A recent study makes the business case for RPO and points the way toward optimization.
By Jayson Saba
The current business climate is driving organizations to adapt to uncertainty as they cautiously eye growth. When it comes to recruiting, uncertainty creates volatility, and growth creates need for talent. Can outsourcing all or parts of the recruitment process help companies balance growth against efficiency without compromising an organization’s competitiveness? According to Aberdeen Group’s latest study, Outsourcing Recruitment is Not Evil (November 2010), the answer is yes.
In this economy, building the business case for anything is a challenge. And to build a case for outsourcing is even more difficult. Handing control of any organizational process to a third party requires due diligence and inordinate levels of buy-in from all levels of the organization. The champion must be armed with enough knowledge to break down the negative connotations associated with the term “outsourcing.” This can be achieved through education, which is why Aberdeen’s research methodology examined every organization in a sample that included 116 concern that maintain their recruitment function in-house and another 80 that outsource all of part of the recruitment process to third-party providers.
Analysis found the performances of those that do use RPO are on par with, or ahead of, those that do not. While the delta is not drastic, it is significant enough to persuade that RPO does offer a valid option for organizations seeking to improve recruitment outcomes, specifically in reducing new hire turnover and time to fill, and improving hiring manager satisfaction and customer satisfaction. These findings, along with data from the 2009 study on RPO, which revealed that 62 percent of organizations that fully or partially outsourced recruitment were able to reduce cost per hire, help build a business case based not only on process efficiency, but also on cost and impact on business outcome.
Doing RPO Well
Some organizations are engaged in pro forma RPO relationships, while others do it very well. Analysis of the top 30 performers revealed markedly superior performance gains on average:
• 90 percent new hire satisfaction with the recruitment process;
• 87 percent new hire retention (measured at 12 months from start date);
• 22 percent increase in customer satisfaction;
• 21 percent improvement in hiring manager satisfaction; and
• 21 percent reduction in time to fill.
Keys to Success
Comparing data of the top performing organizations currently engaged in RPO against others shows that the key to optimizing RPO efforts centers on ensuring a true partnership between the RPO provider(s) and the organization using their services. This partnership is made stronger via better collaboration, stakeholder feedback, performance management, and increased adoption.
Feedback. Hiring managers are key stakeholders in the recruitment process. Their feedback is critical for two main reasons: 1) It’s an indicator of process efficiency and outcomes; 2) it also serves to improve their buy-in, especially in the early stages of the RPO partnership when change management is essential. Another way for the organization to ensure that the RPO partnership is serving its needs is through feedback from new hires. This enables providers and practitioners alike to obtain the perspectives of high quality candidates on important factors, such as whether the organization’s brand is communicated effectively and whether the process meets their expectations.
Collaboration. Top performers enable collaboration by allowing representatives from the RPO provider to meet with hiring managers to discuss or define the qualities or competencies that all candidates must meet. These discussions help set expectations and ensure that the criteria used by the recruiters to source candidates are aligned with the manager’s business needs.
Measurement. Client organizations must define a formal process to track the effectiveness of RPO engagements. This starts with practitioners knowing what their recruitment measures are before they outsource, so that post-RPO performance can be benchmarked. In addition, frequent performance assessments enable organizations to hold their RPO providers accountable when service level agreements (SLAs) are not met.
Expansion. One of the key drivers of RPO efforts is process innovation. Top performing companies are more likely to take advantage of the provider’s expertise. From a process perspective, RPO providers can lend their experiences to improve existing recruitment strategy, formulate plans to implement leaner processes, and ensure that cutting-edge methods are used to identify, reach, and nurture top candidates. This is especially crucial as employers seek to add new weapons to their recruiting arsenals in the ever-evolving arena of talent warfare.
If an organization is challenged by uncertainty, legacy processes, and resource constraints, RPO can provide the flexibility it needs to compete for key talent by innovating its processes and allowing resources to be focused on core business competencies. If implemented effectively, the performance gains can be tremendous. Not surprisingly, 77 percent of organizations in RPO engagements recommend the process to peers.
Jayson Saba is a research analyst in Aberdeen’s Human Capital Management practice. He is the author of “Outsourcing Recruitment is Not Evil.”
Send Out for Recruitment
