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RPO Or Not?
Shanil Kaderali – Sr Director, Talent Acquisition, Knowledge Universe  Recruitment Strategy & Management roles with Cisco...
IMPACTING YOUR BUSINESS WITH EFFECTIVERECRUITMENT: WHICH IS BETTER? RPO VS.INTERNAL?EfficientRecruitingIncreaseConsistency...
5RPO PROVIDER LANDSCAPERecruitment Staffing SearchOriginally RPO was ..…with metricsthat affect CriticalService LevelsStra...
6RPO PROVIDER LANDSCAPELegacy Temp StaffingOrganizations>  Spherion>  Kelly – HR First>  Momentum – Volt>  ManPower>  CDIS...
  Blend of internal recruiters, sourcers and coordinators to fill hiring needs  Based on current model and lack of techn...
8WHAT MODEL TO USE?VSInternal Model vs RPO Model• Full Time Sourcing Employees as part of Recruitment organization or Outs...
  RPO has become much more sophisticated in last 5 years with advancements in sourcing,technology and globalization9CASE ...
10COMPARE THE MODELS FOR YOUR NEEDSIn-House• Enhanced quality of hire• Reduced time to fill• Control over recruitment proc...
  Define your business problem  Compare the models for your specific needs  Determine total cost of the problem  Devel...
WHAT IS YOUR BUSINESS CHALLENGE?TURNOVER? QUALITY OF HIRE?12,200Teachers left us and required backfills!!!25,318Teachers w...
13TeacherTurnover- 48% in 2011- 12,200 teachersUnhappy Parents•  Parent Retention•  20% of parent issues involve teachertu...
14 8/29/12DEVELOPING THE BUSINESS CASE1.  Provides a common point of measurement to compareService Provider pricing to Wel...
15VALUE PROPOSITIONSpeedCostQualityRecruitment Process Outsourcing vs. Internal ModelManaging Processes• Enterprise Workfl...
RPO$4,200K$800K$5,000K$426In-House$3,600K*$2,200K**$5,800K$484KU Baseline$6,000$1,600K$7,600K$63316COMPARISON – FUTURE STA...
CURRENT VS RPO MODELCurrent	  Model RPO	  (2013) VarianceTotal	  Delivery	  Cost	  (12,000	  Hires) 4,200,000	  	   4,200,...
188/29/12RPO VS BASELINE– 5 YEAR SUMMARY –TEMPLATE BUS CASE(in	  1,000s) CY0 CY1 CY2 CY3 CY4 CY5 5	  YR	  TOTALBaseline 0	...
19WHICH MODEL OFFERS MORE SCALABILITY?RequisitionVolumePeak Season/High Volume Low VolumeResource BaselineIncrementalresou...
TeacherHiringStrategyBIG PICTURE – COST, QUALITY, COMPANY IMPACTEnterpriseo  Align sourcing channels tostrategic direction...
Value to Families: HappyChildren/Higher ParentRetentionRPO is $1.8M less cost vs.baseline modelHire Better Teachers/LessTu...
22 8/29/12WHEN SHOULD YOU USEINTERNAL MODEL VS. RPO?1.  Complex, niche based positions (Statisticians at seniorlevels)2.  ...
23 8/29/12PerformanceMgmt.SuccessionMgmt.LearningMgmt.TOTAL TALENT MANAGEMENT – FUTURECONSIDERATIONManage the entire talen...
24 8/29/1224Anticipated change in labor flexibility techniques over thenext three years: How does this impact RPO vs Inter...
25And will you succeed?Yes! You will indeed!(98 and ¾ percent guaranteed).Today is your day!Your mountain is waiting.So......
RPO or Not?
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RPO or Not?

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This is the presentation I gave at ERE 2012 in Florida. I focus on the business case and for TA/HR Leaders to use metrics and develop the right business case to determine if RPO is the right solution for them. I'm agnostic in my presentation

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RPO or Not?

  1. 1. RPO Or Not?
  2. 2. Shanil Kaderali – Sr Director, Talent Acquisition, Knowledge Universe  Recruitment Strategy & Management roles with Cisco Systems, WellPoint  Developed internal models growing teams from 0 to 50+ recruiters for high volume and complexhiring (high tech and health care)  Worked within RPO – Hyrian  Managed Talent Sourcing for United Health Group – 14,000 hires/year  Managed clients like Kaiser, Disney Interactive Group  Implemented RPO model at WellPoint for approx 2-3K jobs/yearKnowledge Universe  Largest employer of early childhood education nationwide – 300,000 students  Private Portfolio Company  Multiple brands – KinderCare, Champions, CCLC  $3B; 33,000 employees; 1700+ Centers in US  Global division focuses on K-12, College. HQ is Singapore  13,000 hires/year in US2INTRODUCTION
  3. 3. IMPACTING YOUR BUSINESS WITH EFFECTIVERECRUITMENT: WHICH IS BETTER? RPO VS.INTERNAL?EfficientRecruitingIncreaseConsistencyReduce Time-to-FillReduce CostEffectiveRecruitingIncreased CandidateQualityImproved HiringManager ExperienceEnhanced SelectionProcessRealize GreaterBusiness ImpactIncreased New HireProductivityImproved EmployeeEngagementGreater Revenue &ProfitabilityTIMEBUSINESSIMPACT4
  4. 4. 5RPO PROVIDER LANDSCAPERecruitment Staffing SearchOriginally RPO was ..…with metricsthat affect CriticalService LevelsStrategy & Assessment Pre-EmploymentProcessesInterviewingTestingScreeningSourcing Hiring OfferPackageOnBoarding…Today RPO has evolved into an end to end solution..…Supported byApplicantTrackingRequisitionManagementCandidateDataManagementSystemsIntegration
  5. 5. 6RPO PROVIDER LANDSCAPELegacy Temp StaffingOrganizations>  Spherion>  Kelly – HR First>  Momentum – Volt>  ManPower>  CDISpecialty/Search Firms>  FutureStep>  HudsonPure RPO>  The Right Thing (ADP)>  PinstripeOriginsHRO Providers>  *IBM>  Aon HewittEntering the NA Mkt>  Talent 2 (Asia)>  Alexandar Mann (Europe)Subcontracting HRO providersin RPO deals
  6. 6.   Blend of internal recruiters, sourcers and coordinators to fill hiring needs  Based on current model and lack of technology, initial investment in staffcould be approximately 45 resources for 12,000 teachers  Staffing would require 3 mos.  Technology investment and implementation would require min 6-9 months forenterprise system  Does TA have leverage for economies of scale regarding job board postingsinvestment?  Hiring teachers can (and should) be a source of competitive advantage whichmay occur within internal – Internal recruiters learn the culture  Internal models provide more control  Internal model has demonstrated good understanding of culture7IN-HOUSE MODEL
  7. 7. 8WHAT MODEL TO USE?VSInternal Model vs RPO Model• Full Time Sourcing Employees as part of Recruitment organization or Outsourcing it to a vendor (ex, Right Thing, Aon,Pinstripe, etc)• Internal model works well for Senior level positions (Apple, WLP, etc) - This model generally has the recruiter as mainPOC for hiring manager and managing the various recruitment processes• RPO works very well for high volume positions (Call Centers, etc)• • Here’s a SECRET:• You can do both!• Blended Models work the best for overall needs
  8. 8.   RPO has become much more sophisticated in last 5 years with advancements in sourcing,technology and globalization9CASE STUDIES•  Wall Mart reduced <90 dayturnover from 54% to 30%(Over 4,000 hires )•  Pepsi - Turnover in first 12months reduced from 28% to6% for bottling plantemployees (over 2,000 hires)•  Decreased Agency spend by70%•  Decreased Sourcing Costs by47% in Six Months•  RPO Examples•  Good with highvolume,replicablepositions (CallCenter, Retail,Finance)•  In-House Models have leveraged strong assessment technology and enterprise ATS•  During tech boom, CiscoSystems hired close to19,000 professionals in 1year with internalrecruitment, sourcing teams(FTE & Contractors)•  Successful high volumerecruitment – 10,000+•  Decreased Sourcing Costswith internal hiring team•  In-House•  Complex roles,strong culturetied to brand
  9. 9. 10COMPARE THE MODELS FOR YOUR NEEDSIn-House• Enhanced quality of hire• Reduced time to fill• Control over recruitment processes• Potentially lower cost for KU over long run• Reduce turnover• Recruiters embedded into culture• Large recruiting team would need to be put in place*• Higher start up costs• Technology upgrade needed?• Is it scalable quickly?• Longer timeframe to implement for labor, technology andbranding if lack of infrastructure?RPO• Enhanced quality of hire• Reduced time-to-fill• Scalable Model• Reduce technology investments*• Standardized processes• Reduce turnover **• All inclusive Pricing/ Fees At Risk of SLAs not hit***• Learning culture to manage internal hiring process• Disconnect b/w company and vender goals• Dependent on vendor qualityBenefitsConcerns* When technology is bundled into service** Vendors with standardized process, testing and resourcesimprove quality*** Fees of approximately 5-10% at risk if turnover is notreduced per Service Level Agreement (SLA)
  10. 10.   Define your business problem  Compare the models for your specific needs  Determine total cost of the problem  Develop a business case  Compare the baseline (current approach) to RPO and Enhanced Internal Model?  Apples to Apples check  Cost per each model  5 year analysis  Review Price of Postings to Job Boards are covered (ex, Monster & Careerbuilder) – Reduce KUadvertising spend by 50-70% (Est. Savings would equalize  Review technology advantages of each  RFP, Visit the RPO firms  Change Management: Ensure there is EVP HR, Client & CEO level support  Decide and Just Do it11NOW WHAT DO YOU DO?
  11. 11. WHAT IS YOUR BUSINESS CHALLENGE?TURNOVER? QUALITY OF HIRE?12,200Teachers left us and required backfills!!!25,318Teachers worked for usIn 2011…For RPO vs. Internal Hiring model,1)  Define the problem2)  Compare Pros/Cons of the models to help with your hiring needs3)  What is the problem costing the company?12What type of teacher issue did you have (KinderCare)?
  12. 12. 13TeacherTurnover- 48% in 2011- 12,200 teachersUnhappy Parents•  Parent Retention•  20% of parent issues involve teacherturnoverFuture student achievement weaker due to teacher turnoverAccreditationchallengesLabor issues – ex, Managers in classrooms(Finance)Hard Costs$12M/year$900 turnovercost per hireLostRevenues:$2-$18M/year*ProductivityLosses:$8M/year**NegativeBrand Impact:$TBD M/year***TOTAL COST APPROACH – COST OF THE PROBLEM:Negative Social Media Brand impactLonger time to fill positions* Estimate from Ops (Kindercare Regression Analysis)** Estimate from TA – High Time to Fill teacher roles (+35 days)***Estimate from Marketing•  Finance costs include advertising, EA costs, training time (Hard Costs)•  Estimate for Interviewing time costs for CDs (20 hours – Soft Cost)
  13. 13. 14 8/29/12DEVELOPING THE BUSINESS CASE1.  Provides a common point of measurement to compareService Provider pricing to WellPoint’s cost of providingthe in-scope activities.2.  Provides “apples-to-apples” comparison betweenService Providers (generally with a moderate amount of“normalization”).3.  Becomes the primary yardstick to measure both the“total cost of delivery” and helps to determine thegeneral size of the transaction.4.  Determine if there is a business case to move forwardwith an RPO model for WellPoint  Focus on RPO vs Internal
  14. 14. 15VALUE PROPOSITIONSpeedCostQualityRecruitment Process Outsourcing vs. Internal ModelManaging Processes• Enterprise Workflow Management• Best Practice Consulting• Sourcing Channel Management• Vendor Selection• Process Mapping• Paperless Operations• Robust reporting and metricdistribution• Data AnalysisReducing Costs• Pre-Employment Selection• Success Profiling based on your highperformers• Reduction in turnover through selectionreduces refilling of positions• Direct Recruiting provides a dedicatedteam at a fraction of agency fees ortemporary employee costs• Sourcing Channel EffectivenessAnalysis• ROI Analysis will tie hiring practicesinto business outcomesImproving Quality “Single Source” Accountability Continuous Measurement andImprovement Revalidation of Selectionprograms and retentionperformance Holistic program approach Overall performance accountabilitymanagement State of art technology and stafftraining Retention Services to reduceturnover and staffing costs
  15. 15. RPO$4,200K$800K$5,000K$426In-House$3,600K*$2,200K**$5,800K$484KU Baseline$6,000$1,600K$7,600K$63316COMPARISON – FUTURE STATE – RECRUITING COSTSPER HIRE MODELRPO Includes posting costs;metrics (daily, weekly); technologyKU doesn’t have; sourcing andbranding expertise and scalableresources . Cost is $350 per hireKU would invest in ATSTechnology, Sourcing,BrandingBaseline would eventuallyrequire investment in TAfoundation (ATS, Sourcing,etc.)Total Labor/Service Costs =Non Labor Delivery Costs =(Advertising, Sourcing, Technology,Background Checks)Total Costs =Cost Per Hire =(KU CD Time vs. In-HouseRecruiters VS RPO Fees)Based on 12,000 Hires
  16. 16. CURRENT VS RPO MODELCurrent  Model RPO  (2013) VarianceTotal  Delivery  Cost  (12,000  Hires) 4,200,000     4,200,000  Recruitment  Technology/Transi8on  Costs 79,000   79,000  Hiring  Costs  (EA,  Training)  -­‐  $486  per  Hire 5,830,000   5,830,000   -­‐  Sourcing/  Adver8sing   459,000   272,000     187,000  Interview  Time  Costs  (SoN  Costs)* 6,000,000   1,200,000   4,800,000  Turnover  Reduc8on  Benefit (1,125,000)  Total  Recruitment  Costs  $12,289,000                                                                        $10,456,000   $1,8433,000  Turnover 48%   43%   5%  17  $1.8  Million  LESS  cost  than  current  baseline  approach    Technology  –  We  would  incur  a  cost  for  technology  maintenance  with  the  RPO    Sourcing  costs  are  reduced  with  RPO.  Es8mate  is  $272K  reduc8on    RPO  Model  will  save  16  hours  from  CD  Time  (20  hours  with  current  model  and  4  hours  with  RPO)  –  Source:  Finance*      Turnover  Reduc8on  Benefit  –  The  is  a  guarantee  of  5%  points  (48%  to  43%  ex)  –  Turnover  Reduc8on  with  Fees  at  Risk  in  CY1  –  For  1  year,  es8mate  is  1,250  hires  saved  @  $900  per  replacement  hire  –  Source:  Finance  
  17. 17. 188/29/12RPO VS BASELINE– 5 YEAR SUMMARY –TEMPLATE BUS CASE(in  1,000s) CY0 CY1 CY2 CY3 CY4 CY5 5  YR  TOTALBaseline 0   2,029   2,029   2,029   2,029   2,029   10,146  Supplier  Price 0   1,325   1,325   1,325   1,325   1,325   6,627  Normaliza8ons 0   (227) (227) (227) (227) (227) (1,135)Retained  to  Go-­‐Live 0   97   0   0   0   0   97  Retained  Organiza8on 0   820   820   820   820   820   4,100  Governance 0   0   0   0   0   0   0  Turnover  Benefit  Impact 0   0   0   0   0   0   0  Total  OperaYonal  Savings 0   14   111   111   111   111   457  Savings  % 0% 1% 5% 5% 5% 5% 5%Supplier  Transi8on  Costs 0   0   0   0   0   0   0  Wellpoint  Transi8on  Costs 200 0   0   0   0   0   200  Total  TransiYon  Costs 200   0   0   0   0   0   200Net  Savings  Before  Tax (200) 14   111   111   111   111   257  Savings  % 0% 1% 5% 5% 5% 5% 3%•   One  Time  TransiYon  Costs  in  Yrs  0-­‐  1  for  severance  •   Total  transiYon  esYmated  cost  of  approx  $200K  (Severance  &  Taleo  expenses)  •   RTI  soluYon  will  save  WLP    approx  $111k/year  from  years  2-­‐5  &  $14K  in  year  1  • WLP  will  save  approx  $257K  over  5  years  
  18. 18. 19WHICH MODEL OFFERS MORE SCALABILITY?RequisitionVolumePeak Season/High Volume Low VolumeResource BaselineIncrementalresources aredeployed tohandle peakvolumeEnables provider or internal to deploy resources as needed.The abilityto adjustincreasesefficiencyreducing perhire cost
  19. 19. TeacherHiringStrategyBIG PICTURE – COST, QUALITY, COMPANY IMPACTEnterpriseo  Align sourcing channels tostrategic direction/talent goalso  Increase of quality hireso  Create hiring consistencyacross LOBSo  Potential $180M in revenuegainso  Significant benefits from 5%turnover reduction (improvedretention rates)o  $1.5M in savings vs.current approachCandidateso  Understand a clearand compellingCandidate ValuePropositiono  Experience aseamless recruitingprocess – theirexpectations aresurpassedo  Generate positivefeedback about KUHiring Leaderso  Experience a seamlessrecruiting process – withsuperior customerserviceo  Have an increase inquality hireso  Cost-effective processo  Increased productivitythrough 10% Time to fillreductionRecruiterso  Understand andsupport strategicvision and innovationo  Provide seamlessrecruiting processo  Deliver extraordinaryservice andexperienceso  Support cost-effectiveprocesso  Track key metrics andtrends•  10% reduction in time to fill(SLA) would potentially yield$8.8 million in productivitygains•  Hires would be onsite onaverage, 5 days earlier•  For every 1% reductionin turnover, there is a$18m potential revenuegain & hard costsavings of $228,000•  Pilot cost aremanageable TBD) givenROI•  Recruiters canscale and managelarger number ofrequisitions asneeded – ImprovedProductivity•  For every positiveinterview experience,candidates generally tell3 other individuals -approximately 40,000face-to-face interviewsresulting in positive brandimpact with 120,000individuals•  Approx. 192,000hours or 13 daysgiven back to CDsto spend withteachers andfamilies•  Build interviewingskills working withrecruiters
  20. 20. Value to Families: HappyChildren/Higher ParentRetentionRPO is $1.8M less cost vs.baseline modelHire Better Teachers/LessTurnover$2-18M in PotentialRevenue GainsBig Change Management$3-4M AnnualIncremental CostMAKE THE DECISION: WEIGH PROS AND CONSBenefits = Highly Efficient, Scalable, MaximumSupport for Hiring Managers, Cost Effective21
  21. 21. 22 8/29/12WHEN SHOULD YOU USEINTERNAL MODEL VS. RPO?1.  Complex, niche based positions (Statisticians at seniorlevels)2.  Roles which require sensitive political savvy within anorganization3.  Directors and above4.  For ALL your hiring needs5.  TA/HR Strategy (today) – that is for TA professionals toprovide the strategy and have RPO execute it
  22. 22. 23 8/29/12PerformanceMgmt.SuccessionMgmt.LearningMgmt.TOTAL TALENT MANAGEMENT – FUTURECONSIDERATIONManage the entire talent pipeline (Internal & External) – What supports TM better?RPO or Internal?Talent Reporting & AnalyticsATSTalentManagement
  23. 23. 24 8/29/1224Anticipated change in labor flexibility techniques over thenext three years: How does this impact RPO vs Internal?7%4%4%10%9%Hiring part-time workersOff-shoringBringing backretired workersOutsourcing 37% 56%40% 56%43% 53%Using temporary /contingent workers 40% 50%59% 32%Decrease No change IncreaseSource: IBM 2010 CHRO StudyWhich model is better with systems for these alternatesources?
  24. 24. 25And will you succeed?Yes! You will indeed!(98 and ¾ percent guaranteed).Today is your day!Your mountain is waiting.So... get on your way!— Dr. Seuss(“Oh! The Places You’ll Go”)

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