are looking more now at the total talent supply chain than at different silos of labor—and at a blended approach to filling varied positions.
As permanent recruiting remains flat, companies continue to fill their slots with temporary and contingent workers. At the same time, companies are increasingly looking to streamline vendor management to save money and create greater efficiencies. HR is becoming more involved in managed service programs (MSPs) that started in procurement, leading to the concept of having one sponsor manage hiring needs within the client. The uniting of RPO and MSP under one provider can be a logical solution from a strategic workforce standpoint. Companies and providers both gain from this flexible answer to changing workforce needs.
Pam Berklich, senior vice president of KellyOCG, puts it this way: “RPO providers need to think in terms of a complete recruiting solution. For example, do you hire on a permanent or contingent basis? We will see a total workforce solution more and more as clients look at hiring differently. The concepts of permanent and temporary are blurring.”
The RPO space has seen a surge of mergers, acquisitions, and partnerships in the last year. As NelsonHall senior HR outsourcing analyst Gary Bragar explains in a recent HRO Insights blog post, “The primary driver of escalating contract and partnership activity in this HRO segment is clear: As companies remain cautious due to continued low consumer confidence and ongoing market uncertainty, they are hiring more temporary employees and utilizing more contingent workforces than on-boarding new full-time hires.” The trend of mergers and acquisitions within the RPO space is likely to continue in 2012 as hiring is predicted to remain flat, and fierce competition for talent persists.
Change is as certain as death and taxes these days, and that’s what the RPO industry is embracing as demographics, work preferences, economics, and technology shift around the world. We are experiencing not just a shortage of labor, but of talent. The new talent supply chain requires new strategies and greater partnership between RPO providers and their clients.
Social media has now put the candidate squarely in the driver’s seat, necessitating a more holistic look at what companies truly need and what job seekers actually want. The complexities of social media sourcing make RPO more attractive to already-overwhelmed HR departments, leveraging the social media infrastructure that providers already have in place.
As recruiting needs and challenges multiply across a diverse global spectrum, RPO providers can truly become partners in an organization’s overall talent strategy. With the rise of the knowledge worker and candidate-as-customer reality, providers are also being tasked meeting the challenge of faithfully representing employer branding. As organizations look for ways to create efficiencies, save money, and whittle down vendor management, a blended approach to filling all positions is gaining traction. This has fueled a spate of recent mergers, acquisitions, and partnerships between RPO and MSP vendors.
The idea of permanent and temporary, RPO versus MSP, are blurring. You could even say they are melting together to create one big pot of global hiring solutions.
D. Zachary Misko is vice president of workforce strategy at KellyOCG.