An organisation’s success is largely dependent upon its strategy and execution rigour. A part of this is rooted in its leaders – their beliefs, the way they lead and the future they see. The other important part is rooted in its people – their capabilities, interests and ambitions. Jeffrey Pfeffer of Stanford Graduate School of Business, a renowned thinker and author has said rightly, “Successful organisations understand the importance of implementation, not just the strategy; moreover, recognise the crucial role of their people in this process.”
Able leaders understand the importance of getting the right people on board. They know, their success or lack of it is determined by the people who work for them.
Leaders rely on their HR (Human Resources) team to get them the right people. Traditionally, the HR team built a team of internal recruiters who draw internal referrals, work with their database of candidates, engage recruiting agencies and visit campuses to source the talent. Most often, they do not have the wherewithal to assess the attractiveness of their employer brand, the effectiveness of their talent acquisition process and the efficiency of what they do.
We need Specialists
It is worthwhile to raise these questions and challenge the old beliefs around the talent acquisition process. We live in the era of specialisation, and want to be specialists; we do not want to be a jack of all trades. How can an organisation be an expert in its core business and at the same time, an expert in recruitment which operates amidst a dynamic talent market?
Unlike functions like learning and development, accounting, IT administration and the like, achieving excellence in recruitment is a lot complex because external variables impact this pretty much like the function of sales and marketing, supply chain, new product development and the like. Hence, we need specialists who are deeply entrenched in the talent market and deal with the volatile and uncertain conditions of the talent market each day.
Small organisations often have their HR people handle all aspects of HR – recruitment, HR operations, employee development, performance management and organisation development. Even in medium-sized organisations, sometimes the HR people are expected to be all-rounders. Some of them have dedicated talent acquisition specialists or recruiters and ask the internal recruiters to hire for all levels and functions. This is quite a wide scope to handle for any recruiter!
We see innovation in recruitment happening at a rapid pace; employment contracts are changing; new kinds of workers and new types of engagements are evolving; technology and new tools are emerging, some of which could improve hiring efficiencies. How can we expect a recruiter to be able to keep track of the dynamic situation created by the rivals employing similar talent and at the same time, be effective in hiring a wide range of skills and levels, deploy the best systems, methods and tools to make the process efficient?
There is no magic wand. We need to rely on Specialists from RPO providers.
It is pretty much like engaging a maintenance service provider, logistics operator, PR consultant or marketing agency. We use them because they carry expertise, nurture relationships and can offer flexibilities in terms of scale, timing and scope.
- An organisation may be diversifying or expanding into a new geography or expanding its product line or simply scaling up fast in its current markets. It calls for finding new catchment areas and casting the net either wide or in new pools.
- Another organisation might be in the phase of optimising its resources and efficiency; so it could be laying off on one hand and at the same time, hiring for new skills and backfilling the critical roles.
- There could be situations where an organisation wants to hire using a new source such as advertisement on a particular platform, visiting a campus, starting a new hiring campaign such as train-and-deploy, gig workers, freshers, contract workforce or the like.
To succeed in any of the above methods, we need the recruiter to have the experience of handling the specific methods, understanding the skillsets being hired and proven expertise in hiring at the levels the organisation is seeking to hire. An organisation can’t build a team of recruiters who have specialists in each of these disciplines. Even if one has, these recruiters can’t be in touch with the reality of the talent market on an ongoing basis.
When do we call for an RPO provider? Is RPO right for your organisation?
We do not visit a doctor as soon as we catch a cold. If the cold persists for a couple of days, one considers visiting a doctor. Similarly, the thumb rule for calling for an RPO provider is when an organisation plans to onboard new hires more than 20% of its current workforce.
For example, an organisation has 500 people and it plans to onboard 100 people in the next 12 months to cater to the backfills and planned expansion. Since this is 20%, we call for an RPO provider to help us in putting together a strategy for each kind of role to be filled in, defining the pools to source from, recruiting methods for each category of hiring and executing all or parts of them.
Let’s take another example. A start-up has 20 people and has found an investor or a large customer which calls for rapid expansion. It needs to hire another 20 people in 3 months. We call for an RPO provider who brings in its experts to hire the range of people, build the employer brand and establish all that the organisation needs in the short-run as well as make them operational for the long term.
What does an RPO provide and other outsourcing methods don’t?
- Analysis and planning:
RPO providers take responsibility for the overall outcome in terms of timelines, conversion ratios and costs. Other outsourcing methods take responsibility for delivering shortlisted profiles and coordinating based on instructions received from the employer organisation. Hence, the planning responsibility varies greatly and analysis in the case of RPO is much deeper while it is near non-existent in the engagements of contingency hiring or retained search mandates.
- Extensive job marketing and Employer Brand building:
Employer branding is crucial for an organisation’s long-term success and has a tremendous ROI (returns on investment). Recruiting partners or recruiters representing the firm have the moral responsibility of conveying a realistic job preview, communicating the value proposition for an employee (EVP) and demonstrating the traits of the organisation culture and values to every potential candidate they engage with. When the organisation works with a score of agencies, freelancers, naïve recruiters and a bunch of recruiters who often attrit faster than the organisation’s average, the organisation’s employer brand is at risk. RPO providers take the responsibility of messaging with consistency and realism; thus, building the employer brand most desirably.
- Sourcing and engaging talent:
Building a talent pipeline is a crucial enabler of the organisation’s success. This has to be done in a proactive manner rather than trying to source candidates on a need basis as and when the hiring managers ask. RPO players can only match this expectation because of the engagement terms. Other methods of outsourcing do not facilitate this because their remuneration is linked with the success of hiring and specific role to be filled.
- Candidate assessments:
All providers know the importance of hiring the right talent and hence, assessing them right. However, the terms of engagement in contingency hiring or retained search, the providers have a short-term view and are not directly motivated to search through the talent market with a fine-tooth comb; rather they pick the best among the talent they can lay their hands on.
In the case of RPOs, the engagement period is typically long and the delivery team is deeply embedded with the organisation; thus, the team works in better alignment with the company’s long-term interest.
- Candidate care:
The impressions we leave on candidates’ minds contribute significantly to building the employer brand of an organisation. All leaders understand this and often do not pay the attention this deserves. As a result, organisations suffer from irrevocable decay as human bodies do from lifestyle diseases. It is supercritical that organisations that are high on recruiting (number of onboards in a year is more than 20% of the workforce) take this seriously and get the recruitment engine to demonstrate the character the organisation stands for.
What can an RPO provider do – various engagement models
Every organisation’s context is unique; however, what remains unchanged at the heart of TA strategy is to get the right talent at the right time. Hence, the RPO provider has to understand each organisation’s context and develop a solution that addresses their needs. Typically, they bring to the table a repertoire of capabilities starting from strategizing such as defining the talent pools to source from, methods to deploy and processes to handle the market dynamics. Typically, these strategic strands are co-created by the leaders of the organisation and the knowledge of the talent market that the RPO providers bring to the table. Execution is the most crucial component of an RPO project.
- Sometimes, organisations take a few recruiters from the RPO player and direct them to fulfil their recruiting needs. This service is typically known as ROD (Recruiter On-Demand). This engagement provides flexibility to the organisation in a way that they can get their recruiting work done as a short-term solution.
- There are situations when organisations get specific parts of recruiting outsourced to an RPO player, for example, coordinating interviews, getting reference checks done, hiring from campuses, coordinating with offered candidates until their onboarding. In such cases, the engagement terms are focused and limited to the deliverables agreed and the focus is efficiency in terms of cycle time, impact vs efforts and costs. We call these Focused RPOs.
- There are end-to-end recruiting projects where the RPO player gets all aspects of recruiting process executed as an extension of the employer. They get fully embedded in the organisation and work towards reducing cycle time, improving conversion ratios and adhering to the timelines. These are Full RPOs or E2E RPOs (end to end recruitment process outsourcing)
As a result, the organisation’s messaging of the value proposition to the potential candidates in the talent market gets standardised; the perception about the organisation’s response and attitude towards potential and current employees gets shaped. On the whole, the organisation’s employer brand persona gets sharply defined.
How much does an RPO cost?
RPOs deliver value not only in the short term in terms of meeting the hiring standards and timelines but also long-term value in terms of building a strong employer brand. As any organisation wants, it must pay the RPO provider right. Typically, an RPO has the following costing elements:
- A fixed fee under the title of project management
- A variable fee that is linked to the activities performed, measured in certain units. These units could be the number of candidates interviewed, candidates offered, joined and retained after a guarantee period.
- Bonus payments linked to certain KPIs (key performance indicators) such as candidate feedback score, conversion ratio, cost per hire or any such strategic elements
- Reimbursements of direct costs incurred
The overarching idea is to optimize costs and deliver value both in the short-run and long run to the organisation. Steve Jobs and several other leaders have rightly said, “Hiring the Best is your most important Task.” One needs to partner with RPO providers to get the best talent consistently.