Knowing how to leverage RPO’s benefits will help your organization stay ahead in the competition for top talent.
HR organizations are at a crossroads. As they transform their functions from administrative to strategic, they are devoting less time, energy, and talent to hiring processes and more time to succession planning, training, and deftly moving managers from position to position to leverage experience and skill sets. But the adage that a company is only as good as its people is more evident than ever in today’s competitive marketplace.
Many HR organizations in North America and elsewhere are turning to RPO, one of the fastest growing segments of HRO and accounting for approximately 25 percent of all HRO expenditures. Yet, RPO is so dynamic, there is not even a commonly held definition. The consensus appears to be that end-to-end RPO starts at the point a requisition has been approved and extends through getting a candidate on board. But that is the RPO “flavor” gaining acceptance in the U.S. and U.K. Other markets dealing with in-country regulations, compliance issues, and cultural acceptance of outsourcing have slightly different definitions.
What’s different about RPO, and why is it finding traction in the market?
Organizations have used personnel agencies, search firms, and other outlets to find workers for decades, but the emerging model for RPO is different. As businesses realized they became more competitive and economically viable by concentrating on their core competencies, they began to outsource functions not directly tied to core skills. The 1980s and ’90s saw a rise in HRO activities, specifically processes involved with benefits, taxes, and payroll. By the early 2000s, many organizations began to consider outsourcing recruiting because of lower overhead costs, an advantage in the war for talent, and higher quality of hire.
The first question most organizations have to answer is whether it’s risky to surrender recruitment processes? The answer is not if you’re willing to do your homework. RPO has reached a maturity where its results can be measured effectively in terms of cost-per-hire and time-to-fill positions. Most HR executives realize staffing has grown more complex, takes more time, and demands substantial investment in online tools, databases, and recruitment specialists. Using RPO providers to handle the front end enables you to focus on what happens to people once they are onboard—everything from creating and building job rotation programs to succession planning models and moving talent to best serve the organization. It can be a nice marriage if you select a good partner and clearly understand how to use RPO.
Your organization’s first step should be a careful assessment of what’s driving a potential RPO initiative. RPO is not going to be a cost-effective solution to a temporary labor shortage. If your organization recently introduced a new product or a service and needs to hire additional staff to handle the added workload, these hires, while substantial, are a temporary blip. You may not need to sign a multiyear contract, but you might want to engage a provider on a short-term, project basis to fill the positions.
Typically, RPO is used to address strategic hiring initiatives. For example, operations may serve as a “feeder” group into your organization, requiring a higher level of recruitment activity. Or perhaps you want to reserve in-house recruitment efforts for senior-level positions and outsource all other positions. RPO is often used to recruit a discrete segment of the staff.
RPO can also be valuable if you’re considering expansion, especially into an area where your competitors have already established a brand advantage. You will be competing for the same talent, so your organization will need to be more creative in its sourcing and marketing techniques. RPO providers can be advantageous in such situations because they are experts at finding creative avenues to source and attract good candidates.
Clearly defining the business objectives and the scope of the contract makes selecting the right RPO provider easier. There are myriad service providers. Some specialize by industry or types of positions or by size of a company. Another major consideration is scalability.
Internal buy-in is essential. For generations, recruitment has been considered a core competency and most CEOs consider talent acquisition a critical issue. So it’s imperative your HR staff and functional/business unit management teams understand the RPO approach, what the process is, and participate in major decisions.
You will also need a good governance model and a dedicated governance team using the latest governance tools to manage your contract and ensure your RPO provider meets agreed-upon service levels.
Recruitment is an expensive proposition requiring continuous investments to stay abreast of the trends, tools, and technologies to source candidates and quickly move them through the process. In today’s recessionary climate, it makes sense to consider outsourcing some aspect of recruiting so HR can focus on training, promoting, and retaining existing talent.
RPO is not a passing fad. While the market is relatively new and dynamic, it is one of the hottest trends in the HR industry. Continuing improvements in RPO processes and technology will ensure today’s trend will soon become an essential HR strategy that will likely deliver competitive edge to those who use it wisely. HRO
Cindy Cardwell is an advisor with EquaTerra. She can be reached at email@example.com.