Look before you leap into RPO

By Harry Griendling, CEO of DoubleStar, Inc.

For several reasons over the last few years, more and more companies are considering or in fact have outsourced some or all of their external recruiting to Recruitment Process Outsourcing Firms (RPOs).

The value propositions for outsourcing recruitment can be compelling:

• Curb runaway acquisition costs caused by inefficient, ineffective internal practices
• Increase quantity and quality of candidate flow
• Shorten recruiting cycles for mission-critical or client billable roles, resulting in enhanced revenue optimization
• Increase recruitment service levels to dissatisfied hiring managers
• A combination of some or all of the above

This list or one similar, appears on every Outsourcer's website. What's not often discussed, however, are the downsides of moving recruiting outside of an organization. In many ways, the jury is still out on viability of outsourced recruiting as a long-term business strategy. Consider these cases:

• Some corporations failed at their first attempt at outsourcing recruitment, and decided after 6-12 months to either bring the function back in-house, or switch providers
• Many corporations outsource some, but not all, of their recruiting function. Often, corporations simply outsource high-volume, repetitive, strategically unimportant recruiting to enable the internal staff to focus on higher-level, value added roles.
• In the decade since the RPO model came into prominence, there are still few long-term (3 years or more) relationships in place. And, when events like the financial market meltdown of 2008 occur, many RPO relationships become instantly irrelevant and are terminated.
• The vast majority of corporations have no or very limited visibility into their long-term staffing needs. And, the larger the enterprise, the more this tends to be true. So, the firms that are most likely to have sufficient recruiting volume to justify an outsourced model turn out to be the same firms that have limited visibility into whether or not that model will pay the kind of long-term dividends needed to justify its implementation.

In our experience, there are four critical questions that should be vetted exhaustively, but often aren't, before deciding if and how to engage an outsourced partner.

Do we have a fully articulated talent strategy that will be supported by an RPO solution?

Many outsourcing decisions are made to solve tactical, not strategic, challenges. A more effective approach is to develop a clear strategy first, then select tactics that will best service those strategic needs.

Our advice-first, conduct a thorough talent needs analysis, compare those needs against an inventory of existing talent, conduct a gap analysis, and develop a clear list of strategic talent requirements. Then, determine which talent solutions will best meet those talent solutions. Often, an RPO solution will be only one of many tactics needed to service a company's full talent demands.

Does the organization understand its medium and long-term talent demands?

For all of the work done in Talent Management and Workforce Planning over the past few years, it is surprising how few organizations are still unable to accurately predict their longer-term talent needs.

Recruitment outsourcing works best when there is a steady or steadily increasing demand for talent with targeted skills sets over longer horizons. Outsourcing is less effective in cases where talent demands are unpredictable and constantly shifting. Do you know your future talent demand beyond the current set of open requisitions in your ATS system?

Further, certain skill sets lend themselves more readily to programmatic, high-volume sourcing that others, which may require more one-to-one direct recruiting, careful candidate management, and careful negotiations to close. The mix between these roles will inform your selection of an outsourcing partner or multiple partners that can best accommodate your needs.

Are we outsourcing for the short-, medium-, or long-term?

Related to the above, are we really serious about outsourcing recruiting, or are we just doing this to solve a near-term problem? The answer to this question not only dictates scope of the contract, but also determines how much organizational effort should be invested in the relationship, and how the relationship is managed.

How will our organization maintain talent market differentiation under an outsourced model?

A paradox of recruitment outsourcing is that the very processes that create a lower cost of delivery also degrade true differentiation of your employment proposition.

Imagine that you have outsourced your recruiting for field sales representatives across the country. Now imagine that all of your industry competitors have done the same thing, and that many have chosen the same provider.

In this scenario (and this case does exist at several large RPO firms), do you think that the RPO firm will provide you with truly differentiated candidates for your environment, using a methodology that is specifically designed to aggressively find and recruit the best candidates to meet your unique talent requirements? Or, do you think that the outsourcer will use homogenized processes to service all of its clients most efficiently, resulting in an even distribution of all candidates across their entire client base to keep all clients equally serviced?

If your RPO partner is working for many of your competitors, the answer is more likely the latter.

If talent is our most important asset, why are we outsourcing our talent acquisition engine?

This is a fundamental strategic question that most organization spend too little time answering. Why specifically am I outsourcing and what specifically will the organization gain from moving talent acquisition to a third-party? Can we launch a process improvement initiative to revamp our spending approach, reduce staff, improve staff, increase efficiency, and achieve the same result? Outsourcing may offer the best solution, but until an organization examines all possible alternatives and models the business cases, it doesn't really know with certainty.

These are many other questions that should be thoroughly considered before committing to an RPO solution. Working through these will help get you pointed in the right direction.

Harry Griendling is the founder and CEO of DoubleStar, Inc., one of the East Coast's leading consulting firms focused on implementing innovative and cost-effective RPO, On-Demand Project Recruiting, and Human Capital Measurement solutions since 1993.