Busting RPO Myths, Defining RPO Benefits, and Helping Organizations Decide if Finding an RPO Partner is the Right Move
These are trying times for the talent industry. Perhaps, the most trying ever.
While it’s been 50 years since the unemployment rate was as low as it is today, that stat tells only part of the story. For many recruiters and hiring managers looking to fill highly skilled positions that require truly unique skillsets, this type of talent shortage is almost unprecedented. At times, it can seem like the right candidate will never be found. And if they are, there’s an even slimmer chance they’ll agree to make a move. The Wall Street Journal recently called recruiting one of the toughest jobs on the market, with some candidates ignoring calls, switching positions after just days on the job, or even scheduling and then skipping an interview with a hiring manager altogether.
Unfortunately, no company is safe from these challenges. Available, quality talent is at an all-time low across all industries, especially in the tech sector, and it doesn’t look like there’s any respite on the immediate horizon.
Organizations know that their growth is dependent on their ability to attract, hire and retain qualified talent. So, what do they need to do to stay competitive and relevant?
One alternative that still seems to be a bit scary for many HR leaders and executives, despite its proven value, is to consider a Recruitment Process Outsourcing (RPO) provider. In most instances, this solution includes the outsourcing of some or all components of internal recruiting for candidates who will become direct employees, including sourcing candidates through the offer and onboarding process. RPO programs can either replace the need for internal sourcing or recruiting, or can augment resources already in place.
Busting RPO Myths
However, when we’re constantly reminded that people are our most important asset, why would a company want to outsource this most critical business component to an outsider? The so-called RPO horror stories are well established – there’s no control, it’s too expensive, it hurts team morale, etc. – but are these true or simply myths that have been misconstrued over the years?
We lean towards the latter. Here are four myths about RPO that it’s time to stop believing.
- Myth #1: You lose control with RPO.
Contrary to popular belief, RPO actually allows companies more control over their recruitment and gives significantly more visibility and clarity into their entire talent management process. Any experienced RPO provider will not be a replacement but rather a seamless extension of a company’s recruitment function. It is a partnered approach where the organization remains responsible for making the hire but also has available tracking and insights into the recruitment process at a moment’s notice.
- Myth #2: An RPO provider cannot represent our employment brand as well as we can.
It can be easy to think that whenever there’s an outside party acting as the first line of communication with potential employees, it might lead to issues where the provider inaccurately represents a company’s culture or employment brand. However, the best RPO providers make it a core responsibility to implement the program only after correctly and properly training dedicated delivery team members on the solution, the jobs, the organization and the minutiae of cultural elements.
RPO has been a successful HR strategy for more than 15 years with proven results and a high client satisfactory rating across the industry. But there is a catch.
An RPO partnership will work only as long as both the provider and the organization are committed to the solution. The organization needs to trust that the RPO provider will deliver on its service level agreements and the provider needs to show its accountability with appropriate metrics, reporting and full process transparency.
- Myth #3: The best RPO providers are too expensive. We can do this much cheaper another way.
Beyond talent acquisition, cost reduction is one of the biggest benefits of RPO. In fact, over the years, RPO has helped organizations reduce their overall recruitment cost by 15 to 40 percent through greater efficiency, lower turnover, and more.
However, RPO is definitely not one-size-fits-all. And any provider claiming to use a one-size-fits-all solution as a cheaper alternative is, well, just that—cheap. Recruitment solutions need to be configured to the specific customer, specific application and the specific expected results. With RPO, you get what you pay for.
- Myth #4: The transition to RPO will be long and will come at the cost of your current recruitment team and knowledge.
Proper implementation of an advanced RPO program shouldn’t take half a year (and if it does, you’ve partnered with the wrong provider). The typical implementation should take anywhere from 8 to 16 weeks depending on the solution and the size of the organization with most of the heavy lifting performed by the provider organization.
Additionally, any of the organization’s impacted recruitment staff are often either transitioned to the RPO provider or new roles are created within the client’s HR organization. This helps accelerate the implementation process and ensure the employment brand continues on through the transition.
Speaking the RPO Truth
Now that some of those commonly cited myths are out of the way, the question can be asked – what are the benefits of an RPO program? Why is this investment in talent process worth it for companies? What does RPO bring to an organization?
- Truth #1: RPO allows organizations the ability to focus on their core, strategic business.
Some businesses will spend countless hours trying to find the right people who fit within an organization’s culture and can deliver on its mission when they should be spending time actually delivering on the mission themselves. With RPO, external experts can focus on the task of finding talent without sacrificing valuable business hours.
- Truth #2: RPO improves recruiting effectiveness.
With a mapped, well-defined process that has clear service level agreements (SLAs), an RPO partner can:
- Improve (or define) an employment brand
- Improve candidate submittals-to-interview ratios, interview-to-hire ratios, and offer-to-accept ratios
- Improve time-to-fill
- Deliver larger candidate pools from which to pull
- Deliver clear business analytics and reporting with full accountability
- Truth #3: RPO delivers better fit hires.
According to SHRM the cost of a single worker turnover is equivalent to the loss of 6 to 9 months of salary. The Bureau of Labor Statistics says a bad hire costs 30% of their annual earnings. For many businesses that can be crushing to a bottom line.
For those organizations having difficulty not only finding and recruiting qualified talent but keeping them on board, RPO providers can help alleviate that pain by using their candidate sourcing tools and strategies to make the right hire from the get-go. Increasing employee retention and reducing new hire turnover are core tenants of any strong RPO program and the best providers will show their ability in this department with metrics to prove it.
- Truth #4: RPO provides scalability.
Surprising news here – hiring can be expensive! And it gets even more expensive with an ineffective recruitment process.
Since most companies don’t experience consistent hiring demand throughout the year, they either have an overstaffed internal team in order to meet peak hiring periods or work with traditional 3rd party recruitment firms who sometimes work to find a candidate, but not necessarily the best candidate.
Unlike internal recruitment teams, RPO providers can flex big or small to meet these ever-changing hiring requirements without wasting unnecessary spend during slower times or feeling understaffed during times of high demand.
- Truth #5: RPO gives organizations a competitive advantage in recruiting and talent.
Many organizations understandably do not have the resources to build a top recruiting function. They can become very dependent on job postings and simply hope the right people apply. Even hiring good recruiters is a tremendous challenge today. They’re not only in very high demand, but their compensation has gone up exponentially during the last 12 months. Working with an RPO provider to hire timely, qualified talent will give the organization a leg up on competitors, allowing it to deliver on its business plan more effectively and grow more quickly.
- Truth #6: RPO offers access to state-of-the-art tools and thought leadership.
Recruiting technology is changing at a rapid pace, and even the most advanced companies can find it difficult to keep up with the latest and greatest tech. With an RPO partner, organizations will receive access to artificial intelligence (AI) technology and recruitment process automation (RPA) without the costly capital investment.
Additionally, most organizations aren’t in the business of talent and can’t afford to spend time becoming experts in it. By partnering with an RPO provider, companies will receive access to talent acquisition thought leaders who stay current on all the latest processes, tools, and strategies that will define the talent industry now and in the future.
RPO Delivery Methods & Pricing Strategies
With RPO myths busted and benefits clear, you should be better equipped and prepared to look at outsourcing your recruiting in a more objective way. But keep in mind, there are a number of different ways a recruitment process outsourcing (RPO) program can be delivered and priced. Here are a few of them.
- Full Talent Lifecycle RPO
This is RPO where the organization outsources the entire recruitment function. It is an end-to-end recruitment solution, from workforce planning support through new hire on-boarding. While it may not be right for everyone, it is the most comprehensive solution.
- Point of Service RPO
This type of solution augments what already exists within an organization by delivering some aspects of the recruitment function but not the entire recruitment process. Examples may include candidate sourcing and/or candidate screening or new hire on-boarding. Sometimes Point of Service is deployed for scalability purposes and is perceived as less invasive where the organization maintains at least a minimal core recruitment team.
- Project-based RPO
This type of RPO can be either a Full Talent Lifecycle or Point of Service for a defined period of time depending on the organization’s requirements. Examples may include times when an organization is introducing a new product line, a new service offering, a new plant start up or new facility, or a sudden peak in hiring demand. Project RPO may also be offered as a pilot (taste before you buy) to a longer term RPO solution.
As for pricing, there are a number of options organizations can consider depending on the project, need or budget. It can be:
- A resource-based model, billing on time and materials
- A performance-based model, billing per hire
- A hybrid/blended model, with both resource-and performance-based pricing
Recruitment Process Outsourcing may be a somewhat scary concept at first but once organizations take the time to learn the ins and outs of this talent strategy, it may make a lot of sense as a recruitment alternative for companies both big and small. This is especially true if their current strategies are not working or not producing the desired results.However, it is important that if you decide to consider RPO, you select a provider that is culturally aligned (very important) with a strong reputation and a high client satisfaction rating. RPO works only if it is a trusted partnership between the two parties. With that in place, it’s one strategy that can make talent a true organizational asset and a competitive advantage.