Know Your Recruitment Process Outsourcer (RPO)
For more than 25 years, Recruitment Process Outsourcing (RPO) has played a significant role in talent acquisition — particularly within the Consumer Packaged Goods Industry.
Recently, we sat down with Linda Lutton, Project Leader, U.S. Delivery for Futurestep, A Division of Korn Ferry and market leader in RPO. We discussed the relevance of recruitment process outsourcing in today’s economic climate.
A Brief History of RPO☨
The concept of an employer outsourcing the management and ownership of all or part of the recruiting process was first realized on a consistent basis in the 1970s. The first RPO programs typically consisted of companies purchasing lists of potential candidates from RPO vendors. This “search/research” function, as it was called, generated names of competitors’ employees for a company, and served to augment the pool of potential candidates from which that company could hire.
Over time, companies began to examine how they might reduce the growing expense of recruitment fees, and towards this end, explored the various steps in the recruiting process with an eye toward outsourcing those portions that they had the greatest difficulty with, and that added the greatest value.
Business in general increasingly embraced the concept of outsourcing, and RPO began to gain favor among human resource management. Not only did RPO reduce overhead costs, but it also helped improve a company’s competitive advantage in the labor market.
Meanwhile, throughout the 1980s and 1990s human resources (HRO) outsourcing was becoming more commonplace, and as firms increasingly relegated such traditional HR tasks as benefits administration, on boarding, taxes and payroll to outside firms, the concept of outsourcing the recruiting function, a significant cost of HR, gained acceptance as well.
The red-hot labor market of the mid-to-late 1990s gave RPO a significant boost, and in the early 2000s, more and more companies began outsourcing major portions of their recruiting activities to sophisticated RPOs capable of fully assuming the ownership and management of their corporate clients’ recruitment processes and associated business results.
CPGJ: Let’s start with the basics. Can you give us a definition of today’s RPO?
LL: Recruitment Process Outsourcing (RPO) is a form of business process outsourcing (BPO) in which an employer transfers all or part of its recruitment processes to an external service provider. An RPO provider can provide its own or may assume the hiring company’s staff, technology, methodologies and reporting. In all cases, RPO differs greatly from providers such as staffing companies and contingent/retained search providers in that it assumes ownership of the design and management of the recruitment process, as well as the responsibility for the results of these efforts.
CPGJ: Why would a company hire an RPO?
LL: Hiring an RPO is a strategic decision, but the value and benefits RPOs bring to their clients are quite tangible and direct. These benefits include:
- Improved scalability / flexibility
- Improved speed and quality of hire
- Direct alignment of the HR function with the business strategy and goals
When considering working with an RPO, organizations should begin by asking themselves some important questions including:
- Are you satisfied with how your recruitment strategy addresses the goals of your business?
- Do you have sufficient resources to meet your recruitment needs without depending on agencies?
- Are you concerned about candidate quality, or your ability to upgrade talent while the market allows?
- Do you have a handle on the ongoing costs associated with your recruitment efforts?
- Are you confident of your ability to meet any changes in the company’s recruiting goals?
If you are answering “no” to any of these questions, RPO may be an option worth considering.
An RPO relationship is advantageous for clients that, for a variety of reasons— whether it be physical location, distributed staffing needs, or competitive environment— are unable to access candidates with the expertise and background they need from the local talent pool. RPOs, with their broad networks of resources and passive candidate pools, work particularly well in these types of situations.
So, I would say that among other factors, any organization that is concerned about costs, quality or the scalability of their recruitment efforts or is facing a dearth of local, experienced talent is one that will see tangible benefits in working with an RPO.
CPGJ: When we talk about RPO, we tend to think of the very largest corporations. Is this an accurate picture? What types of companies most benefit from working with an RPO?
LL: While there is a common definition of “RPO”, there really is no single formula. This is because RPO as a practice has matured to the point where it can be tailored to the needs of many different kinds and sizes of organizations. Certainly the company that is looking for high-volume hiring across a broad variety of locations will benefit from an RPO, but so can a company that is recruiting a harder to find high-level manager, or highly specialized, skilled positions in particular departments or areas.
Regardless of the size of the company, a well-planned and executed RPO can deliver important advantages for addressing key talent acquisition challenges including:
Strategic Recruitment Needs: RPOs offer a strategic approach to recruitment as opposed to focusing simply on the need to “fill seats now.” An RPO is great at setting the stage for long-term value, including making the business case, getting everyone on board, and rolling out the program.
Variable Recruitment Needs: RPOs are able to ramp up or scale back based on changing economic or seasonal needs. We have a large global client in New Zealand and Asia Pacific, for example, that routinely needs to scale up its recruitment to fill specialized needs during certain times of the year for production and distribution of its products.
Employment Branding: The perception of a company in the eyes of both its employees and candidates is critical to its ability to hire. A good RPO provider is dedicated and responsive, and will usually go a long way to support an employer’s brand in a way that fits the realistic expectations of its candidate audience. Employment branding is more than messaging, a great career website etc. It’s about candidate experience and understanding where and how to target the people whose values and needs match those the company has to offer.
Broad Recruitment Resources and Technology: RPOs have dedicated resources that would be impractical for the company to maintain itself; or in many cases the RPO will have the ability to rapidly integrate its processes with those of the client.
CPGJ: You’ve touched on the benefits of RPO. Can you say a little more about the specific kinds of services RPOs bring to their clients?
LL: Well, each RPO service provider offers specific strengths, but the most mature solutions have capabilities that extend across critical areas of recruiting success, including:
Strategy and Planning – Workforce Planning, Employment Brand Development, Reporting Strategy, Planning and Execution, Process Assessment and Optimization
Competency-Based Tools and Resources – Job Profiling, Competency Modeling, Interview Tools, Candidate Assessment
Technology – Employment Background Screening, E-Reference Checking, Best-in-Class Applicant Tracking, Applicant Tracking System Administration, Training and Reporting, Tax Credit Processing, Custom Candidate Career Portal, Compliance
Service and Delivery – Recruiting Program Design/Management, Full-Lifecycle Recruitment/Management, Project Management With Continuous Improvement, Internal Mobility, Employee Referral Management, and University Recruiting.
In addition, some of the more forward-looking providers offer capabilities that touch on all aspects of recruitment. For example, our organization draws on proven competency based tools and resources. These resources provide the foundation for best practices in job definition and competency modeling, as well as tools for interviewing and candidate assessments.
CPGJ: Do organizations tend to outsource particular areas of HR practice to their RPO?
LL: The typical areas that are outsourced include: sourcing, recruiting, selection and assessment, administration, and on-boarding. Technology systems (including the Applicant Tracking System (ATS) and the corporate career website) are also sometimes handled by the RPO.
In many cases, RPOs actually network on behalf of their clients beyond sourcing and recruiting by conducting phone screens, interviews on site, attending job fairs and other activities. From a candidate’s perspective, this integration is seamless and they are never aware that they are dealing with a representative of the hiring firm’s RPO.
The best RPOs function as consultants to their clients in areas that include planning for the RPO, and strategic HR leadership functions like workforce planning, change management, development of the employment value proposition, etc.
CPGJ: What should clients look for when “shopping” for an RPO partner?
LL: In my experience, the key factor in choosing a RPO company comes down to one core thing: true partnership. An RPO relationship built on a foundation of true partnership with each company working cooperatively to make recruiting a success can last for years. This partnership can expand beyond the business of recruiting to linkages in training and development, workforce planning and marketing, to name just a few. Companies should always look for a strong RPO partner that listens and responds to their needs, that integrates best practices in the industry, and that possesses the willingness to evolve as business needs change.
CPGJ: Can you explain how organizations typically measure the performance of their RPO relationship? What are the key success measures?
LL: Well of course client success measurement criteria are as varied as the clients themselves, but I can say that each Futurestep RPO is customized to the needs of the client. Because we have RPOs that are international, we look at measures that support specific business goals across borders. Typical areas for key success measures include: process, cost per hire, manager compliance, OFCCP/EEO compliance, talent pool, (quality, development), time to hire and quality of hires.
CPGJ: How has the increasing influence of professional online social networks influenced the work of RPOs?
LL: Well certainly I would say that online social networks have effected Futurestep RPO clients in the same way it has any business. We have focused on the best ways to effectively utilize these networks while staying open to new technologies. The challenge is how to integrate technology into the day-to-day business of recruiting and optimizing the technology to best fit the business. We do work directly with many of the professional online networks as well as assist our clients in understanding and utilizing these tools for their recruitment and employment branding efforts.
CPGJ: There has always been a lot of discussion in the industry about recruitment of passive versus active candidates. Can you address how RPOs assist clients with each of these candidate groups?
LL: A strong provider has the resources and experienced staff to help clients identify the best talent in the industry to fill positions. That includes building talent pools of both active and passive candidates to pull from, reaching out to candidates who might not have considered a particular company for employment, or who are gainfully employed and have not considered a change.
The Futurestep team is comprised of recruiters who have extensive passive candidate development experience and are highly networked in their specialty industries. In many ways, the approach to this type of recruiting is dependent on the expectations of the client and the types of positions being filled.
CPGJ: Many CPG companies are currently using or are considering using RPO. Do CPG companies have unique needs or concerns?
LL: There are tremendous potential benefits for CPG industry companies who use RPO. Recruiting is probably the most painful area of business operations for most companies and as companies grow larger, that pain only increases. CPG companies in particular are constantly faced with really tough hiring challenges.
Very often they must hire experienced field sales personnel far from their corporate offices, and even across many national borders. They hire marketing personnel from a variety of disciplines— from brand management to product management- two very different functions in CPG. IT people with skills specific to the technologies used in CPG can be tough to recruit.
The experience these people bring to their jobs is quite specialized in the industry and the hiring decisions are very strategic. Searches must be conducted nationally and even internationally and this can be very difficult for internal human resource staffs to handle. For these reasons, the RPO value proposition can be particularly beneficial for CPG companies.
CPGJ: Can you explain how you work with companies like CPGjobs when performing services for your clients?
LL: We look for the strongest and best partners when working on behalf of clients, especially in the areas of advertising positions and professional networking.
CPGjobs is quite well aligned with what we do because when it comes to the consumer packaged goods industry, Michael Carrillo and his staff are all about networking and building relationships. This is a very strategic way to work on behalf of clients and focuses on building long-term value, not just completing a credit card transaction for a job posting. Providers like Michael who focus in the niche markets of the clients that we serve are an important part of the value an RPO provider offers its clients.
Of course, no one provides all of the pieces to the puzzle. But CPGjobs has a talented, loyal pool of candidates and does things for candidates that no one else is doing; building a true niche career networking service for high quality CPG-experienced candidates.