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Avoiding Groundhog Day

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Many firms struggle to find top talent. This ins't a new problem, but solving it can be an enigma. The talent is out there, learn how to break the code and find more than your fair share.
New eBook on the business case for Recruitment Process Outsourcing.

Published in: Recruiting & HR, Career
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Avoiding Groundhog Day

  1. 1. Avoiding Groundhog Day THE BUSINESS CASE FOR RECRUITMENT PROCESS OUTSOURCING TIM MEEHAN
  2. 2. /02 Many firms struggle to find top talent. This isn’t a new problem, but solving it can be an enigma. The talent is out there, learn how to break the code and find more than your fair share.
  3. 3. INTRODUCTION /03 A new talent landscape The inventor Charles Kettering once said, “a problem well stated is half solved,” so here’s how we define the problem. • An organization’s supply of talent acquisition resources (recruiters) is built to support a business plan • However, for many reasons, business plans often change • This means the demand for talent (hiring needs) often varies from the original business plan • To respond, Talent Acquisition implements countermeasures, but often costs still increase and key performance indicators (KPIs) decline • As a result, HR’s focus shifts from executing strategy to managing transactions Sound familiar? Given that business-planning cycles are now much shorter and more likely to change, organizations need a far more agile talent acquisition model to keep pace. In this paper, we seek to frame the problem and propose another approach as outlined below, in four parts. Part 1: The structural challenges facing Talent Acquisition (TA) Part 2: Quality and cost implications Part 3: A new talent acquisition performance model Part 4: Five decision factors to consider before making a change
  4. 4. /04 Part I: The structural challenge facing Talent Acquisition Why agility isn’t part of the business plan.
  5. 5. PART 1: THE STRUCTURAL CHALLENGE FACING TALENT ACQUISITION /05 Talent Acquisition usually has two types of resources: strategic and operational Strategic resources engage in employer branding, workforce planning, mobility and succession planning, just to name a few. Operational resources usually focus on the hiring transaction and include activities such as candidate attraction, sourcing and screening as well as recruiting logistics support and on-boarding. These strategic and operational resources are combined and represented in the dark charcoal line in FIGURE 1.
  6. 6. Talent acquisition landscape /06 FIGURE 1 QUANTITY TIME Employees CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME
  7. 7. PART 1: THE STRUCTURAL CHALLENGE FACING TALENT ACQUISITION /07 The structural challenge Talent Acquisition faces is reflected in the purple line in FIGURE 2. The line shows how actual requisition demand can often vary greatly from the demand the plan was built upon. Economic conditions, site expansions, mergers or competitive activity all affect hiring and thus the demand for Talent Acquisition resources. The result is periods of imbalance, or disequilibrium, between requisition demand and the supply of recruiting resources.
  8. 8. Talent acquisition landscape /08 FIGURE 2 GOOD ECONOMY NEW SITE NEW COUNTRY BAD ECONOMY MERGER COMPETITION QUANTITY TIME Employees Requisitions CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME BUT REQUISITION ACTIVITY IS SELDOM AVERAGE
  9. 9. PART 1: THE STRUCTURAL CHALLENGE FACING TALENT ACQUISITION /09 The blue line in FIGURE 3 shows how talent acquisition departments often use supplementary resources such as contract recruiters, or borrowed internal resources, to respond during peak periods. Note how the blue line never quite syncs up with the purple line. This reflects a lag between requisition demand and the supply of recruiting resources. The lags during growth or peak demand cycles are caused by the time to onboard, and make productive, recruiting resources. The lags during decline or valley cycles are caused by the hesitation to release recruiting resources once the volume drops. This structure is also compromised by Talent Acquisition’s own resource limitations to find and train recruiting resources when they themselves are most busy.
  10. 10. Talent acquisition landscape /10 FIGURE 3 QUANTITY TIME Employees Requisitions Supplemental CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME BUT REQUISITION ACTIVITY IS SELDOM AVERAGE SUPPLEMENTAL STAFF IS USED, BUT NOTE HOW ON-BOARDING, OFF-BOARDING AND PRODUCTIVITY LAG
  11. 11. /11 Part 2: Quality and cost implications Whether the demand is at a peak, or in a valley, or in equilibrium, cost and quality are impacted.
  12. 12. PART 2: QUALITY AND COST IMPLICATIONS /12 The rush to meet peak demand The grey areas in FIGURE 4 reflect periods when demand for recruitment services exceeds the supply of available recruitment resources. During these periods, talent acquisition managers experience a range of obstacles that result in reduced KPI performance and higher costs. During periods of peak demand talent acquisition managers often divert resources from recruiting talent, to recruiting and training supplementary recruiters so they can recruit the talent. In effect Talent Acquisition must go backwards to go forwards. This negatively impacts the business in many ways. Cycle times increase because experienced resources are diverted to training roles. Next, candidate quality declines as new resources engage and take time to be effective. Combined, cycle times increase and quality of candidates decrease. By now, hiring manager satisfaction has declined so Talent Acquisition is focused on filling requisitions, not strategy. Unfortunately employment brand is impacted as job seekers encounter undertrained recruiters and slow hiring processes. Finally, and most costly, contingent search fees increase. Counted together, these outcomes can greatly reduce Talent Acquisition productivity and cost effectiveness and thus business performance.
  13. 13. Total cost of ownership /13 FIGURE 4 QUANTITY TIME Employees Requisitions Supplemental REQUISITION DEMAND > RECRUITING RESOURCES SUPPLY: KPI ISSUES
  14. 14. PART 2: QUALITY AND COST IMPLICATIONS /14 The hesitation to off-board once demand subsides The red areas in FIGURE 5 reflect the periods of time when Talent Acquisition has more resources than requisition demand warrants. This is caused by Talent Acquisition’s hesitancy to release recruiting resources until they are certain demand has subsided. These requisition valleys result in a range of cost and quality implications. The first and most obvious cost is contract recruiters. But what’s important to understand isn’t their total cost, because they were supporting a real business need. It’s more important to understand the cost, in lag time, between when requisition volume started to decline and when they (and their tools, licenses, systems, etc.) were actually off-boarded. Another less obvious cost is the increased cost of quality. While KPIs improve during valleys, it’s typically because the organization is over-resourced. Thus they are spending too much to deliver an acceptable quality of service. Finally, there are the costs associated with downsizing. The most obvious one is severance to right size teams, but perhaps even greater is the impact on team morale. Watching team members and friends, who helped the organization survive a peak, be released, impacts team morale, employee engagement and ultimately loyalty to the organization.
  15. 15. Total cost of ownership /15 FIGURE 5 QUANTITY TIME Employees Requisitions Supplemental REQUISITION DEMAND > RECRUITING RESOURCES SUPPY: KPI ISSUES REQUISITION DEMAND < RECRUITING RESOURCES SUPPLY = COST ISSUES
  16. 16. PART 2: QUALITY AND COST IMPLICATIONS /16 Finding equilibrium The green shaded areas in FIGURE 6 represent the equilibrium periods when Talent Acquisition resources meet the demand for recruitment services. However, even this period harbors a hidden cost for employers. While the equilibrium periods help recharge morale, the challenges incurred during the prior peak and valley requisition cycles has a cumulative effect on talent acquisition teams and the organization as a whole. No one wants to repeat those stress-filled disequilibrium cycles. Organizations must deploy solutions that are more agile to ensure they don’t keep repeating the challenges each peak and valley cycle will surely create. Otherwise, like Phil Conners, Bill Murray’s character in Groundhog Day, they too will live each day the same over and over again. Leadership must take heed that if they don’t integrate agility into their delivery structure, team members may use these equilibrium periods to explore their options. Thus, the team members most needed to support the next peak may not be there – further exacerbating the challenge. . No one wants to repeat the stress-filled disequilibrium cycles. In fact, they probably expect their leadership to deploy solutions that will ensure they don’t keep living the same day over and over again, like Phil Conners, Bill Murray’s character in Groundhog Day.
  17. 17. Total cost of ownership /17 FIGURE 6 QUANTITY TIME Employees Requisitions Supplemental REQUISITION DEMAND > RECRUITING RESOURCES SUPPY: KPI ISSUES REQUISITION DEMAND < RECRUITING RESOURCES SUPPLY = COST ISSUES SUPPLY & DEMAND ARE IN EQUILIBRIUM = OPTIMISED
  18. 18. /18 Part 3: A new performance model Recruitment process outsourcing (RPO) lets Talent Acquisition easily scale recruiting capacity to meet demand, better understand recruitment costs and resolve the tensions associated with peak, valley and even equilibrium requisition demand cycles.
  19. 19. PART 3: A NEW PERFORMANCE MODEL /19 In Part 1, we looked at how rapidly changing business requirements affects demand for talent acquisition resources. Part 2 explored how regardless of a peak, a valley or equilibrium cycle, costs and quality are impacted. In this third section, we’ll show how using a recruitment process outsourcing (RPO) firm lowers total cost of ownership by embedding agility into the business plan. Starting the shift to RPO As FIGURE 7 shows, the first step in the transformation requires Talent Acquisition to separate strategic activities from operational activities. Resources for operational activities, such as sourcing, screening, recruiting and on-boarding candidates, become the responsibility of the RPO firm. This shifts accountability to experts while also lowering internal fixed costs. As shown in FIGURE 8, next an RPO partner is engaged and integrated into the Talent Acquisition team. This dedicated RPO core team is tasked with understanding the client’s processes, tools, culture as well as hiring manager expectations. They will also determine how to improve KPIs by integrating RPO resources, methodologies, best practices and continuous improvement ideas.
  20. 20. RPO landscape /20 FIGURE 7 QUANTITY TIME Employees Requisitions Supplemental LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT
  21. 21. RPO landscape /21 FIGURE 8 QUANTITY TIME Employees Requisitions Supplemental RPO Core LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM
  22. 22. PART 3: A NEW PERFORMANCE MODEL /22 RPO benefits FIGURE 9 demonstrates how RPO helps improve outcomes during peak periods. Contract recruiters are replaced by the RPO provider’s own flex resources. This approach helps align the supply of recruiting resources with requisition demand. It also improves visibility of recruitment spending, allows talent acquisition departments to scale requisition resources more easily, and frees managers to focus on strategic considerations. FIGURE 10 shows the quality and cost benefits of this new outsourced model. With lag effects gone, KPIs improve during peak periods, ensuring the business secures necessary talent efficiently and on time. At the same time, the RPO allows managers to easily scale recruitment capacity down during slower periods, which results in a lower total cost. And since downsizing was part of the business model, employee morale, engagement and loyalty increases. Yes indeed, Groundhog day has ended.
  23. 23. RPO landscape /23 FIGURE 9 QUANTITY TIME Employees Requisitions RPO Flex RPO Core LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM ACHIEVE PEAK PERIOD KPIs: USING RPO SHARED RESOURCES
  24. 24. RPO landscape IMPROVED KPI’S LOWER TOTAL COST /24 FIGURE 10 Employees Requisitions RPO Flex RPO Core QUANTITY TIME LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM ACHIEVE PEAK PERIOD KPIs: USING RPO SHARED RESOURCES MODEL LOWERS TOTAL COST OF OWNERSHIP
  25. 25. /25 Is RPO for you? Five factors to consider.
  26. 26. IS RPO FOR YOU? FIVE FACTORS TO CONSIDER /26 RPO provides fast-changing organizations with a scalable, more cost-effective way to manage recruitment resources. The following five steps will help you decide whether RPO could present a better path for your business: 1. Review current recruitment practices – Be honest: how does your firm respond to unexpected peaks in recruitment demand? Do you see them coming? Or are you one phone call away from another Groundhog Day? 2. Tally the costs – Look at the cost implications we described in Part 2. How long does it take you to train and make a recruiter productive? How many quit before succeeding? Do search fees increase? Do you keep the recruiters too long? What about severance costs? 3. Assess the quality – Try to measure the change in KPIs between steady-state and peak periods. Do critical projects suffer because resources are diverted to train new recruiters or staff? How does your recruitment process affect your employment brand? Do critical projects suffer because resources are diverted to train new recruiters or staff?
  27. 27. IS RPO FOR YOU? FIVE FACTORS TO CONSIDER /27 4. Consider testing the waters – Many RPO programs start off focusing on recruitment for one aspect of a business. Engage the stakeholders where a critical challenge exists and determine if a pilot program may be beneficial. Keep in mind that an RPO program requires enough volume in the pilot to warrant the assignment of dedicated resources over an extended time. Ideally a pilot with a core team in place would run a minimum of one year. That core team then becomes the gateway to an extended RPO engagement. 5. Find a catalyst – Deploying an RPO program is not complicated but it does require adoption and ownership with the hiring managers and end users. Driving organizational alignment is enhanced when there is a common challenge motivating the need for change. Using the examples outlined in this paper, identify a handful of recruitment difficulties within your business and consider how RPO could make life simpler for your talent acquisition team. If you are seriously exploring options for outsourcing your recruitment process, KellyOCG would love to discuss your current state with you and make recommendations on how to get started. Send a request for consultation to solutions@kellyocg.com or visit kellyocg.com for more information on our full suite of Talent Supply Chain Management and RPO solutions. Deploying an RPO program is not complicated but it does require adoption and ownership with the hiring managers and end users.
  28. 28. EXIT ABOUT THE AUTHOR TIM MEEHAN is vice president, Recruitment Process Outsourcing, at KellyOCG and currently manages several large RPO programs for the practice. Prior to his role in RPO, he worked in the Kelly Global Solutions organization, managing teams in the Americas and Asia. ABOUT KELLYOCG KellyOCG® is the Outsourcing and Consulting Group of workforce solutions provider Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions, Human Resources Consulting, Career Transition and Executive Coaching, and Executive Search. KellyOCG was named in the International Association of Outsourcing Professionals® 2014 Global Outsourcing 100® list, an annual ranking of the world’s best outsourcing service providers and advisors. Further information about KellyOCG may be found at kellyocg.com.

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