Recruitment Process Outrsourcing
INSIGHT & DIRECTION
PAST, PRESENT & FUTURE
In a rapidly maturing, third generation, UK RPO market, with increasingly sophisticated demands from clients, the RPO offering in the UK has evolved significantly, and continues to do so. Yet RPOs face significant challenges, with some of the biggest issues stemming from increased competition, pricing pressures and their own SLA-driven behaviours.
Of particular interest to us is the inextricable link between RPOs and external recruitment businesses, the relationship between the two has historically been mixed.
To understand the situation more clearly, in February and March this year we undertook qualitative and quantitative research with HR decision makers.In our survey of 100 senior, multi-sector HR clients who are all involved in the RPO selection process and/or a user of RPO services:
• 57% rated their RPO service as ‘more good than badʼ• 55% of respondents described their RPOʼs relationship with external suppliers as ‘averageʼ or ‘poorʼ• 39% described internal service levels as ‘average or poorʼ whilst 30% said the same for the delivery of accurate metrics• 65% rated the internal and external communications as ‘good or excellentʼ• Time to hire and cost of hire also scored highly, with 80% and 75% respectively
Yes
Mixed
N/A
No
29%
57%
9%
5%
Does your current/previous RPO arrangementdeliver the service you agreed it would?
manyRPO organisations
have now introduced strategic workforce
planning, social media sourcing and many
other innovations that businesses see real
value in.
RPOsneed to embrace (and potentially
offer) EVP research through to implementation and ensure the whole
organisation and its suppliers understand how to be an ambassador
of the organisation.
Organisationsare demanding a much more
strategic solution, based on partnership with a trusted
advisor.”
CLIENTSare realising that you get what you pay for, and with candidate demand increasing in many areas, RPOs really need to show value, rather than cost saving.
ONEreal advantage RPO
suppliers have is their scale and ability to share
technology and innovations ahead of the
market.
A SNAP SHOT OF VIEWS FROM HEADS OF RESOURCING/TALENT ATTRACTION
In your opinion has the RPO delivered the cost/benefit you envisaged?
9%
29%
62%Yes
No
N/A
“”
Overall, the general view from both sets of research is that RPO has evolved (or is evolving) from a short-term, problem-solving approach to issues such as headcount and flexibility vs. demand to a much more sophisticated, forward-thinking model, where strategic workforce planning (SWP), EVP, Talent Management and executive hiring play a key role in the RPOʼs offering.
The RPO industry has evolved for sure - however, the level and speed of the change is different from firm to firm. The RPO firms have tended to focus on time to hire and direct sourcing, however, nowadays there is a lot of focus on the quality of our hires, building proactive pipelines and ensuring a quicker “time to productivity” with robust on-boarding solutions for new joiners.
- Shilpa Shah, Global Head of TA,
Rolls Royce
“RPO has evolved into a 3rd generation now, which is
more sophisticated than 10 years ago and now includes
areas such as SWP, Diversity, assessment and employer
branding. Organisations are demanding a more strategic
solution, based on partnership with a trusted adviser.
The service offering needs to operate hand in hand with
business strategy, have an agile approach to talent
management a nd become trusted experts within the
technology space."
THOUGHTS ON THE EVOLUTION
OF THE RPO INDUSTRY
- Jim Richardson, Director of Talent,
Learning and Resourcing, Santander
Some HR participants felt that RPOs were failing to align their client’s business needs with their own KPIs, whilst others had noticed that high staff turnover and the difficul-ties in acquiring and retaining top talent within the RPOs’ own teams were common issues across the board.
Pricing structures were another concern, with views that RPO pricing models still relate to the services offered ten years ago, with the emphasis on low cost and volume, rather than value and outcome.
WIDERC O N C E R N S
The move into executive hiring, in particular, has been met with a degree of concern from many corporates, including those we spoke to, who feel executive hiring should be retained or brought back in-house.
1STTheir first iteration was as a mass temporary hiring
service, specialising in finance or IT.
3RDNow in its third
generation phase, the focus seems to have shifted to
sourcing revenue-generating roles as well as executive
search
2NDThe second generation of RPOs
expanded into the permanent market with
RPOs becoming more sophisticated by attempting to cover broader support
functions.
RPO HISTORY OF EVOLUTION
S L A s a r e p r eve n t i n g R P O s f r o m w o r k i n g f r e e l y w i t h e x t e r n a l r e c r u i t e r s a n d p r ov i d e r s , t h e r e i s t h e p o t e n t i a l fo r r e a l c o n f l i c t b e t w e e n a l l p a r t i e s .
T i e d t o t h e c o n s t r a i n t s o f t h e S L A , t h e R P O i s o b l i g e d t o d i r e c t s o u r c e w h e r e p o s s i b l e , w h i c h i s n ’ t a l w a y s i n t h e b e s t i n t e r e s t s o f t h e c l i e n t .
R P O s a r e u n d e r p r e s s u r e t o p r ov i d e C V s r e g a r d l e s s o f q u a l i t y, a n d a t w o r s t , t h e h i r i n g m a n a g e r a p p r o a c h e s e x t e r n a l p r ov i d e r s d i r e c t l y i n t h e k n o w l e d g e t h a t t h e i r R P O c a n t p o s s i b l y d e l i ve r.
D E L I V E R Y I S S U E S
INCRE ASING PRE SSURE S
- tom baker - global head of resourcing, imperial brands
The pricing models have become transactional as clients demand lower cost per hire and quicker time
to hire. Now with the demand for better quality of hire it’s difficult, particularly having been through a
deep recession, to try and find any higher value (incremental fees) from an RPO’s perspective.
Also can their low cost shared service centres genuinely manage variable volume/complexity and
service multiple differing markets? So transactional pricing has become the norm which isn’t always the easiest thing to land. And also the challenge of how
they deliver in some markets the same value of service where their service may not be always on
premise – its difficult building the rapport/credibility if not on premise despite technology (telephone/on-line assessment and video interviewing ) emerging
as common place tools.”
- Rachel barr - global head of resourcing,tullet prebon
The growing demand for improved candidate levels, worries about employer branding and
the need for accurate data and analytics seem to conflict with the increasing pressure on margins and the ability to attract and hire
their own staff.
The inflexible nature of SLAs are universally acknowledged
as potentially driving bad behaviours by RPO staff.
Submitting unsuitable CVs to fulfill an SLA commitment was a common complaint amongst respondents.
There is the acknowledgment that RPOs are under enormous
pressure to deliver, despite squeezed costs, declining
margins with ever-growing client demands and the need to offer
more tailored and specialist services.
SLA'SE X P L O R E D
KeyResearchFindingsbasedon all datacollected fromrespondentswhose companiescurrently have anRPO Staff.
PoorAverageGoodExcellent
Are they capable of
What futuretechnological “disruption” can
they deliver?
1
3
4 5
2
What is thefuture of Exec Resourcing:
in-house or RPO?
Given the influenceof Procurement, how do they
align their KPIs more with true business and HR needs?
of delivering a broader service offering, such as SWP, Diversity, OD and Graduate Recruitment?
6
Can they deliveractive “candidate pools” to
further build the direct source capability?
7 How do theyaddress the challenges of their own talent attraction
and retention?
How will theirrelationships with external recruitment
partners change? Do they see any benefit in embracing change and will SLAs continue to
drive current behaviours? If not, is talent pipe-lining dead?
It’s pretty clear that in developed (third generation) markets, such as that in the UK, RPOs face a number of challenges. Whilst under no immediate threat, they are under severe pressure to innovate, both to maintain market share and margins. This raises a number of questions:
Richard Colgan Founder & Joint CEO, Oakleaf Partnership Limited
A Final Thought From An Industry Leader...
“They will either move more into their clientʼs talent and Organisational Design space or they may run out of steam. As the cost vs. in-house numbers come closer together we may see the ‘bring it back in-houseʼ argument played out more and more. How they cope with the expectation of line man-agers to constantly be looking for new talent rather than traditional ‘vacancy ledʼ recruitment also remains to be seen. They are under no immediate threat. They have real scale and one must have an appetite for risk to begin a journey of returning back to in-house.”
- John Hardy - Resourcing Director,Barclaycard