Eight Procurement Questions for Recruitment Process Outsourcing (RPO)
Outsourcing the recruitment function—a process core to identifying and securing your company’s single greatest asset, its people—is a major strategic consideration for any organization. We believe a number of critical questions – Hudson’s “Great Eight”—need to be asked and properly addressed in the evaluation process, and that procurement management should use as a baseline in the decision process.
- Does outsourcing the recruitment function/process align well with
the organization’s business needs/strategy? Plain and simple,
if this choice does not present a compelling strategic rationale based on your
competitive market priorities, don’t do it.
- Will recruitment process outsourcing truly improve your business
performance? Cost reduction may be a big driver of pursuing an
outsourcing arrangement for a non-core competence in your business, and it’s
one important financial measure. At the same time, you should establish
other performance metrics with your business partner to demonstrate that this
arrangement helps you better attract the best and brightest for your business,
speed time to hire, keep your employer brand consistent and effective,
leverage internal mobility, and increase employment engagement and
retention.
- How can you understand and control costs?
Outsourcing relationships are commonly struck to reduce cost. However,
it is important for you to understand the entire cost structure, all of its
components and how an entire package of products, services and management fees
may be bundled together. Being able to quantify total cost per hire is
critical, and it is also important to ensure that there is shared risk in any
RPO deal so the company is cost-protected during hiring peaks and
valleys.
- Are the financial projections accurate? It is
important for you to take a critical look at any numbers submitted by the RPO
provider. Look for assumptions, oversimplifications or just plain
misleading figures that may adversely impact your overall cost/fees.
- Will this arrangement still enable you to have the necessary
internal human resource skills and expertise needed in any
organization? While outsourcing may be the right direction for
your recruitment function, there is still a need for internal expertise to
help evaluate chosen strategies and tactics, and coordinate with the RPO
provider. Your business partner should also be open to transferring all
knowledge, and turning back over the people and processes to your internal
team once a best-practice operation is established and running
smoothly.
- Who will ultimately manage the financial and performance metrics
of the contract? People, processes and technology combine to
deliver for a RPO arrangement. It is essential for the company’s
internal leadership to maintain management oversight of any outsourcing
initiative. Factoring into the contract terms the time and resources
necessary to effectively manage the relationship and its results is smart.
- What are the cultural ramifications of outsourcing your
recruitment function? Understanding how your managers and
broader employee base are going to react to this massive operational change is
critical. One essential competency you should be looking for in your RPO
business partner is change management expertise. Folks who have been
there/done that have experienced most of the potential pitfalls and know ways
to best handle to ensure organizational support and buy in.
- Is there an escape clause in the deal or protection in place for when business conditions change? As we have seen during the recent recession, business conditions can change in a major way, and fast. You need to make sure you are not locked into a long-term contract or deal with little or no flexibility to alter scope or completely withdraw over time. Here again, making sure that there is a shared risk model for operational costs when hiring demands change is one way to help ensure some of this protection.
