An RPO SWOT Analysis
Using a Recruitment Process Outsourcing (RPO) firm to outsource your hiring is something to be seriously considered when stepping up your recruitment efforts. However, it is important to choose the right RPO or the results may not be what was expected going into the deal. RPO providers have strengths, weaknesses, opportunities, and threats like every other aspect of business.
In choosing the right RPO, you will have some major strengths to consider. RPO firms typically lead to large cost savings; for example, Hire Velocity can drive down your recruiting costs by as much as 50%. Not only that, but outsourcing all or some of your recruiting efforts allows your recruiters and hiring managers more time to focus on other important business functions. It also provides your business the ability to scale up or down as needed gaining a flexible recruiting advantage. Another strength of using an RPO firm is the speed and quality of recruiting. An effective RPO can reduce your time-to-hire and fill those open positions faster. But filling open positions faster should not affect the quality of the candidates. Reputable RPO firms will be able to deliver qualified, available, and interested candidates for your open positions. RPO providers are process driven and leverage Service Level Agreements (SLA) to measure, reward and sometimes penalize based on attainment of results. The SLA is such an important part of the RPO process because it details the expectations, objectives, needs, numbers, procedures, and quality of the candidates.
While there are numerous strengths for using an RPO, there can also be weaknesses if the right firm is not chosen. It is important to meet with the RPO and ensure that the partnership is a good fit since it will become an extension of your team. Choosing an RPO that cannot deliver on what you expect can cause it to have a negative impact on your business. It is important to look at the experience that the RPO firm has. For example, Hire Velocity has over 70 years of recruiting leadership on our team and the client list includes Fortune 500 retailers, private to public healthcare companies, Fortune 1000 telecom companies, and Fortune 100 technology companies.
Using an RPO can also have its opportunities. In general, RPO firms have a proven record for high hiring numbers across the industry. Organizations that have previously used a reputable RPO firm can attest to the positive results achieved during the partnership. The partnership created during the RPO experience is another opportunity for an organization. When requiring fast and cost-efficient hiring in the future, the partnership that was created with the RPO in the past will allow for a quick start to the recruiting requirements and ensure successful results based on previous experience with the organization.
As with any other business task, there are threats involved. One of the initial threats is finding that the organization and the RPO do not have a partner relationship. Again, this goes back to meeting with the RPO and making sure there is compatibility before choosing it. Additionally, a well thought-out SLA will provide guidance and avoid one party being unhappy with the partnership.
RPO SWOT
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The Importance of RPO Service Level Agreements
Choosing a Recruitment Process Outsourcing (RPO) firm to outsource your hiring needs is a great choice when you’re focused on maximizing financial and operational results. To maximize the benefits of using an RPO, it is important to have a well-formulated Service Level Agreement, or SLA. An SLA is an agreement between the customer and the RPO that specifies expectations, objectives, needs, numbers, procedures, and quality of the candidates. This agreement is developed before the RPO begins working on the recruiting tasks and is the backbone of the partnership that is about to begin.
The SLA guides the success of the partnership between the internal recruiter and RPO. It helps guide the RPO to understand what types of candidates the customer is looking for, the process that will be used and the key metrics for success. By having these specific details outlined, the RPO will be able to work more efficiently and achieve better results.
The SLA can also be used as an incentive for the RPO to meet the outlined goals. By basing the part of the RPO’s compensation on meeting the goals, it will ensure the best results because the compensation is based off of the final result, their performance.
The typical RPO SLA is made of seven sections:
- Objectives and Needs Assessment – Defines exactly what the customer is looking for and what the final result should achieve.
- Scope Statement – Summarizes what process and methods that will be used to source and screen the candidates.
- Pricing and Cost Estimate – Outlines how the pricing works and the cost per resume, cost per qualified submission, or cost per hire.
- Organization Chart – Establishes the roles and responsibilities of each contributing member on each side.
- Measurements and Metrics – Discusses how performance will be measured and monitored.
- Work Schedules and Communication – Describes the expected hours of operation and how the two parties will communicate.
- Response and Escalation – Creates a communication plan for issues
Resources:
Anapol, Stan. “Recruiting Process Outsourcing: Using a Well-defined SLA and KPI to Engage the Right Vendor and Set Correct Expectations..” HR Management n. pag. Web. 9 Nov 2010. <http://www.hrmreport.com/article/Recruiting-Process-Outsourcing–Using-a-well-defined-SLA-and-KPI-to-engage-the-right-vendor-and-set-correct-expectations/>.
Research and Recruiting
Filed under: Recruiting, Recruiting Update, Services
Recruiting quality talent requires a great deal of research. Unfortunately, finding the right person for the job is not as easy as picking a random resume from a pile and giving the person a job. Performing these research tasks take time and effort, especially when you are targeting specific competitive companies to source from. When researching candidates from competitive companies, there are two services that Hire Velocity offers.
Name Generation is the first option offered by Hire Velocity. With Name Generation you specify competitive companies that you think will have the talent you are looking for. Upon getting this information we immediately begin researching to find candidates that meet the required job specifications. Hire Velocity uses a wide variety of search tools including job boards, social media, cold calling, and our proprietary tools. Leveraging our search tools, we identify the names, phone numbers, and emails of qualified candidates. The final product is a list of qualified candidates from the competitive companies you specified.
In addition to Name Generation, Hire Velocity also offers Talent Mapping. Similar to Name Generation, we research candidates that meet the required job specifications in competitive companies that you specify. Again, we use our search tools to identify the names, phone numbers, and emails of qualified candidates. Talent Mapping takes Name Generation to the next level and maps these names into the company’s hierarchy. This service can be extremely useful to visually see the hierarchy of the candidates. This service entails an even heavier load of cold calling and research to map names, but the results can be quite valuable to your recruiting efforts.
Cost Per Hire
While calculating cost per hire (CPH) is not an exact science, it can be a valuable instrument that gives insight into the cost of the hiring process for various positions and do some comparisons. Cost per hire can also allow companies to evaluate how effective they are with various sourcing strategies in the hiring process. However to be most effective, a company should look at all of the factors that contribute to the cost per hire.
Many contributing factors have to be considered when calculating the cost per hire of an internal recruiting team. The first factor is the recruiter who is a fixed cost since he or she is an employee of the company. Then hardware related costs have to be added in such as the computers and the telephones. Expenses to get the word out about open positions like job fairs, job boards, referral bonuses, and the applicant tracking system will also need to be added into the cost per hire calculation. Finally add in training, on-boarding, and turnover costs. Once all those costs are added up, the total cost per hire can be determined. This total cost per hire is essentially the same whether a company is hiring an inexpensive person or an expensive person because it is the same person doing the recruiting. When recruiting internally, it is also important to remember that the recruiter is a fixed capacity so he or she cannot handle any surges in hiring.
The alternative to recruiting internally is using a recruiting agency for hiring needs. The cost per hire with a recruiting agency should encompass most of the items that are calculated into the cost per hire of using an internal recruiter
One option is using a contingency firm, who gets paid only when someone is placed into a position. Contingency firms typically charge 15- 30% of salary. This means if a company is hiring an employee who will be paid $50,000 a year, the contingency firm will charge between $7,500 and $15,000 per hire. This can be a very hefty fee. The other option is to utilize a recruitment process outsourcing (RPO) firm. An RPO allows companies to outsource a part of the recruitment process or the entire recruiting function. RPO’s typically result in a cost per hire of 5 – 10% of salary compared to the 15 – 30% that a contingency firm charges. Using the same $50,000 salary as before, an RPO would typically result in a cost per hire of $2,500 to $5,000. Even by comparing the lowest CPH for a contingency firm with the highest price for an RPO, there is a minimum savings of $2,500 over a contingency firm.
When a company is faced with any level of volume hiring, the savings to the firm with an RPO exponentially increase. This is one of the areas where real value is delivered. Think of the cost savings of using an RPO versus a contingency firm to hire, for example, five sales personnel with $50,000 salary. This could be a savings of $7,500 to $50,000!
Utilizing an RPO such as Hire Velocity, a company can achieve a more cost effective cost per hire while delivering flexibility and scalability in meeting hiring needs…especially in this market when many internal recruiting teams are at their smallest size. Additionally, the RPO helps the company avoid any of the fixed cost elements of the Cost per Hire calculation.
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A New Way to Look at Cost Per Hire
Should you bring on a contract recruiter or let an RPO manage for you?
Recruitment Process Outsourcing, also known as RPO, involves a company turning all or some of its hiring duties over to an external company. The external company, an RPO, has the task of finding a specific number of employees using a list of specific needs and a timeframe set by the company. For example, Hire Velocity was tasked with hiring over 900 assistant store managers and bi-lingual sales consultants over the period of 12 months for a major telecommunications company. Hire Velocity saved this telecommunication company about $260 per hire made, saving the company a total of about $236,340.
Many companies are left wondering whether it would be best for them to do the hiring internally, through the use of a contract recruiter, or use an RPO to do some or all of its hiring tasks. The company needs to ask itself if it can handle the increased workload of hiring a large amount of employees in a specific time frame. It is important for the company to consider all of the steps in the hiring process. The first step is active sourcing and screening, which is manually going through its applicant tracking system, job boards, and social networks to find potential applicants. Then the company must screen every applicant to ensure that they have the skills, education, and experience that the company is looking for. These two steps alone can often be overwhelming for a company that is looking to hire a lot of qualified candidates in a specific time frame.
This is where an RPO can help relieve the stress of mass hiring from a company. A company can choose to have an RPO do some of the hiring tasks, called RPO On-Demand, or have the RPO take over the whole hiring process, called Enterprise RPO. For example, a major home improvement store company hired Hire Velocity to do diversity sourcing and screening. Hire Velocity used its resources, including over 200 job boards and 5,000 content partners, to source potential candidates using the needs and wants of the company. Hire Velocity then telephone-screened each potential candidate to make sure his or her skills, education, and experience met the needs of the home improvement store company. This process led to 49 bi-lingual store managers and human resources managers being hired.
Recruitment Process Outsourcing can be a great tool for a company to take the stress out of hiring and reduce costs by up to 50%. However, it is up to the company to evaluate its needs and resources to see if it would be beneficial to hire an RPO or do the hiring internally. With an RPO, every task is managed for the company and all tools are supplied. With a contract recruiter, the overall work must still be managed internally as well as all tools needed to do the job. If you’re looking to do volume hiring quickly in an efficient and cost effective manner, the RPO may be just the solution to your current hiring challenges!
Spring 2010 ERE Expo Learnings
Hire Velocity attended the ERE Expo last week in San Diego. We were able to meet a lot of interesting people and learn about some of the new technology in the recruitment field. The ERE Expo is a great place for recruitment professionals to network and exchange ideas with other professionals. Going to all the sessions and exhibits is a way to learn about new recruiting products, services and technologies.
Recruitment Process Outsourcing (RPO) was really embraced at the ERE Expo this time. RPO has been shaped into a customizable service that ranges from outsourcing of a single task to outsourcing the entire recruiting process. Outsourcing a single task, or On-Demand RPO, seems to be the trend recently with more companies outsourcing tasks such as sourcing & screening to extend the reach of their team versus permanently adding onto it. We also heard some very strong opinions that life cycle recruiting needs to be done by more than one recruiter. Rather than having one person manage the entire recruiting process, it is more economical and efficient to have people do the specific tasks of the recruiting process such as sourcing and screening, relationship management, and administrative functions. This is the most efficient way to get quality results.
A big topic at this ERE Expo was incorporating social media into the recruiting process. Using Facebook, Twitter, LinkedIn, and blogs is all part of the social media strategy that needs to be adopted by companies because it is the future. In the recruitment industry, a hot trend is tweeting and retweeting open job positions. By doing this, there is potential for thousands and thousands of job candidates to view the open position. Tracking ROI by each social media channel is just now coming into play so companies can identify the source of each candidate found. Reporting is getting very sophisticated but there are a lot of amazing tools, techniques, and companies that can be leveraged.
The old school “Post & Pray” method of recruiting is rapidly becoming outdated and the general consensus is that is a waste of money. The Internet is only growing, so it is important to utilize all of the resources available to maximize the response. It’s a big Internet world out there so cast a wide but targeted net. Don’t just fish in one pond!
One of our favorite sessions dealt with the 4 pillars of recruiting – Process & Policy, Technology, Team Alignment and Metrics. These pillars are critical for success in your recruiting organization.
Valeri Marks
CEO
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