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The Legal Ramifications of RPO

Finding ways to improve your recruitment functions.

by William B. Bierce

Recruitment process outsourcing (RPO) offers some solutions to challenges facing all organizations as they confront an increasingly complex and confusing environment for human resource management (HRM). Unlike the human resource development (HRD) function, HRM encompasses the traditional tasks of HR: recruiting and staffing, compensation and benefits, employee and labor relations, and occupational health and safety. While HRM performs the transactions that make up the life-cycle of the employment relationship, HRD in contrast involves the design of the organization through its people. HRD addresses organizational development, performance management, training and learning, succession management, and alignment of the HR functions.

RPO services can help organizations focus on HRD to build shareholder value by enabling internal HR resources to optimize organizational development. Properly structured, RPO can allow an organization to apply IT and a deep team of skilled recruitment processing associates to dynamically adjust its HRM functions to adapt to changes in corporate and regulatory mandates.

An RPO’s statement of work will typically include a specific description of each major function in the recruitment process. Because the goal is to generate the best candidate pool from which to solicit prospective employees, RPO can start with the pre-solicitation phase of targeting the right candidate pools using marketing and sales tools. The pre-solicitation phase can include traditional marketing techniques to get mindshare in the candidate pool.

In the solicitation phase, the RPO service provider may offer its own OEM-style recruitment engine for intake, interviewing, candidate screening, testing, background verification (including criminal records and regulatory licensure history), psychological assessment, evaluation of references, prior work product, and reporting to the employer.

In the “on-boarding” phase, the RPO service provider needs to integrate with payroll and benefits processing. If the service provider offers these benefits, such integration should be included in the overall scope of work. If not, the statement of work will identify the integration process. As with any integration of different service providers in a multi-sourcing environment, the line-of-business manager and HR professional need to carefully define the handoffs between the suppliers and the oversight, audit, and control functions that the employer will exercise.

Given the employer’s responsibility for compliance with legal and regulatory requirements of the recruitment process, the employer faces new risks by hiring an RPO provider. The employer remains directly responsible for illegal operations conducted under its supervision or control. Consequently, the employer considering an RPO “solution” must evaluate, manage, and allocate responsibilities appropriately, and deal with a reputable, responsible RPO provider.

For the service provider, compliance is a two-way street. It can agree to comply with generic, applicable laws such as Title IX, various civil rights acts and regulations, consumer protection laws, labor laws, and the like. But the game gets trickier when the employer is regulated; it probably knows the rules better than the provider. Even trickier challenges burden multinational employers. Shared-services centers and captive support operations, as well as other types of business process outsourcing, will impact the organizational structure and workforce demographics globally.

Intellectual property rights in the employer’s candidate profiles and other unique data points, as well as the security to protect such valuable assets, also need attention. For insourced operations, such protections are managed internally. For outsourcing, IP includes a discussion of proprietary rights, trade secrets, patentability, copyright, and the knowledge base that reflects years of corporate history. Security procedures are equally essential to comply with new laws governing identity theft, privacy, civil rights, disclosure of security breaches, Sarbanes-Oxley and similar foreign laws and auditing requirements.

In this increasingly complex employment environment, RPO can solve many HRM problems and refocus the HR executives on value-driving HRD. Yet RPO raises a few new ones. As with the outsourcing of any business function, RPO requires careful preparation and ongoing monitoring for compliance and evolutionary process improvement. It can shift operational responsibilities for the more complex elements of HRM while enabling HR executives and business managers to concentrate on generating shareholder value through better organizational development.

Tags: Contributors, RPO & Staffing, Talent Acquisition

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