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The Cold Hard Truth About the HR Revolution

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Posted by Matt Rivera

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January 30, 2015

forcasting_a_storm-1-742710-editedWe are all doing more work with fewer resources. In the U.S., worker productivity continues to grow at an annualized rate of 3.2 percent according to the latest figures. That is a good thing, but it means companies, departments, and employees have to be continually reinventing themselves, thinking about new ways to get the work done.

The HR department is no exception. According to the Society for Human Resource Management (SHRM), median HR staff sizes have held steady from 2009 through 2012. HR is doing more with the same (or with less) -- automating repetitive tasks, concentrating on activities that have a strategic impact on the organization, and looking for ways to reduce costs.For example, the changing nature of recruitment -- in a contradictory “jobless recovery” where companies nonetheless find it difficult to fill essential positions -- is leading companies to take a hard, new look at Recruitment Process Outsourcing, orRPO companies. In many ways,RPO recruiting is more vital today than ever before, as it has morphed in response to the changing nature of work and the workforce.

The recession was a wake-up call for many companies. “Companies learned the hard way that a fixed in-house recruiting model is really expensive,” said Andy Roane, Vice President of RPO at Yoh.

“If you have 30 recruiters in your organization, and you have a fluctuation in the number of requisitions you have open, you are either going to strain your organization, because you don’t have enough recruiters, or you are going to be inefficient, because you have too many.”

“On the other end of the recession,” continued Roane, “companies found it difficult to rehire recruiters and scale up when they needed to hire more people.”

Reapproaching HR with Efficiency 

Companies are becoming increasingly sophisticated in the way they approach efficiency. Every aspect of a company’s business process is now open to question: Is it part of our core competency? Is it cost-effective for us to do this ourselves? Is it better to let someone else do this and focus our resources on something more strategic?

RPO services are getting a new look because it gives companies the ability to variabilize their cost structure, paying only for what they need to meet their current workload. It also offers compelling economics compared to more traditional approaches to outside recruiting, such as working with a recruiting agency. RPO services can be as little as 60 percent of the cost of working with an agency, and an RPO partner is focused on achieving the client’s business goals, not just making a fee off a quick hire.

Of course, most RPO companies are about improving time, cost, and quality, but RPO also provides significant strategic benefits, where using RPO has enabled a company to do something it wasn’t able to do before:

  • Finding the golden egg. There are times when there are only five or six people worldwide who could fill a very specialized role – and to find that talent, traditional recruitment tactics have to be turned on their head. Through RPO, companies are able to leverage the network, time, and resources of an outside recruiter, one with expertise in finding experts. See this month’s article on “Good egg or golden egg: The secrets to recruiting one-of-a-kind talent.”
  • Focus away from recruitment to more strategic HR issues. Five years ago, one of our clients had HR business partners in every one of its major locations and remote plants, and they were all responsible for recruiting. In fact, recruiting took up so much of their time that the HR business partners couldn’t do anything else but recruit. Turning the recruiting functions over to an RPO provider freed up the overworked HR business partners and allowed them to focus on strategic issues like employee engagement and retention. See the article “How RPO saved post-recession recruiting” for more on this.
  • Focus on process, methodology, and accountability. Organizations are starting to understand that recruiting is a pipeline development process, one that can and should be under continuous improvement. With process comes method, and with method comes accountability. RPO enables companies to leverage best practices across industries, a viewpoint that can only be taken by fresh eyes from outside the firm. The service level agreement (SLA) with the RPO provider enables both parties to pay attention to improving the process of talent sourcing. Read the article “RPO: Recruitment Process Productivity Outsourcing for details.

The Proof is in the Process

This last point -- process, methodology, and accountability -- offers the greatest strategic opportunity in the use of RPO services. As Roane explained, “For many companies, the number one issue is simply a lack of visibility into what actually happens in the recruitment process. This comes down to data. If you don’t have the data, you can’t measure, you can’t manage, and you can’t make it more efficient.” Roane shared the client story profiled in the article “RPO: Recruitment Process Productivity Outsourcing,” where understanding the data behind the recruitment process enabled a company to cut 12 days from its handling of every candidate. “If you are able to reduce time-to-fill, that can make a real contribution to the bottom line.”

There are many times when process can serve as a competitive differentiator, something that brands the company in the minds of potential candidates as a great place to work. Everybody complains about companies that are “resume black holes,” where candidates send in resumes and never hear back. One thing top RPO companies institute early on in a lot of RPO engagements is a candidate disposition system, so that candidates can see where they are in the process and ensure proper follow-up. This keeps candidates warm too when a decision hasn’t been made. In today’s business climate, when many of the best candidates are passive candidates who are not actively looking for work, having a good experience throughout the hiring process can help make a candidate choose to make a job switch. RPO is not a new approach to managing talent acquisition, but the changing economy is leading many companies to take a renewed look at RPO. RPO, as well, has changed to keep pace with today’s business world.

“RPO has become much more fluid, much more based in the idea that a client’s needs can change in a moment’s notice,” said Alison Citti, Vice President of RPO Client Services at Yoh. “In the past, RPO was strictly for direct hire and almost always exclusive.” Citti explains that companies now often use an RPO process for contingent and temporary labor requisitions. It’s also increasingly common for companies to outsource the recruiting of people for different functions or levels to separate RPO companies.

“Great companies look at the RPO relationship as a true partnership in every sense of the word,” concluded Citti. “When they as the talent acquisition leader are given a task or goal, or are asked to rise to a challenge, they should have the confidence to look straight to their RPO partner to help make it happen.”

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