For an HR department, trusting a third party to take on the responsibility of bringing talent to their organisation is one of the biggest decisions they will have to make. Alexander Mann Solutions’ David Heath, discusses some of the key things to consider when outsourcing your recruitment function.
For many businesses, the decision to outsource is primarily driven by a desire to keep costs down. This is understandable, especially in the current economic climate. Outsourcing has great potential for reducing costs since a specialist provider will benefit from economies of scale and greater efficiencies that just aren’t possible for in-house teams. The decision can also come as a result of strategic activity however, such as expanding into new sectors, service lines or geographies, downscaling operations or acquisitions. Or simply a natural propensity to outsource and keep the business focusing on what it does best.
Once you have made the decision to outsource your recruitment function, there are a number of key things to consider which will enable you to get the most out of the relationship. You need to understand why you are doing it. What are your strategic businesses goals and what skills and expertise does your organisation’s workforce need to deliver these goals? You also need to consider whether you want to outsource all, or only some of your recruitment processes? Perhaps you need a supplier to help manage a contingent workforce or to recruit very specialist skills across an international base.
Having established your resourcing priorities, my advice would be to ensure the decision to outsource is supported from the top down, with engagement and buy-in from across the business – from Resourcing, HR and Procurement. In my experience, this is one of the most important predictors of success or failure.
Next, do your research. There is a whole host of RPO providers available and some are more qualified and experienced in particular areas than others. Industry bodies, such as the HR Outsourcing Association (HROA), and industry analysts work closely with buyers and RPO vendors and will be able to provide more information and independent advice on how to carry out a formal tendering process and HRO Today publishes an annual independent survey of RPO providers who they subsequently rank into different groupings. You don’t need to have an idea of how your targets should be delivered from the outset. Once you know what you need to achieve, an experienced RPO provider will be able to develop a range of solutions, tailored to the specific goals of your organisation.
For some of the businesses AMS works with, the aim is to simply improve the efficiency of their resourcing practices. There are many ways this can be done and, by carrying out an audit of the processes that are already in place, a RPO provider will be able identify areas that could be made more efficient. For instance, one of our clients, a financial services group, was looking to improve their recruitment processes across the board. Previously, hiring was done on a transactional basis with heavy reliance on third-party recruiters that drove costs up. By implementing an onsite team that worked in the same way as an internal recruitment function, AMS was able to reduce cost-per-hire by 60 percent and increase direct sourcing levels from 10 percent to 82 percent. Increasingly, as businesses operate on a more international scale, they are looking to create global talent pools. This is often challenging as the recruitment industry still tends to operate on a domestic basis in many countries. However a number of RPO providers have broadened their geographic scope and can now support clients across international boundaries. At AMS we have been doing this for a number of years and now deliver services to clients in over 60 countries worldwide.
Whatever your organisation’s aims, it is absolutely essential that you are able to measure the success – or otherwise – of the deal. It is therefore vital that the goals you identify are both concrete and quantifiable. At AMS we build a risk and reward element into our contracts so that, if we don’t deliver as promised, we take a financial hit. This kind of target-setting enables the project to be assessed objectively and can protect your business financially if the outsourcer fails to perform.
There are many reasons why outsourcing recruitment can make sense for your business, but to optimise your results – and maximise your financial investment – you need to choose the right partner and remember that outsourced recruitment is a way of increasing the value of recruitment. An organisation that is solely looking to cut costs will, almost inevitably, end up with a poorer service and HR professionals should not underestimate the other benefits an outsourcer can have on your organisation’s recruitment processes. The most productive outsourcing deals are those where the outsourcer is able to become, not just a provider, but a genuine partner in the business’ ongoing development.
Human Resources news brought to you by theHRDIRECTOR – the only independent strategic HR publication.