Exploring the benefits that come with recruitment process outsourcing, or RPO, is a hot button issue for staffing professionals and C-suite denizens alike.
But while RPOs better suit some employers than others, even the ideal employer might have trouble explaining the need and benefits of an RPO to the C-suite.
According to Andy Roane, vice president, RPO, at Yoh, a recruitment outsourcing firm (part of Day & Zimmerman), many C-Suite dwellers need to learn about and understand the savings and efficiency that can be gained with a well-executed RPO.
Complexity rising
For starters, Roane explains, talent acquisition has gotten more complicated. Employers who scaled back on HR costs and talent acquisition during difficult times end up even further behind when they bounce back. Often, they use outdated practices and can't attract top talent.
“Over the last decade, companies have been forced to do more with less in all aspects of their business,” Roane says. “Efficiency and productivity rule the day. Obviously that doesn’t exclude talent acquisition.”
As such, the complexities of finding the right talent have increased. Technology has drastically changed the way recruiters and candidates communicate.
“This technology has given an edge to the companies that have figured out how to effectively deploy it and implement it,” he says.
Taking on a critical new role
The nature of RPO is changing. RPO firms have taken on the added role of "trusted advisor," shedding the more “transactional” role. Today’s RPO recruiter, Roane says, is providing value by finding candidates who are technically proficient and a good match for company values.
“RPO has evolved over the last decade,” he says, adding that not too long ago it was strictly about cost. Now it’s more about the greater impact that talent acquisition is having on the business, where there is alignment between workforce planning and overall business strategy.
Assess today’s situation
Roane says the first place to start when it comes to making a business case is to get an idea of what your HR/recruiting is currently doing. It’s important to take a look at all costs – from recruiting agency-use to internet advertising, all of which impact business success in terms C-Suiters can understand.
“RPO can be more agile and scalable than the alternative as companies are able to hire the talent you need quickly without a lot of overhead costs,” he says.
In addition, hiring managers often have issues around candidate flow and candidate quality, and the two issues are often intertwined. The key is to look at how a company is currently measuring these metrics and how they can be improved at a cost level.
“An RPO provider should understand how to attack those two issues even if a company, at least at the moment, doesn’t have the metrics on quality and flow,” Roane says. “An RPO can provide the structure to begin the measurement and drive continuous improvement of those two metrics. And those metrics can be tied directly to overall business performance.”
Many HR and talent leaders get stuck in the traditional form of recruitment scalability – when they need additional recruitment support, they engage a fee-based agency. However, this can ultimately result in huge costs – 25-35% of first-year compensation, from what Yoh has found in its experience.
“Traditional recruitment scalability is really only a tactic, not a strategy,” Roane says. “It’s a Band-Aid.”
He explains that there typically are a few key metrics one hears about when connecting an RPO to business objectives. The first one is around retention, but there’s also employee performance levels and agility and workforce alignment – the ability of a business to actually capitalize on opportunities.
“Doing it all right is about having the right talent available to execute when business opportunities arise. This requires a talent acquisition team moving from a reactive model to a proactive model,” Roane says. “Overall, most organizations are highly reactive when it comes to talent acquisition. We want to avoid being hamstrung by having open positions and move toward having a pipeline of qualified candidates who, once on board, are going to allow that organization to reach its business goals.”
Selling it to the C-Suite
Again, for an RPO to get traction, HR has to deliver business impact. Many senior managers just don’t see the business risks and successes that come with talent acquisition. It’s also important to remember that ROI is not static. Effective RPO firms will work with talent acquisition leaders, C-suite executives and other stakeholders to formulate and monitor metrics to make sure they’re on track 30, 60, 90 days in, and for the duration of the project.
“When you’re building that business case, that person has to understand business impact,” Roane says. “Make sure to draw the line connecting talent acquisition success and business success.”
After all, when it comes down to alignment with business goals, business leaders understand these things. They understand the impact of not having somebody on board when they need to have somebody on board. They understand the impact of quality of candidates and how that can impact productivity. Forcing those discussions from a talent acquisition leader standpoint becomes really important.
“It’s the backbone of making a solid business case,” Roane says.
