Big pharma’s Covance needed to ramp up global staffing quickly. And it could not
administer a generic prescription.
By Tom McNichol
In recruitment process outsourcing, some relationships wind up being fairly straightforward. A company hires an RPO vendor to help it recruit talent in a sector that’s already well-known to the vendor, in a geographic area close to home, and the hiring more or less goes according to plan.
But other times, a client challenges an RPO provider to stretch its capabilities to the limit, to push the envelope, to recruit beyond its comfort zone. That’s just the challenge drug development and food testing giant Covance issued to RPO provider PeopleScout when it entered into an agreement with the vendor in early 2009.
Covance, with headquarters in Princeton, NJ, is one of the world’s largest drug development and food testing companies, with annual revenues of more than $1.8 billion, operations in more than 30 countries, and more than 10,000 employees worldwide. Covance needed to ramp up its team of highly skilled workers quickly, adding as many as 1,000 employees in a year. And it wasn’t just skilled workers that Covance needed—jobs could vary from entry-level hourly employees to a senior research scientist with a PhD. The geographic reach of the assignment was formidable, covering 17 countries in North America, South America, Europe, and Asia. The task called for an experienced RPO provider that not only had a global reach, but also could scale resources up and down according to the vagaries of the pharmaceutical market.
Covance chose PeopleScout after a rigorous selection process, knowing full well it was asking a lot of the company.
“We had to push them out of their comfort zone,” says Raul Valentin, vice president, global recruitment and rewards at Covance. “It was clear to me that they could do a very strong job in the Americas, but we really wanted someone who could do this globally. We thought they had the core capabilities. But we did challenge them.”
PeopleScout was naturally delighted to have landed a three-year, multi-million-dollar deal, but knew that it was being asked to break new ground.
“We had not done a job quite like this before,” admits Patrick Beharelle, CEO of SeatonCorp, the parent company of PeopleScout. “It was something we considered very carefully before we agreed to take on four continents and 17 countries all at once. There was a pretty high trust factor on Covance’s part, and we had to have some faith in ourselves that we could do the job.”
Not only was the deal geographically daunting, but PeopleScout had little direct experience hiring skilled researchers, clinicians, and scientists in the pharmaceutical and biotech field. But Covance studied PeopleScout’s past work carefully and was convinced that the RPO firm was very adept at acquiring skilled workers in other industries. PeopleScout had extensive experience recruiting in the airline industry, which also demanded lots of highly trained workers, and was subject to some of the same unpredictable peaks and valleys of hiring as the biotech and life sciences industries.
Annually, PeopleScout facilitates more than 187,000 hires via RPO engagements, and has made HRO Today’s “Baker’s Dozen Customer Satisfaction Ratings” list of top RPO providers four times.
“PeopleScout had handled a wide range of jobs already,”’ says Covance’s Valentin. “So it was just a matter of having a partnership and giving them the time and exposure to learn our job right.”
Covance began soliciting for an RPO provider in the fourth quarter of 2008, having decided to transition from its previous RPO provider. Covance issued an RFI and then an RFP, and whittled a candidate list of nearly a dozen down to two or three finalists.
One of Covance’s concerns up front was that they wanted an RPO provider that could scale up and down quickly. Covance provides contract testing services to the pharmaceutical, environmental, food, and nutritional-supplement industries, and provides antibody products to the research community for neurological disorders. The nature of Covance’s business is selling large-scale outsourcing agreements to other life sciences companies. For example, Covance might win a contract with a major pharmaceutical company to conduct a drug trial, and then have to find labor very quickly in markets across the globe to fulfill the contract.
“We can win a contact and need workers quickly, or then we may get a cancellation, or there may be a delay in a drug development study,” says Valentin. “So sometimes I’m thinking I need to hire a hundred people. And then suddenly I have to wait six months before we hire them, or maybe we only have to hire 50. So it’s kind of hard to gauge where should we have our recruiters and how many recruiters will we need to do a scale up. We really needed an RPO partner that was going to support our volatility. We don’t have a nice straight line hiring curve.”
Covance especially wanted their RPO partner to deliver strong analytics, numbers that could give Valentin and his in-house team of recruiters a real-time snapshot of the global operation. That way, they could see exactly where the hiring bottlenecks were located in order to improve the company’s time to fill, cost per hire, and cycle time.
Covance made a thorough vetting of each of the finalist’s analytical skills and recruitment expertise, and gathered references from both past and present clients. In the end, it might have been Covance’s visit to PeopleScout’s main recruitment center in Chicago that tipped the balance.
“The site visit was the really key piece where I thought PeopleScout really stood out,” says Valentin. “I could see how the PeopleScout employees were engaged, the mood, the morale. You can’t really pick that up on the phone or through references.”
By touring the site, the Covance team got a sense of whether PeopleScout was likely to be a good fit and become an extension of the company’s in-house recruitment team.
Another key factor for Covance in the selection process was candor.
“You want to be able to really look a partner in the eye and let them know when things are going well, and also when things aren’t going well,” says Valentin. “And also look back to them to tell you when you’re not upholding your end of the equation in the process.”
PeopleScout met all of Covance’s extensive criteria, and the two struck an RPO agreement that went live February 2009. For Covance, the most important metric of the Service Level Agreement was time to fill. It’s a key metric for any growing business, but is absolutely critical for a company such as Covance; if the right workers with the right skills aren’t in place at the right time, the entire contract is in jeopardy.
Covance’s time to fill was averaging about 48 days, not bad in some industries, but a bit tardy in the quicksilver world of biomedicine. To help bring the number down, as well as reduce costs, Covance stipulated that payment to PeopleScout would be on a cost-per-hire basis. This was a different agreement than what Covance had made with its previous RPO provider, in which it paid set fees for the resources that the vendor provided.
“We wanted an agreement where if PeopleScout hired X number of jobs, we’d get billed X,” says Valentin, (declining to enumerate the X’s). “You can pay a recruiter a lot of money up front and not see results for a long time. So this puts some pressure on PeopleScout as a provider, but it also shares the pressure with us. Because ultimately, I’m responsible for delivering great candidates for Covance.”
So far, the shift to the cost per hire model, along with other business process efficiencies, has paid off handsomely. Covance’s time to fill has dropped from 48 days to as low as 33 days in some areas. And it’s managed to reduce its cost per hire by 40 percent.
Another key metric written into the contract as a business rule is a stipulation governing the time it takes PeopleScout to launch the hiring process. When a job requisition is approved and Covance wants to hire, say, a project manager, PeopleScout is contractually obligated to schedule and conduct a meeting with the appropriate Covance hiring manager within three days at least 85 percent of the time.
At the same time, PeopleScout also put benchmarks into the SLA that Covance is obligated to follow. When a PeopleScout recruiter submits candidates to hiring managers, interviews must be scheduled within five days at least 75 percent of the time.
“That’s a little unusual, you don’t often see clients that have SLAs put on them by the RPO,” says Beharelle. “I think it’s because most RPO firms are in the sell mode, as opposed to thinking about what would be the smartest thing to do long-term for this partnership. Sometimes it’s a little intimidating to make some demands of the clients when you’re in a competitive situation.”
PeopleScout is currently helping Covance to make more than 1,000 hires a year, not an easy task in the life sciences field. Skilled candidates are highly sought after, and PeopleScout recruiters have to use aggressive techniques, such as mapping out competitors of Covance to contact and convince qualified candidates to come to work for Covance.
Security screening is also a particular concern. In order to test new drugs, Covance performs animal testing, which has made the company the target of animal rights activists in the past. Both Covance and PeopleScout workers are carefully screened to make sure that they are not in active opposition to Covance’s animal-testing practices.
“We were very open in the RFP to say, ‘Here’s our business, we have nothing to be ashamed of, and we’re very proud of the critical role we play in the drug discovery process,’ ” says Valentin. “But there are always people that don’t agree with that, and so we put up the PeopleScout team to the same background check as a Covance employee.”
The recruitment team is also keeping close watch on other metrics, such as submittal- to-interview ratio, interview-to-hire ratio, and offer-to-acceptance ratio. The company goes into excruciating detail to uncover why forwarded candidates were not selected to advance in each part of the process, and why a candidate decided not to accept a final offer. The team also tracks every stage of the hiring process to monitor how long it takes each candidate to get through a particular stage by location and job category. The figures show exactly how many days it’s taking to source and screen candidates, to schedule an interview, to complete drug and security clearances, to meet with the hiring manager, and to make a hiring decision.
Watching the numbers closely works out well for both sides of the partnership: PeopleScout wants to submit high-quality candidates more efficiently to improve its numbers; Covance wants to reduce the number of interviews it has to conduct so managers can spend more time running the business.
The number crunching also helps the team to focus on the inevitable soft spots that need attention. If, for example, time to fill in one geographic area suddenly rises, the team can look at the key sub cycle times and pinpoint exactly where in the process the problem is. Perhaps it’s because not enough candidates are being recruited, or maybe it’s just that hiring managers aren’t available because it’s vacation time.
Eighteen months into the partnership, Valentin says he’s very pleased with the results PeopleScout has delivered.
“The bottom line effect has been dramatic,” says Valentin. “Not only did we see a reduction in time to fill with no impact on quality, and improvement in quality in some areas, we’ve seen a 40 percent improvement in our cost structure from our previous approach.”
Sometimes, taking an opportunity to challenge an RPO provider to go beyond its comfort zone pays off. No guts, no glory—no reduced time to fill.