rpo 2011: rethink recruitment - patrick...

RPO 2011 Rethink Recruitment

November 2011

Mollie Lombardi

~ Underwritten, in Part, by ~

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

November, 2011

RPO 2011: Rethink Recruitment Hiring is arguably one of the most important things any organization does. It is a key inflection point where the company seeks to bring in the right talent that will raise the bar on organizational performance. There is a fiercely competitive marketplace for top talent today and businesses seeking an edge are looking to rethink recruiting and add any and all solutions to the hiring arsenal that will help them get ahead. In September and October 2011, Aberdeen studied 145 companies, 63 of which were actively using Recruitment Process Outsourcing (RPO) solutions to understand how RPO can help solve for key hiring bottlenecks such as sourcing, project staffing, and building critical talent networks. Gone are the days of one-size-fits-all end-to-end recruitment outsourcing. Today's RPO clients are innovating hiring and using RPO to help craft strategic talent acquisition strategies.

Building the Case for RPO Finding the right talent to power business growth is a top concern for organizations today. With the return of growth to the top of the enterprise agenda, companies are in fierce competition for top-performing talent. Aberdeen's September 2011 Talent Acquisition study found that this increasing competition, along with key skill shortages are the top pressures organizations must combat with their recruiting efforts (Figure 1).

Figure 1: Talent Acquisition Pressures

Respondents indicated top three responses

Source: Aberdeen Group, August 2011

52%49% 49%

%

20%

40%

60%

Increasing competitionin the marketplace for

top talent

Shortages of requiredskills available in the

labor pool

Pressure to meet thecompany’s growth

objectives

perc

enta

ge o

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, n=5

06

All Respondents

Research Brief

Aberdeen’s Research Briefs provide a detailed exploration of a key finding from a primary research study, including key performance indicators, Best-in-Class insight, and vendor insight.

http://www.aberdeen.com/aberdeen-library/7142/RA-talent-acquisition-management.aspx

RPO 2011: Rethink Recruitment Page 2

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In order to keep up in this competitive marketplace, top companies know they must differentiate themselves. They need to get better at identifying the talent most likely to succeed within the organization, proactively build talent pools and candidate pipelines in support of a continuous talent acquisition strategy, deliver a top-notch candidate experience, and work internally to build a talent acquisition culture with engaged stakeholders at every phase from sourcing through onboarding. That laundry list of priorities was the key findings of Aberdeen's latest talent acquisition research, and it is a daunting one for sure. So it's not surprising that companies are looking to new ways to rethink recruiting, and come up with an arsenal of solutions to solve key issues across the talent acquisition spectrum.

One of the options available to companies today is the world of Recruitment Process Outsourcing (RPO). For the purposes of this research, RPO is defined as outsourcing one or more elements of the recruiting process. These elements can include, but are not limited to: sourcing and job advertising, screening, testing/assessments, interviewing and selection, background verification, drug testing, offer extension, onboarding and orientation. However, the use of online job boards is not included in the definition of RPO. The solution set included in the world of RPO is often misunderstood, particularly in light of the evolution of the space in recent years. Today, just 17% of the organizations surveyed for this report define their use of RPO as end to end, where the provider acts as the recruiting function and handles everything from sourcing to onboarding (Figure 2).

Figure 2: Current Use of RPO Solutions

Source: Aberdeen Group, October 2011

Organizations are innovating the use of RPO solutions, and using them to solve specific business needs. And in fact, Aberdeen's 2010 RPO research found that organizations using RPO solutions for all or part of their recruiting needs were 12% more likely to be Best-in-Class. Users no longer need to get stuck on the "O" in RPO, thinking it's about handing over the

Fast Facts

Organizations using RPO solutions for all or part of their recruiting were:

√ 12% more likely to be Best-in-Class

And those who use RPO were:

√ 50% more likely to use RPO on an ongoing basis for specific elements of the HR process

http://www.aberdeen.com/aberdeen-library/6784/RA-recruitment-process-outsourcing.aspx



entire staffing function. Rather, it's a strategic tool that is used to solve for specific sticking points in the process, or for particular hard to fill roles or projects.

This idea of RPO as a tool to solve for key challenges in recruiting is supported by the top pressures cited as drivers of RPO investment. Just as shown in Figure 1 with the pressures driving overall recruitment efforts, companies are looking to their use of outsourcing to solve for:

• Sourcing and locating candidates with key skills

• Improving hiring speed and efficiency

• Increasing the volume of candidates to satisfy business needs

Figure 3: Pressures Driving Outsourcing in Recruitment

Respondents indicated the top two responses Source: Aberdeen Group, October 2011

Throughout this report, the data will show how companies are using RPO to achieve business results, and how to effectively manage these solutions to impact strategic outcomes.

The Case for RPO As stated above, organizations don't have to outsource the entire end-to-end recruiting function to get results, and the majority don't. But when compared to non-users, users of RPO solutions are improving the efficiency and effectiveness of recruiting efforts (Figure 4).

39%

32%

24% 23%

%

25%

50%

Trouble sourcingqualified

candidates to fillopenings

Consolidated /reduced resources

in internalrecruiting function

Trouble sourcingenough candidates

to fill openings

Need to hire morequickly

Perc

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, n=6

3

All Respondents



Figure 4: Impact of RPO - Improvement of Key Metrics


It is important to note that these metrics are about improving process as well as outcomes. The traditional business case for outsourcing is when a particular process can be delivered by an external provider with greater efficiency while maintaining quality, to improve quality while maintaining efficiency levels, or in the ideal situation, when both efficiency and quality are improved. In this study, organizations using RPO solutions are indeed seeing the best of both worlds. Not only is time to hire improved - and therefore the productivity loss due to an open position is lowered - but the candidates acquired are more likely to stay with the organization, and they are making both their managers and the organizations’ customers happy.

Among the organizations not currently utilizing RPO solutions, the number one reason cited (by 58%) was that the organization is satisfied with current recruiting performance. But given the focus on growth, the dispersed and diverse nature of many organizations today, and the ongoing need to manage costs across the organization, companies may want to consider if being satisfied is enough. Particularly if the business has hard-to-fill roles, scales up and down to meet project needs, or wants to improve critical pieces of the talent acquisition life cycle, RPO offers options to do so while maintaining and improving efficiency and results.

Elements of RPO For organizations currently outsourcing or looking to outsource particular pieces of the recruiting puzzle, the options are many. Figure 5 shows some of the most commonly highlighted elements of the recruiting process.



Figure 5: Elements Currently Outsourced


Many organizations struggle with the efficient and effective execution of any number of these key parts of the recruiting process. RPO solutions provide an opportunity to rethink how the organization delivers against those challenges. A provider can help with sourcing, building talent pools, screening or interviewing to help optimize the process. RPO providers can offer an organization access to specialized recruiting skills that may take too much time or cost too much to develop internally, freeing up in-house staff to focus on stakeholder engagement and hiring manager relationships.

Managing the RPO Relationship Given its evolving position as a strategic element of the hiring process, it makes sense that users are thoughtfully managing the relationship. Service Level Agreements (SLAs) are an important part of managing the RPO relationship. There are many elements that may be a part of the SLA, but it is important to consider what problem you are trying to solve when crafting the agreement. Figure 6 lists some of the most common elements organizations have in place now, and would like to add in future renewals.



Figure 6: SLA Elements


Having clear expectations of what the RPO provider can and cannot do for the organization and setting in place the right metrics to monitor performance is critical. Setting the right expectations with SLAs is an important place to start. In the next section, we will address the internal capabilities required to effectively manage an RPO relationship.

Capabilities Enabling Success The selective use of an RPO provider can have a powerful impact on an organizations ability to execute on strategic hiring needs.

Case Study — Chemical Manufacturer

Building a strong team takes chemistry. Filling key roles in the 19 North American chemical plants of this manufacturer requires the right blend of talent, skill, and know-how from its field of candidates. As one of the world’s leading producers of specialty chemicals, as used in automotive, electronics, and consumer goods industries (among many others), there is a strong need to improve the hiring process and the quality of workers brought into the plants.

At times, recruiting efforts have been stalled by weeks, even months, due to the inability of locating solid prospects in the available talent pool at its many locations. At crunch time, the organization often turns to its Recruitment Process Outsourcing (RPO) partners to close the deal for notching critical hires. When methods like local advertising and website postings return inadequate results, an RPO provider has proven the most reliable counterpart in finding the right talent.

continued

SLA Definitions

√ Position guarantees: Provider guarantees position will be filled for a certain period of time, and will replace in case of attrition

√ Time to fill: Provider guarantees position will be filled in a certain number of days from the day a requisition is opened

√ Candidate guarantees: Provider guarantees a certain number of interviewed / qualified candidates for each vacancy

√ Hiring manager satisfaction: Provider guarantees minimum scores in hiring manager satisfaction surveys

√ Candidate satisfaction: Provider guarantees minimum scores in candidate satisfaction surveys

√ Fill ratio: Provider guarantees a certain number of hires as percentage of vacancies (more applicable in high-volume environments such as call centers)

√ Diversity effectiveness: Provider guarantees specific diversity goals for candidates or hires

√ Turnover: Provider guarantees specific turnover ratio within a certain period.



Case Study — Chemical Manufacturer

“We find it to be a very effective measure when we’re pressed to fill an important role with a quality candidate,” said their operations director. “We find that an RPO partner who knows the industry and understands our needs will have the resources to produce candidates matching our qualifications, where and when we need them. By building solid relationships with the recruiting partner, it only contributes to their success of placing good people.”

Of the roughly 4,000 US employees the company estimates that half of the mid- to high-level personnel are obtained through recruitment process outsourcing. While the company typically doesn’t use RPO for recent college graduates or entry-level engineers, it has become a key tool for finding replacement hires in more senior, critical roles. “We don’t use RPO partners for sourcing when it comes to any of our hourly employees,” says their operations director, referring to plant operators and mechanics. “But when it comes to maintaining the talent pool to bring in senior people like our engineers, it requires a different approach.”

For this organization, it’s a matter of brand. “The problem with that is that our brand doesn't a high level of visibility,” said their operations director. In order to help find the right talent that may not know the brand well enough to be knocking down the door, they turn to an RPO partner. “We need quality talent, and we typically need to find it quickly. Bringing in a strong resource ultimately improves business and returns greater profits, justifying the investment in the hiring process.”

Aberdeen Group analyzed the internal capabilities of surveyed companies to understand the skills, capabilities and processes required to effectively manage an RPO relationship. These characteristics are broken down into three key categories: (1) process (the approaches they take to execute daily operations); (2) organization (corporate focus and collaboration among stakeholders); and (3) performance management (the ability of the organization to measure its results to improve its business). These characteristics (identified in Table 1) serve as a guideline for best practices.

Table 1: Capability Framework

Best-in-Class

Process Solicit feedback from hiring managers and / or other stakeholders on the process

69%

Organization

Assign a dedicated resource to manage the relationship with the RPO provider

68% Before outsourcing, define recruitment process pain points that need to be addressed

65%



Best-in-Class

Performance

Regularly assess vendor performance 71%

Detailed SLAs are defined and in place that detail the organization and provider responsibilities

66% Before outsourcing, gain clear understanding of when and how RPO will improve business performance

60%

Service Level Agreements (SLAs) have built-in penalties in the event the RPO provider does not meet expectations

58%


It's not surprising that the majority of the top capabilities fall into the performance management category. Given the nature of RPO as an outsourced service, managing expectations and results is critical to success. But there are other important steps organizations must undertake in order to make the most of an RPO relationship.

Process Hiring managers play a huge role in the recruiting process, so involving them and helping them see the benefits of an RPO solution is critical. If hiring managers are not having their needs met, it doesn't matter how much time or money an RPO provider saves - it simply isn't driving value. And like any recruiting process, feedback from hiring managers and other stakeholders in the hiring process is essential. Hiring manager satisfaction with how the process is working for them, as well as with the results of that process - namely, the new employee and their performance - is the first place organizations should look when launching or evaluating an RPO initiative.

In addition to the 69% of organizations with this capability in place, 55% have a process in place to allow the RPO provider to meet with the hiring managers and work with them to define core competencies required by the role. Defining the core competencies required for a role was second only to improving visibility into candidate status in the hiring process among Best-in-Class organizations in the 2011 Talent Acquisition study (81% vs. 79%). Competencies and competency frameworks are a common and effective way for organizations to gain a clearer understanding of a role and to provide a way to screen for the skills, behaviors and attributes required by a role.

Organization The most cited organizational capability is all about oversight, and having a dedicated resource to manage the RPO relationship. In 42% of the organizations studied that currently use RPO services, the person with primary responsibility for managing the relationship is the HR leader.

Best-in-Class Definition

In Aberdeen’s September 2011 report The Talent Acquisition Lifecycle, the following key performance indicators were used to determine the Best-in-Class for hiring practices, with top performers achieving impressive results:

√ 95% of first-year employees were retained

√ 82% of employees hired in the last 12 months met first performance milestones on time

√ 16% year-over-year improvement in hiring manager satisfaction

Maturity Framework:

√ Best-in-Class – top 20% of aggregate performance scorers

√ Industry Average – middle 50% of aggregate performance scorers

√ Laggard – bottom 30% of aggregate performance scorers


http://aberdeen.com/Aberdeen-Library/7142/RA-talent-acquisition-management.aspx

http://aberdeen.com/Aberdeen-Library/7142/RA-talent-acquisition-management.aspx



Another 25% cite the recruiting or staffing lead as holding the responsibility, with the rest citing a mix of line leaders or other functional department heads. In addition, 74% of users indicate that the decision to outsource recruiting was made centrally. Having a point of contact internally and externally to manage the relationship is an important element to ensuring smooth execution.

Another key organizational decision is to define the recruitment process pain points that need to be addressed. Without a plan and a clear picture of the problem it will be hard to prove the value of RPO as a solution. Think about where the organization may have weak points in the process, or where there are critical roles in which vacancies will have a significant impact. For these roles in particular, it may be worth considering an RPO partner to help source, build talent communities, or even manage the whole hiring process. Aberdeen's latest Talent Acquisition study found that Best-in-Class organizations are 57% more likely than Laggards (72% vs. 46%) to indicate that the job roles deemed most critical to organizational success, those roles that have the greatest impact on revenue / profit, have been identified. This is critical because those roles are the ones where the deepest talent pool must be developed. If you rely on a strong sales force, a particular professional expertise, or a specific trade, building that pipeline of ongoing relationships with potential candidates for those roles will help manage business risk. Any day vacant in a critical role, or spent ramping up a new hire that isn't an ideal match to the job, can cost an organization. Companies with this capability saw three times the improvement in customer retention (6% vs. 2%) and two times the improvement in customer satisfaction (6% vs. 3%) over those without it, in addition to allowing for greater achievement of overall goals, and improved new hire performance and engagement (Figure 7).

Figure 7: Impact of Identifying Critical Roles

Source: Aberdeen Group, August 2011

39%

33%

26%

51%

44%

38%

0%

20%

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60%

Organizational goalsachieved

New hires meeting timeto performance goals

New hires highly engaged

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Have Identif ied critical job roles

Have not identif ied critical job roles




Performance Management Managing the relationship and evaluating the performance of the RPO provider is the most cited capability among RPO users. It is somewhat shocking that 29% of RPO users have no regular performance assessment process, but among those that do, 58% indicate that they evaluate it at least quarterly. An RPO relationship, like any relationship, cannot be left unattended for too long, or it may not be providing value as had been designed.

The most common way organizations and solution providers set expectations when and how RPO will improve business performance, as well as monitor performance is through SLAs. SLAs can take many forms, but as Figure 8 shows, organizations must have in place some key capabilities in place to create, implement and manage them.

Figure 8: SLA Capabilities


No matter what form they take, taking the time to establish expectations, requirements and consequences will help ensure both sides of the RPO relationship know what they are getting into and how success will be defined.

Where RPO Can Help Given that RPO solutions are in and of themselves an enabler, it is helpful to look at just where companies are applying this enabler and to what ends. When asked which job roles the organization was outsourcing recruiting for, 60% cited front line and / or mid-management; 57% experienced individual contributors; and 52% of respondents cited executive / senior leadership, experienced hourly positions, and entry level hourly positions. Often RPO is thought of as a tool for high volume, hourly positions, and it



can have great benefits there. But clearly many organizations are also finding value in working with an RPO provider to support all or some of the hiring process for more senior levels too. And there is good reason for this, particularly at the experienced hires and front-line leadership levels. As Figure 9 shows, organizations are highly satisfied with the hires their RPO partners are supplying them at levels up and down the organization.

Figure 9: Satisfaction with RPO Provided Hires


There are clearly many ways to make RPO a useful part of the overall talent acquisition strategy. By highlighting the various roles and levels RPO providers can address, the various components of the process that can be broken out or brought together by a provider, and being mindful of the internal planning and management required, organizations can achieve Best-in-Class performance through an effective partnership.

Key Takeaways Whether a company is just beginning to explore the possibility of an RPO relationship or is looking to expand and improve its partnership, a few key points should be kept in mind:

• Do the internal work before looking to a provider. Like any other tool, technology or solution, RPO is only a benefit when the work to understand how it fits into the broader talent acquisition process is done first. Engaging with an RPO won't instantly solve all of an organization's recruiting problems. But approaching a partnership with a clear picture of desired outcomes, current progress, and defined accountabilities can be a step in the right direction. Involve the right stakeholders, define pain points, and set clear SLAs to guide ongoing performance conversations.



• Rethink recruiting and rethink RPO. Recruiting is a big world, containing everything from sourcing and branding to interviewing and offer negotiation. It's hard for any one company or any one person to be expert in all of those areas. Rethink how the organization wants to spend its precious recruiting resources, and decide if outsourcing certain roles, projects, processes or the end-to-end function may be a benefit to the HR organization and the business as a whole.

• Manage performance and measure outcomes. RPO is a solution from a provider, and its ongoing success must be measured. Put in place the right resources to ensure oversight, evaluate the impact on hiring managers, employees and candidates, and make sure all participants internally and externally are living up to expectations. Know what metrics you expect the RPO provider to impact and provide visibility into results.

Recruiting is an important part of an organization's identity and its talent strategy. Top performing companies should be, and are, looking for new ways to differentiate themselves in today's fiercely competitive talent marketplace. Leveraging the reach, skill, tools and expertise of an RPO provider is something any company should consider as they look to continually improve the return on their talent acquisition investments.

For more information on this or other research topics, please visit www.aberdeen.com.

Related Research

The Talent Acquisition Lifecycle: From Sourcing to Onboarding; September 2011 Employee Screening Strategies; August 2011

The Engagement / Performance Equation; July 2011 Outsourcing Recruitment Is Not Evil: RPO Builds Its Business Case on Flexibility, Scalability, and Outcomes; November 2010

Author: Mollie Lombardi, Research Director, Human Capital Management ([email protected])

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This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. (2011a)

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mailto:[email protected]



Featured Underwriters This research report was made possible, in part, with the financial support of our underwriters. These individuals and organizations share Aberdeen’s vision of bringing fact based research to corporations worldwide at little or no cost. Underwriters have no editorial or research rights, and the facts and analysis of this report remain an exclusive production and product of Aberdeen Group. Solution providers recognized as underwriters were solicited after the fact and had no substantive influence on the direction of this report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.

Advantage xPO is a leading provider of consultative workforce management solutions and an operating company of Advantage Resourcing, one of the largest human capital management firms in the world. Advantage xPO delivers best-in-class talent acquisition solutions to organizations around the world. With over 25 years of experience and a solid operational platform, Advantage xPO utilizes proven best practices and industry expertise to deploy leading solutions in Recruitment Process Outsourcing (RPO), Contingent Workforce Management, Business Process Outsourcing (BPO) and Contractor Compliance. Advantage xPO was recently ranked as the #3 RPO Provider within the Mid-Market and Project/On-Demand category in HRO Today’s 2011 Baker’s Dozen.

For additional information on Advantage xPO:

Advantage xPO

600 West Van Buren Blvd, Suite 710

Chicago, IL 60607

Telephone: 312.529.3030

www.advantagexpo.com

[email protected]

http://www.advantagexpo.com/




The RightThing, An ADP Company, is a premier recruitment process outsourcing (RPO) provider. Harnessing the power of unmatched proprietary technology, The RightThing continues to lead the industry with innovative, scalable solutions that help clients find, recruit, hire and retain top talent. Dedicated to recruitment leadership, technology and outsourcing, The RightThing offers recruiting solutions to small, medium and large organizations serving many of the world's leading companies. The RightThing is also parent company to AIRS, the leading provider of recruitment training. For more information, visit http://www.rightthinginc.com. For additional information on The RightThing:

The RightThing, An ADP Company

3401Technology Dr.

Findlay, OH 45840

Telephone: 800.466.4010

www.rightthinginc.com

[email protected]

http://www.rightthinginc.com/

http://www.rightthinginc.com/




Kenexa® is in the business of improving companies and enriching lives. With every person we recruit, every assessment we administer, every technology solution we deliver, every survey we conduct, every leader we develop and every compensation strategy we support, lives are impacted by our craft. And because business relies on metrics, we rely on measurable outcomes that prove we’ve helped companies become better. We believe relationships are personal bonds that are as fragile as they are strong. That’s why we strive to build trust from the beginning of the relationship and then keep it. To us, business is personal.

For additional information on Kenexa:

Kenexa

650 East Swedesford Rd., 2nd Floor

Wayne, PA 19087

Telephone: 610.971.9171

www.kenexa.com

[email protected]

http://www.kenexa.com/




Adecco RPO leads the recruitment process outsourcing industry in terms of scale, size, flexibility, customer service, and customer satisfaction, and in 2009 Adecco RPO was recognized the #1 RPO in the industry by Datamonitor (Orbys Book of Sourcing). In 2010 Adecco RPO was ranked second on HRO Today’s Baker Dozen list of RPO firms, having been ranked for five consecutive years. Our pledge to quality enables us to move beyond the “average” RPO service provider paradigm and become our RPO customers’ trusted advisor. Adecco RPO has built a formidable recruitment powerhouse that is responsible, on average, for making one new hire every seven minutes on behalf of our clients, touching more than 60,000 new hires on an annual basis.

For additional information on Adecco RPO:

Adecco RPO

336 N. Superior St., Suite 200

Toledo, OH 43604

Telephone 1: 419.720.0111

Telephone 2: 617.304.6509

www.adecco-rpo.com

[email protected]

http://www.adecco-rpo.com/


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