Recruitment Process Outsourcing (RPO) is a strategic talent acquisition solution that enables companies to expand their recruiting capabilities rapidly and cost-effectively. In this model, the company partners with an RPO provider to manage all or part of its recruiting functions and “either assumes or provides its staff, technology, methodologies, and reporting,” according to the Recruitment Process Outsourcing Association. RPO differs greatly from other recruiting solutions, such as traditional staffing, contingent/retained search, as it “assumes ownership of the design and management of the recruitment process and the responsibility of the results.”
As RPO has evolved over the past two decades, RPO delivery models have changed, and RPO engagements have become more defined. In this article, TalentWoo explains common challenges of RPO customers, types of engagement, why RPO engagements sometimes fail, and how REITs, Property Management Companies, Homebuilders, and Private Equity Firms can prevent failure during RPO selection and contract negotiation.
For additional information about recruitment process outsourcing, please visit the Recruitment Process Outsourcing Association website at: www.rpoassociation.org.
Most Common Challenges Faced by RPO Clients
Companies seeking to outsource their recruiting functions often face capacity and budget constraints. Clients are often experiencing high growth but have a limited budget to invest in talent acquisition. It’s often the decision to build or buy. Building out a recruitment function adds fixed costs to the organization, and capacity and expertise are limited to those that are hired. Buying, through an RPO partnership, provides a solution that scales with the organization’s growth and provides access to the recruitment expertise of an entire organization.
From a more strategic perspective, RPO clients may struggle to align their recruitment strategy with their business strategy. Every industry is becoming more niche, requiring a specialized recruitment approach. The right RPO partner can provide the depth and breadth of recruitment to meet those specialized needs.
Models of RPO Engagements in the Marketplace
Many RPO providers offer various “models” to educate potential buyers. Generally, RPO models range from a fully outsourced relationship to just sourcing candidates and everything in between (hybrid models).
• Fully Outsourced RPO: The RPO partner operates as a true extension of the client’s HR team. The RPO partner is accountable for filling every opening within the organization, managing all recruitment spending, managing the ATS (Applicant Tracking System), interacting directly with the hiring managers, and providing recruitment analysis and strategy to leadership.
• Sourcing Only RPO: The RPO partner generates candidate names based on the requirements provided by the client. The client is responsible for managing those candidates through the remainder of the recruitment and selection process.
• Hybrid RPO: This model falls between the two.
As we advise potential buyers, it’s important to focus on developing the right solution/relationship through an understanding of business drivers, rather than trying to force them into a predetermined “model.”
Why Do RPO Relationships Typically Fail?
RPO (Recruitment Process Outsourcing) relationships are often plagued by misaligned expectations, leading to failure. During the sales process, clients tend to hear certain key messages and make assumptions. Hence, it’s crucial for RPO buyers to clearly define and agree on expectations from the start of the relationship.
Another factor that contributes to the failure of RPO relationships is high turnover, both on the client side and the RPO provider’s side. If there’s executive buy-in from the client’s side regarding the decision to outsource, turnover on the client point of contact usually won’t negatively impact the relationship. However, turnover in the recruitment team supporting the client could sometimes put the partnership at risk. To avoid such situations, clients and providers should focus on recruitment results instead of individual recruiters. RPO providers typically have resources to immediately backfill in case of turnover, which should minimize service disruptions.
Sometimes, RPO relationships fail when organizations don’t prioritize talent acquisition. For instance, if a client engages an RPO partner as a temporary solution and isn’t fully committed to investing time in the relationship, it’s bound to fail. Although RPO providers bring extensive talent acquisition expertise to the table, understanding a client’s culture takes time, and identifying the best talent for the organization requires patience.
When evaluating RPO providers, some common metrics include time to fill, interview to hire ratios, cost per hire, hiring manager satisfaction, and candidate satisfaction. As RPO partnerships evolve, more clients are looking for performance-based metrics, such as employee turnover and quality of hires. RPO providers don’t hesitate to commit to having a positive impact on both these measures, but accurate measurement requires that the client understands their baseline and has the ability to consistently measure and report it.
In our experience, the most successful RPO partnerships place value beyond these metrics. Such clients are completely transparent and view talent acquisition as a key strategy for their growth. As a result, we have a seat at the table, providing insights and analysis that helps us form a stronger partnership.
Key Elements in an RPO Contract
To govern the RPO relationship contractually, a best practice is to use a Master Services Agreement, which is supported by one or more statements of work (SOW). The services agreement defines the legal terms of our working relationship, including terms, liability, billing and payment, confidentiality, solicitation, insurance, warranties, employment relationships, and so on. The scope of work defines the specifics of the services being provided. If additional services are added, amendments to the scope of work manage them.
Executive Level Support
When seeking executive-level support for an RPO engagement, involving them throughout the sales process is key. The executive team needs to be supportive of the decision to partner with an RPO firm and comfortable with the partner selected. Although they don’t need to be involved in every meeting or discussion, the RPO firm should provide executive-level summaries or information to facilitate communication between the client point of contact and their executive team. It’s also essential for the RPO provider to validate the business drivers/objectives with the executive team to ensure alignment within the client organization.
Ingredients for Strong Partnerships
The most important elements for a long-lasting RPO relationship are transparency, trust, and commitment. Transparency is critical as the RPO provider is operating on behalf of the client, and hence they need to understand what’s happening within the organization as it happens. Trust is often difficult to establish, but it’s essential for the client to place trust in the RPO provider. Commitment from both parties is essential for a long-lasting relationship, and hiring managers need to provide time to ensure that recruiters understand what they are looking for within the roles and provide productive feedback on candidates. The client point of contact needs to invest time in supporting the relationship and addressing challenges as they arise. Ultimately, there needs to be a strong commitment from both parties for the engagement to be successful.
TalentWoo is a leading provider of Recruitment Process Outsourcing (RPO) services that helps organizations streamline their recruitment processes and find the best talent for their business needs. With over 15 years of experience in the industry, TalentWoo’s RPO services offer end-to-end recruitment solutions, from sourcing and screening candidates to onboarding and employee retention. The company’s RPO services are customizable to fit the unique needs of each client and can be scaled up or down based on hiring demands. TalentWoo’s team of expert recruiters uses innovative technologies and strategies to identify and attract top talent, resulting in faster time-to-hire, reduced costs, and improved candidate quality. With TalentWoo’s RPO services, organizations can focus on their core business while leaving the recruitment process to the experts.