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Making the Grade: Where Talent Solution Providers Succeed (and Fail)

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IntroductionWhether you’re a talent solution provider or client, you know it’s not easy to build a successful long-term partnership. There’s the matter of the dramatic shortage for skilled talent, not to mention the constant pressure to source quality candidates while controlling costs.

To explore what makes talent solution partnerships work—or fail—Orion Talent turned directly to the source. Based on a survey of end users of staffing, permanent hire, recruitment process outsourcing (RPO), managed services provider (MSP), and other talent solutions, we’ve compiled this report. It analyzes the state of provider performance and explores a wide range of related topics, from provider selection to metrics collection.

We invite you to take a closer look at strategies on both sides of the equation (provider and client) to improve communication and collaboration for mutual success.


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Table of ContentsExecutive Summary 5

Overall Performance: Plenty of Room for Improvement 6

Selection Factors: Quality Beats Quantity (and a Whole Lot of Other Stuff Too) 8

Stakeholder Alignment: A Slippery Slope 10

Performance Issues: Why Relationships Fail 12

Performance Metrics: Metrics Fall Short on Multiple Fronts 14

Top Takeaways: For Clients and Providers 16

About the Survey: Demographics and Company Information 18

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Client Satisfaction Ratings

Overall, how does talent solution provider performance stack up? Results are mixed, but not exceedingly positive. Opportunities abound to improve partnerships, as evidenced by the fact that most clients (57%) assign a B grade to their providers.

When it comes to strategic decision making, most of these providers haven’t earned a seat at the table. Less than half (45%) are viewed as “valued, trusted business partners.”

#1 Demand: Quality of Candidates

Despite these lukewarm endorsements, a large majority (80%) of end users say their primary provider meets expectations most or all of the time. Successful providers excel at providing a high quality of candidates, which also happens to be clients’ top selection criteria. In fact, quality of candidates is ranked five times higher than the next factor, proven successes/metrics (53% vs. 10%).

Why Things Go Wrong

For the most part, key stakeholders—including HR, the C-Suite, the business, and solution providers—are on the same page at the start of a talent engagement. That serendipitous state of affairs doesn’t usually last, though.

Respondents rate the overall level of their talent solution programs’ alignment to strategic business objectives throughout the engagement at 69 out of 100 (in other words, a D grade). Most clients attribute the lack of continued alignment to poor metrics and poor communication.

Failure Factors

When talent solution partnerships fail—and about a third of them do (35%)—it’s primarily due to an inability to reduce cost-per-hire. That’s true even for clients who rank quality as their top selection factor. It also doesn’t take long for a client to know if they’ve made a right choice, only up to about six months on average.

Metrics Fail to Impress

Providers also receive low marks for the effectiveness of their performance metrics. Only 37% are satisfied with the frequency of performance metrics and 45% with the quality. Less than one third (29%) use provider metrics to inform business decisions, primarily because the analytics aren’t relevant or useful.

At the end of this report, we’ve provided some insights for both clients and providers inspired by the survey responses. We’ve outlined some takeaways and practical paths to improving processes, performance, and ultimately, profits.

Executive SummaryOrion Talent is pleased to share insights based on a survey of end user clients of talent solutions in Making the Grade: Where Talent Solution Providers Succeed (and Fail)

MAKING THE GRADEOverall Rating of Provider Performance

57%

2%

29%

12%

Plenty of Room for ImprovementTalent solution providers deliver average performance.

When it comes to impressing clients, most talent solution providers don’t find themselves at the top of the class. The majority of clients (57%) assign their providers a B grade… not bad, but decidedly not great either.

Less than a third (29%) give their providers an A. When you consider that 14% give them a C or D, it’s a small consolation that no respondents mark the grade as an outright F.

Meeting—and Managing—Expectations

Despite lukewarm ratings, a large majority (80%) say the solution provider they use most often meets expectations most or all of the time. The other 20%? Not so much.

What’s more, less than half (45%) of providers are perceived to be “valued, trusted business partners.” End users classify the same proportion as “professional suppliers,” and a few label them “commoditized vendors” (8%) or “non-value added providers” (3%).

One respondent describes a worst-case scenario: “They are in it for the money – not focused on partnership.” On the other hand, one respondent shares an example of a particularly successful relationship: “Our best provider has actually visited not only our facility but our region and our area business development organization; they really know who we are and what we do.”

Given the inherent challenges of building strong partnerships, one client shares some solid advice, “Don’t try to fit your clients into the same box. We all have different processes. You have to understand that and be adaptable.”


RATED “A” RATED “B”

RATED “C” RATED “D”

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Rising to the Challenge

Providers widely meet expectations, but scant few garner top performance ratings by clients. What’s behind this seeming inconsistency? Has mediocrity become the norm?

In an environment characterized by low unemployment rates and critical deadlines, it’s not surprising that an A grade is hard to come by. That means it’s incumbent on providers to manage expectations and anticipate problems.

Client expectations are high—as they should be. As an industry, these findings represent a challenge to providers to improve their processes, communication, and especially results. Provider issues (and low ratings) go away with high quality, on-time placements.

CONSISTENCY COUNTSHow often does your top provider meet expectations?

8%

72%

17%

3%

ALL OF THE TIME

MOST OF THE TIME

SOME OF THE TIME

HARDLY ANY OF THE TIME

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“Provider issues (and low ratings) go away with high quality, on-time placements.”

Talent solution providers earn a B grade from their clients.

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What qualities do clients look for when choosing talent solution providers? By far, quality of candidates drives the selection process. If this doesn’t surprise you (and let’s be honest, it probably doesn’t), the dominance of this factor might.

Quality is 5x More Important than the Next Factor

More than half (53%) rank quality of candidates as their top selection factor. A distant second is proven successes/metrics (10%), followed by cost (9%). We see little differentiation in these rankings based on the primary talent business model used, although cost edges out metrics for perm-heavy clients.

Survey respondents bemoan the “see what sticks” and “throw spaghetti on the wall” approach that leads to candidate submittals that never should have happened. As one states, “I would rather have just a few excellent candidates than a bunch of mediocre candidates. Take your time to understand what I’m looking for, then go find it.”

We do notice some differences between the perspectives of top leaders (VPs and executives) and of those at the director level and below:

• VPs and executives are more than twice as likely to rank proven successes/metrics as their top selection factor than those at the director level and below (18% vs. 7%).

• Frontline staff rank cultural fit much higher than executives: 44% compared to only 21% who ranked it in the top three selection factors.

Among the lowest ranked factors (for both groups) are market reputation and referrals. Clearly, end users prefer to evaluate providers for themselves, rather than rely on others’ feedback.

TOP 3 SELECTION FACTORS

53% QUALITY OF CANDIDATES

10% PROVEN SUCCESSES/ METRICS

9% COST

Quality Beats Quantity (and a Whole Lot of Other Stuff Too) Quality of candidates tops the must-have list for provider selection and satisfaction.


CRITERIA AT WHICH A & B PROVIDERS EXCEL

The Secret to a Long Life

Quality of candidates doesn’t just get providers in the door, it dictates their perceived effectiveness over the life of an engagement. Those giving their providers an A or B say they excel at providing quality candidates. That’s the top ranked criteria for successful providers, followed by meeting the volume/scale of recruiting needs and communication.

By contrast, those who gave their provider a C or below are more likely to call out processing/scheduling and response time as areas of strength. That goes to show that efficiency and speed may count for something, but not nearly as much as finding the right fit for an open position.

35%QUALITY OF CANDIDATES

21%MEETING

VOLUME/SCALE OF RECRUITING

NEEDS

18%COMMUNICATION

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“Quality of candidates doesn’t just get

providers in the door, it dictates their

perceived effectiveness over the life of

an engagement.”

Cultural fit of talent solution providers matters more to frontline employees than top executives: 44% vs. 21% ranked it as a top selection factor.

A Slippery SlopeStrong stakeholder alignment at the start doesn’t hold up over time.

Here’s the good news: at the onset of a talent engagement, companies report that key stakeholders—including HR, the C-Suite, the business, and solution providers—are on the same page. More than two thirds (70%) say alignment about the overall goals of the talent solution program is good or excellent. Still, more than a third (39%) of clients admit they are guilty of not setting clear expectations up front.

Misalignment Over Time

Unfortunately, things go downhill from there. When we ask about overall alignment during the course of an engagement, the picture is less rosy.

Respondents rate the overall level of their talent solution programs’ alignment to strategic business objectives at 69 out of 100. On a standard grading scale, that’s equivalent to a D.

The reality is, programs change. Transactions move quickly, turnover happens, and strategies evolve. Providers must take heed and not just drive on autopilot. They need to revisit program goals and SLAs regularly to ensure they stay on track with client expectations.

PRE-ENGAGEMENT ALIGNMENTLevel of Program Alignment Among Stakeholders

FAILURE TO CONNECTAlignment of Talent Solution Programs to Strategic Business Objectives

21%

14%

2% 2%

56%

Good

Poor Very Poor

69Making the Grade: Where Talent Solution Providers Succeed (and Fail)

Excellent

Neutral

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1 | Metrics to show impact and success (31%) When done well and consistently, detailed analytics serve as a valuable tool, not only to compare provider performance, but also to check that a program is on track to meet stated goals.

However, clients send mixed signals when it comes to metrics. Even though they identify this as the top strategy to improve strategic alignment, 42% admit they don’t consistently review the ones that are provided.

2 | Better communication with executive leadership (24%) Too often, executives only show cursory interest in their talent solution programs (at least until things start to go wrong).

Providers need to show up and show off. One respondent shared this advice: “Spend time together, in person, with all levels of the customer; face time is too often scarce.”

3 | Recurring meetings with company leaders throughout the engagement (20%) When companies limit access to different functional corporate areas, they’re increasing the chance of failure. When providers fail to build relationships across the enterprise, they do the same.

Exacerbating the situation, many HR and talent acquisition professionals are evaluated on their ability to save money by eliminating providers and cutting costs. That’s why providers need to demonstrate value, no matter who’s asking.

On a scale of 1 to 100, clients

rate the alignment between

talent programs and strategic

objectives at only a 69.

Boosting Program Alignment

We’ll take a look at specific areas where talent solution providers fall short in the next section, but here we pause to explore strategies to improve alignment, right from day one. Three techniques emerge as best practice for aligning talent solution programs with strategic business objectives.

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Even though clients identify better metrics as the top strategy to improve strategic alignment, 42% admit they don’t consistently review the ones that are provided.


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Talent solution providers have a 35% failure rate. You read that right… in the last two years, end users report that more than a third of their relationships have failed. The rate is even higher for companies that primarily use permanent hire services: 40%.

Given the emphasis on quality of candidates during the selection process, you might surmise that’s where most providers fall short. But in fact, clients primarily attribute failure to an inability to reduce hiring costs.

Reducing hiring costs is the main failure factor across the board, even for companies who rank quality of candidates as their top selection factor; rate their providers highly; and say their stakeholders are well aligned.

Striking a balance between quality and cost frequently emerges as a source of friction between talent solution providers and clients, particularly when profits are under scrutiny. Delivering ‘good, fast, and cheap’ is an engineering challenge that points to the need for clear and constant communication between all parties around hiring expectations.

Short Shelf Life

Providers have a short window of opportunity to prove their ROI. Greater than 70% of clients say up to six months provides a sufficient period of time to determine whether a talent solution provider will be successful or not. Of those, close to 40% give their providers just three months. These quick assessments particularly hold true for companies using more transactional business models such as staffing and MSP.

CRITERIA AT WHICH PROVIDERS FAIL

23% REDUCING HIRING COSTS

14%(TIE) RECRUITING PASSIVE CANDIDATES

14%

12%

(TIE) TRANSPARENT PERFORMANCE METRICS

FILLING HARD-TO-FILL ROLES

Why Relationships FailDemanding high quality and low costs, clients are quick to judge low-performing providers.

Fix or Fire?

Fortunately, when there is a problem with an individual provider, close to half of clients (47%) will try to fix it, rather than fire them and use other providers (34%) or bring the work in-house (6%). Fourteen percent aren’t sure.

When clients have invested heavily in a relationship, exit costs—both literal and figurative—can be quite high. It may be easier to walk away from providers who hold a smaller proportion of business, particularly when there are dozens of competitors lined up to take a shot. Once again, these results highlight the critical importance of cultivating deep partnerships.

TIME IS OF THE ESSENCETime to Determine a Provider’s Potential Success

34%

4-6 Months

10%

1-2 Years

14%

7-12 Months

37%

1-3 Months

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37% of clients assess a provider’s success within just 1-3 months.

Clients primarily attribute talent providers’ failure to an inability to reduce hiring costs.

Metrics Fall Short on Multiple FrontsFrequency and quality of talent metrics don’t lend themselves to strategic decision making.

With first-hand knowledge of talent supply and demand, talent solution providers have their fingers on the pulse of information critical to business success. Yet too often, this information is not adequately conveyed by the provider or is dismissed by the client, resulting in missed opportunities.

Frequency and Quality Ratings

At best, clients are disinterested in their providers’ analytics, and at worst dissatisfied. Only 37% of clients are satisfied with the frequency of performance metrics and 45% with the quality. A large portion—around 40%—respond ‘not sure or not applicable,’ suggesting they aren’t receiving metrics at all.

The Verdict: Irrelevant and Useless

More than 40% do not consistently review performance metrics provided by their talent solution providers (42%) or use them to inform business decisions (42%). Although that’s because some don’t have that responsibility (19%) or available time (13%), more than half (55%) of people who do not use metrics to inform decisions say it is because they are not relevant or useful to the planning process.

Despite these findings, clients still look to their talent solution providers to deliver additional market information in the decision-making process, such as market supply/demand analysis, demographic data, candidate availability, and salary requirements. Two fifths (40%) rely on such information, compared to 29% who don’t, and 22% who say it’s not given to them.

Performance Metrics Need WorkAre you satisfied with the frequency and quality of metrics?

QUALITY

45%

YES

18%

NO

38%

NO

T SU

RE o

r N/A

37%

YES

23%

NO

41%

NO

T SU

RE o

r N/A


FREQUENCY

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Supplemental AnalysisDo you use additional market information for decision making?

What’s more shocking – that providers aren’t providing appropriate metrics to their clients or that clients aren’t using them? Regardless of the talent delivery model, metrics can be used to identify bottlenecks, ensure compliance, and drive efficiency. Business leaders who aren’t actively using talent metrics to inform strategy are missing a big piece of the puzzle.

22%

Not provided

40%

Yes

10%

Not sure or N/A

29%

No

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55% of those who don’t use metrics say that’s because those metrics are not relevant or useful to their planning process.

42% do not use performance metrics provided by talent solution providers to inform business decisions.

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Top TakeawaysThrough the lens of both the customer and the provider, let’s spell out some actions you can take to ensure you’ll be just as engaged and enthusiastic about your talent partnership six months in as you are the day you sign the contract. Each party plays a pivotal role in creating mutual success. With so much on the line, a thoughtful approach helps you adopt best practices and avoid common errors.


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For Talent Solution Clients

1 | Elevate your Vendors to Stakeholders Not every talent solution provider will rise to the rank of a true stakeholder, but you can increase the chances through transparent expectations and clear service level agreements. The best partners have deep insights into talent markets and process workflows, so be sure to include them in the conversation when you’re engineering your programs.

2 | Demand Quality Metrics, then Use Them An inability to leverage talent data costs you money. Not only does it undermine efforts to hold your talent solution providers accountable, it also impedes forecasting and decision making about the resources required to attract, hire, and retain critical talent. Establish formal analytics guidelines for your vendors, and schedule time for stakeholders in multiple functions (executive leadership, HR, operations, etc.) to review and discuss them.

3 | Walk the Talk when it comes to Quality Of course, reducing hiring costs matters, but place the greatest emphasis on the results that can be generated by finding the right talent who can make an impact quickly. There’s an opportunity cost to poor quality. Make sure you have agreement on desired business outcomes before you establish the price structure, and make sure you’re investing sufficiently to allow your partners to unleash their knowledge and creativity.

For Talent Solution Providers

1 | Raise your Profile, Raise your Game Clients admit they don’t use talent metrics; educate them on why it’s in their best interest and how to analyze the data for strategic purposes. You’re in a unique position to navigate the politics and priorities of the numerous stakeholders involved in the recruitment process. Use that position to your advantage, across multiple communication channels, by going above and beyond the usual scorecard to serve as a true business advocate.

2 | Aim for an A In the words of one respondent, “More candidates does not equal better process.” Spend more time on the quality of the candidates, instead of the quantity, to avoid wasting candidates’ and clients’ time. Don’t settle for a B (or lower) and chalk it up to the inherent difficulties of a partnership; instead, turn a critical eye to people and processes that are holding you back from the highest performance.

3 | Avoid the Rush Moving too quickly often leads to misalignment. Examples include rushing to sign a contract (without understanding strategic goals); rushing to get candidates on the client’s desk (at the expense of proper vetting); or rushing to expect a seat at the table (without earning it through results). Communicate actively and be as transparent as possible, while not jeopardizing your long-term objectives for the sake of a short-term win.


Orion Talent’s report, Making the Grade: Where Talent Solution Providers Succeed (and Fail), utilizes data from an online survey of talent solution clients. The survey was fielded from March 28 to April 24, 2017, and a total of 119 responses were received.

The average respondent personally works with two to five talent solution providers working across multiple delivery models, including: permanent hire (71%), contingent staffing (62%), executive search (40%), recruitment process outsourcing (RPO) (19%), and managed services provider (MSP) (9%). The most common primary recruitment model was permanent hire.

The largest functional area represented was human resources (28%), followed by operations (18%), CEO/owner (13%), and sales and marketing (13%). Most operate in leadership roles, from director (29%) and vice president (25%) to executive c-suite (13%).

Participants reflect a wide variety of company sizes and industries, from manufacturing and engineering to financial services and healthcare.

Please note, some of the figures in the report don’t add up to 100 percent due to rounding or question design, e.g. the ability to provide multiple answers. Some participant quotes were edited for clarity and length.

About the Survey: Demographics and Company Information

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About Orion Talent

Headquartered in Cary, North Carolina, Orion Talent provides a total talent solution for businesses nationwide, including skilled talent acquisition, recruitment optimization and military hiring solutions. As a military recruiting leader for 25+ years, Orion Talent has a long history of supporting Veterans in their search for meaningful careers and has found employment for more than 40,000 Veterans. Orion Novotus, an Orion Talent company, provides a full range of recruitment optimization and consulting solutions. Orion Talent has offices nationwide, a dedicated team of 200-plus recruiting experts, and holds more than 400 hiring events each year. Visit www.oriontalent.com.

www.oriontalent.com

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