Recruitment Process Outsourcing

ERE Presentation – 07/22/09 Recruitment Process Outsourcing (RPO) _______________  Presenter: Scott Foos 1 

Introduc+on  •  Sco$ Foos  –  President & CEO Harbor Light Recrui+ng, Inc. & Harbor  Light Management Services, LLC  –  Execu+ve Director of the Recruitment Process Outsourcing  Associa+on (RPOA)   –  Former Board Member of Staﬃng.org and co‐chairperson  for metrics round table  –  13 years in business & systems consul+ng  –  13 years in various execu+ve opera+onal and IT roles   –  Proud father of three challenging but great kids   2 

Changing and challenging +mes....  3 

All sectors being impacted  4 

Impact to staffing & recrui+ng    Layoffs = much lower hiring volume    Employees are not leaving    Companies are moving people internally to fill open posi+ons  to avoid severance/unemployment claims    Staffing is much more compe++ve – fees are being cut (not a  good thing) to keep/acquire business    More “in‐sourcing” to leverage internal labor & reduce external  expense    Percep+on of abundant supply of good labor    Reality: Increased volume of applicants to sort through with  more “desperate” unqualified applicants  How can we keep exis1ng business and grow?  5 

RPO Defined  •  S+ll no industry consensus on a defini+on or standard for RPO  •  “Recruitment Process Outsourcing (RPO) is a form of business  process outsourcing (BPO) where 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  company’s staff, technology, methodologies and repor+ng.  In all  cases, RPO differs greatly from providers such as staffing  companies and con+ngent/retained search providers in that it  assumes ownership of the design and management of the  recruitment process and the responsibility of results.     Source: HROA  •  RPO should be re‐1tled: “Recruitment Process Op1miza1on”  6 

RPO Deﬁned  •  Characteris1cs of RPO Rela1onships:  –  RPO is sold at “C” level – not at the recruiter level  –  Typically longer term contracts based on annual hiring volume or  high volume project with deadline (e.g. new facility)  –  Currently most RPO contracts are for direct hire posi+ons  –  RPO recruiters work directly with hiring managers – no middle  person in HR  –  Oaen seamless representa+on of employers brand  –  Disciplined use of an applicant tracking system  –  Fees usually not en+rely performance based  –  RPO usually supports more than candidate sourcing and screening  –  Emphasis on base‐lining and tracking key metrics  7 

Why RPO?  •  Small Growth Companies:  –  Low hiring volume does not jus+fy internal recruiter  –  Need to focus on core competencies  –  Need for scalability – pay for what you need when you need it  •  Mid‐market companies:  –  Can’t  jus+fy investment in technology/sourcing tools needed to ﬁnd the  best candidates  –  Internal Recruiter/HR Generalist overloaded – usually hiring managers are  unhappy and applying pressure  –  Cost of con+ngency support (20%+) warrants looking at other op+ons  •  Large cap companies:  –  High volume recrui+ng = leverage to structure compe++ve deals  –  Interna+onal expansion – global recrui+ng/staﬃng complexi+es  –  Uncontrolled decentralized spending buried in regional opera+ng budgets  8 

History of RPO  •  Pre 2000 – “vendor management”, “strategic partnerships”, “partner  alliance”   •  2000 – 2002  –  “RPO” name coined as subset of “HRO and BPO”  –  Media emphasis on RPO market opportunity and high profile  contracts drew new vendors like flies  –  Increasing Market confusion over what RPO really is  •  RPO – short term fad or maturing long term shia?  •  2003 ‐ RPOA and the RPO Alliance were formed as industry  associa+ons to help educate employers on RPO value proposi+on and  define standards that would ensure con+nued market growth  •  2006‐2008 merger, acquisi+on, and building of RPO offerings within  most major staffing firms   •  2008‐2009 employment market melt‐down drives some RPO vendors  back to tradi+onal service lines  9 

Why RPO?  Sco;’s top 10 reasons why employers try/buy RPO:  1.  Internal frustraIon – internal staﬀ not geong the job done   2.  Scalability – pay for the services you need when you need them   3.  Vacancy – # of open posi+ons limi+ng ability to meet $ goals   4.  Cost – lower the total cost of recrui+ng on a compara+ve basis  5.  ExperIse – “percep+on” that process will be berer managed by  RPO vendor that brings best tools & prac+ces to the table  6.  Risk MiIgaIon – hold third party accountable for compliance and  record keeping  7.  Consistency – improved performance from learning/repe++on,  berer accountability for improved performance  8.  Employee RetenIon – lower turnover = reduced cost of  replacement and associated produc+vity loss  9.  Metrics/AnalyIcs – ﬁnally a way to measure the ROI of recrui+ng  10.  Because their compeItors are doing/trying it  10 

Why RPO works in this economy...    Eliminates overhead not being fully u+lized    Provides scalability for when market turns and  company is hiring again    Low hiring volume allows for easier transi+on    Can retain exper+se by having internal recruiter  work for RPO vendor on account team    Pushes risk to third party  11 

Who are the RPO players?  2008 “Bakers Dozen” – source: HROA  1.  Right Thing Inc.   2.  Spherion   3.  People Scout   4.  Alexander Mann Solu+ons   5.  Kenexa   6.  Talent2   7.  Manpower Business Solu+ons   8.  Kelly HR First   9.  Pinstripe   10.  FutureStep   11.  Adecco   12.  Select Interna+onal   13.  H.L. Yoh   12 

Fundamental Differences  •  RPO sales:  –  Longer sales cycle  –  Selling to CEO, CFO, COO, CPO or VP HR  –  More complex agreements with defined service levels  –  Emphasis on strategic versus tac+cal recrui+ng  •  RPO OperaIons:  –  Client expecta+on of finding top candidates not from job  boards  –  Discipline use of applicant tracking system to capture and  report key metrics  –  Ability to support EEOC and OFCCP compliance  13 

Primary Func+ons  •  Forecas+ng/planning  •  Requisi+on rou+ng and approval  •  PosiIon AdverIsing  •  Candidate sourcing  •  Candidate screening (may include assessment tesIng)  •  Reference checks  •  PresentaIon of candidates  •  Background veriﬁcaIon (criminal, DMV, educaIon,  employment, licensing)  •  Drug screening  •  Pre‐employment on‐boarding  •  Post employment surveys (30/60/90)  •  Exit interviews  •  Metrics analysis and process reﬁnement  14 

Candidate Sourcing    Internet job board posIngs    Job board search engines    Candidate lists, associa+ons, alumni     Web  communi+es: Google, Facebook, Linkedin, Myspace,  blogs,    Direct sourcing from other companies    Print adver+sing    Open house events    Job fairs    Campus recrui+ng events    Military/Veteran    Community networking through religious and other  organiza+ons  15 

Secondary Services  •  Organiza+onal analysis and alignment  •  Standardiza+on of job descrip+ons and employment  agreements  •  Compensa+on planning  •  Performance management  •  Succession planning  •  Referral and reten+on programs  •  Employee orienta+on programs  •  Risk audit and mi+ga+on plans  16 

Metrics  •  Total cost per hire  •  Time:  –  Time to fill  –  Time to submit first qualified candidate  –  Time from first interview to employment offer  –  Time from offer to start   •  Posi+on vacancy (Budget vs. Actual)  •  % of applicants submired that are interviewed  •  Avg. # of applicants interviewed to produce 1 hire  •  Turnover within first 90 days  •  Hiring Manager Sa+sfac+on  •  New employee performance/quality  •  Interviewed candidate experience  •  Rejected candidate experience  •  Recruiter efficiency  17 

RPO Challenges in 2009  •  Cancella+ons of open job orders, hiring freezes, and/ or drama+c changes in hiring needs  •  Global needs of clients  •  Reloca+on assistance/ability to sell homes to  relocate  •  Increased compe++on and awareness of RPO  op+ons  18 

Case Study  •  Na+onal top +er security services company  •  1200+ plus commission only sales people  •  85‐120% turnover  •  Decentralized recrui+ng with corporate funded job board  contracts  •  RPO sold on basis of reduced turnover and “theore+cal“ lia in  sales   •  200+ hires/month in Eastern Region  •  Nego+ated $2,300/placement  •  Program manager and steering commiree established  •  Con+ngency based contract  •  90 day replacement guarantee  •  Quarterly Execu+ve report  •  Hiring freeze – Doom!  19 

Wrap‐up  •  Ques+ons/Open Discussion  •  Thank you...  •  Contact informa+on:  –  sfoos@hlrjobs.com, 305‐799‐3237  –  www.rpoassocia+on.org  –  www.hroa.org  20 

Recruitment Process Outsourcing

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