Why RPO – Why Now?
For those of us keeping a watchful eye on the staffing industry, the growth of recruitment process outsourcing (RPO) has been on our radar for more than a decade. Based on a recent survey, Staffing Industry Analysts estimates RPO is a $4 billion global market that is showing no signs of slowing down. So why are more and more businesses making the move to outsource their hiring processes? While each business case is unique, there are some common circumstances, both in the economy and in our industry, that have encouraged companies to move toward an RPO solution.
Businesses have long relied on internal staffing functions and outside staffing companies to find qualified people to fill their open positions. From small businesses that lack the internal resources to conduct an adequate candidate search, to large companies wanting to expand their talent pool, using a staffing agency is a commonly-accepted, readily-utilized business practice. This comfort level with staffing providers, combined with a stabilizing economy, helped to set the stage for the recent growth of RPO.
This is especially true for companies facing complex challenges like global expansion, acquisitions, mergers or other high-growth initiatives. All of these issues could spur the need to implement an RPO; especially if that growth strains already taxed staffing resources. A move to an RPO model gives companies the ability to rapidly scale their recruiting efforts, both with additional recruiters and pipelines of candidates, to meet increased demand. In addition, all the recruiting efforts of an RPO proliferates the client’s brand instead of marketing individual candidates to several companies as is the case with staffing agencies.
The rise of technology has played another important role in the move toward RPO. Many of the tasks that used to be controlled by internal staff are increasingly handled by technologies, making them largely self-service. Automation has allowed companies to reduce the administrative burden but has done little to affect the need for strategic planning and forecasting. The resources to handle these high-level tasks, plus access to the latest recruiting tools and technologies, are tactical advantages that remain firmly in the realm of HR service providers.
Another issue driving RPO is the recruiting of recruiters. Businesses looking to hire internal HR teams are finding it harder than ever to find top-quality recruiting talent. The increase of RPO providers has taken the best recruiting talent off the market. Companies find themselves hard-pressed to woo prospective recruiters away from highly-specialized RPO providers who can offer a compelling career track. This lack of supply is compounded by an increased demand for HR professionals as the economy continues to recover. In combination, these forces have created a talent drought that is driving companies to increasingly rely on RPO providers to meet their recruiting needs.
Another factor to consider is the significant cost savings that an RPO can deliver. These financial benefits are derived primarily from the contracts that govern the RPO relationship; allowing placements to be discounted based on volume and fee structures rather than the “one-off” pricing available through traditional staffing agencies. This ability to leverage long-term spend within an RPO program means companies can realize substantial savings with a measurable impact on their bottom line.
All of these factors combined have played a large role in the changes the industry has experienced over the last decade. While process efficiencies, compliance and cost savings are all important, the decision to choose an RPO partner is ultimately about gaining a knowledgeable partner that will support the company’s big-picture, enterprise-wide goals. This expertise and strategic thinking is the backbone of a successful RPO engagement and it will continue to be the defining difference between how hiring was done in the past and how it will be done in the future. It is a great time to be part of this industry and we are excited to have a front row seat on all the changes yet to come.
RPO in Healthcare
According to the 2012 Staffing Industry Analysts Healthcare Industry Staffing Buyers Survey, 28 percent of healthcare buyers currently use recruitment process outsourcing, with another 24 percent seriously considering doing so. I firmly believe that we will only continue to see this number increase as the effects of healthcare reform continue to be realized.
Over the years we have witnessed a significant evolution in the industry. The criteria necessary to operate a profitable and viable healthcare institution has been redefined. Historically, hospitals and other healthcare organizations were able to operate on a traditional, in-house recruiting model, where HR was wholly responsible for employee hiring, credentialing, compliance, onboarding, scheduling and the patient care cycle.
Today’s healthcare environment is much more complex, complicated by acute nursing shortages, less attainable clinical ratios, keeping up with the latest recruitment technology and the Affordable Care Act. When you combine these variables with the need to synergize scheduling, time and attendance, and maintaining compliance, the need for a flexible overhead structure is apparent.
To that point, the employment and economic landscape is highly suitable for healthcare organizations to consider alternative and innovative solutions for workforce management. The answer lies within recruitment process outsourcing (RPO): a highly consultative program that encompasses the staffing office, recruitment, credentialing, onboarding, staff augmentation and the patient care life-cycle.
The growing pains of implementing new ways of doing business are ever-present. However, failure to adapt is sure to only negatively impact the financial health of hospitals and healthcare organizations. The time for healthcare organizations to improve scheduling operations, increase process efficiency and engage competent, caring healthcare professionals is now.
Can Technology Drive RPO Success?
A significant factor impacting today’s changing RPO environment is the evolution of technology. New niche talent management technology providers are constantly emerging. As these providers grow, they often attract attention from larger enterprise providers looking to offer a complete, integrated talent management platform. Just consider the recent acquisitions of SuccessFactors by SAP and Taleo by Oracle. With each new merger and acquisition, RPO providers must adapt their capabilities.
With a number of new solutions becoming more mainstream, like mobile applications, e-reference checking, digital interviewing and highly effective job fit assessments, it may seem like each new technology will bring greater efficiencies to the RPO function. For instance, digital interviewing can streamline talent acquisition by enabling recruiters to learn about candidates before meeting them in person and eliminate weaker candidates earlier in the process. When it comes to driving RPO effectiveness and business impact, however, technology innovation should be approached with caution.
New technologies can be promising, but not all solutions can offer a quick fix. For technology to truly make a difference, the provider must ensure that it applies solutions that work best for their own internal processes and bring maximum benefit to clients. That means the solution must not only address a key need, but it also must be supported by RPO and client resources who have the knowledge to understand its use and implement it successfully.
While technology has been able to streamline and automate many processes, it should be seen as a complement to recruitment strategies, not an end-all solution. RPO buyers are likely to be skeptical if the provider is unable to deliver a hands-on approach to guide them through the technology strategy. No matter how advanced an RPO provider’s processes or access to emerging technologies may be, the real value is derived from its ability to adapt and integrate these solutions for the individual needs of each client.
When considering an RPO provider, it is important for buyers to look for one that not only stays on top of the latest technology, but is also willing to work directly with clients to develop the right strategy for the business need. After all, technology solutions offer tremendous promise in many areas, but ultimately, talent acquisition is about people. It is up to the provider and the client to work together to translate the promise of innovation into the reality of talent acquisition success.
Why You Should Be Thinking about RPO
How would you define your departmental (or organizational) goals for the next 12 months? Do more with less? Increase productivity? Hire and train new staff? Perhaps all of the above apply. What if you could outsource some or all a certain job function in order to meet these goals? For recruitment, that’s where RPO comes in. Recruitment Process Outsourcing is a way to increase efficiency in the areas of sourcing, screening, hiring, and onboarding employees. Third party companies work in a variety of ways to relieve these responsibilities, whether a portion or all of them, on a full-time or temporary basis depending on your needs.
Is an RPO option right for you? The first step in determining what solution may be best is to figure out exactly where the faults are in current processes or assess what problems are currently hindering you from meeting objectives. Examples of issues that an RPO could be helpful in solving are:
- Current sourcing techniques are not producing quality candidates.
- Lack of consistency in hiring processes.
- Onboarding and training processes are not effective or not meeting needs.
- Staff is spending too much time devoted to one process (ex. Sourcing candidates), creating deficiencies or loss of production in other areas.
- Lack of technology and/or resources to aid in recruitment is negatively impacting operations.
- Shortage of qualified candidates.
- Issues with hiring once candidates are identified (ex. undesirable circumstances such as salaries or location or an extensively long recruitment process).
In a detailed RPO guide, Manpower describes the business thinking behind an increase in RPO popularity:
Working as the organization’s internal recruitment function, an RPO provider can leverage market knowledge, industry expertise and access to talent to improve quality of hire, speed of delivery and cost containment. These are aspects of the recruiting process that organizations often struggle with on their own, and rightly so, given that they are typically more focused of their own core business. By outsourcing the recruiting function, companies can dedicate more time and resources to their strategic initiatives, ensuring they can focus on key strategic initiatives.
As competition for qualified talent heats up, organizations will rely on their RPO providers more than ever to supply them with the employees needed to meet organizational objectives. The paradigm for what companies will need from their RPO provider will continue to change, and RPO providers will undoubtedly rush to keep up and deliver new services to improve their clients’ ability to hire qualified talent. While many of these changes have already taken effect, it is clear that the RPO environment will continue to change dramatically in the coming years. The challenge for organizations, then, is to select an RPO provider that not just supplies talent, but can also meet the changing needs of the organization through innovative solutions to address their most complex recruitment needs. In today’s business environment, the best RPO providers are delivering in three main ways. Specifically, they are: 1) tapping into Big Data, 2) micro-targeting talent, and 3) acting as a test lab for their clients’ recruiting functions.
It comes down to balancing the overall cost against the potential benefits. Many organizations opt for more of a hybrid RPO. Utilization of a hybrid RPO means the desire of hiring an outside vendor to assist internal personnel, rather than fully taking over a particular function or completely replacing current recruitment staff. Keep an eye out for next week’s article for a more extended description of hybrid RPO differences and benefits.
According to service provider PeopleSoft, The Case for Recruitment Process Outsourcing comes by way of:
Flexibility & Scalability
- In today’s rapidly changing economy, many organizations are faced with decisions on how to meet their internal hiring needs. With recruiting departments cut substantially, the decision to rebuild, completely outsource, or to augment their existing resources with flexible, scalable resources is a tricky one.
- RPO allows the client the flexibility to scale resources up and down in a cost-effective manner.
- Scalability – It typically costs an organization more to hire during peak times because there is a need for additional resources to compensate for the increased hiring need. Similarly, in periods of low volume, it also costs an organization more to hire because resources are not fully utilized. In an RPO solution, there is not typically a premium charged during periods of high or low volume.
- Process efficiencies – By partnering with an RPO provider, organizations can take advantage of the best practices they’ve developed. These efficiencies allow an RPO provider to price its services below a company’s current operating costs.
- Reduced turnover – By producing a higher quality hire, organizations see lower early attrition, which results in cost-savings for the client.
- It is widely thought that by partnering with an expert in recruiting, the quality of the hire will improve. This is true, because RPO providers have broad depth of recruiting experiences and draw upon them when delivering RPO services.
- Utilizing a structured hiring process promotes quality by facilitating more consistency among the hires.
- OFCCP compliance is a big concern for many large organizations. RPO providers follow rigorous processes to ensure a legally compliant hiring process.
- By maintaining accurate records of hiring activity, RPO providers can supply critical information to support audit requests from the OFCCP.
Opportunity to Leverage ATS Technology
- Some RPO providers offer a bundled ATS/Recruitment solution. This is a fantastic option for organizations who haven’t yet invested in an ATS.
Companies can utilize RPO for process management, reference checking, sourcing and screening, onboarding, or any other function in the talent management realm and reap any one of the benefits highlighted above. Organizations facing a merger or acquisition, those with rapid expansion plans, possible global initiatives, or any number of other circumstances should be evaluating the impact an RPO strategy may have on their current processes and the bottom line.
Traci Kingery, PHR is an HR Professional and freelance writer based in the Midwest, specializing in immigration and talent management. When she’s not improving unemployment, she keeps busy with her husband and four children.