Aug 19, 2014 | Blog

To RPO Or To Not

Acquire the Right Talent

I’ve been agnostic over most of my career within corporate TA as to which is better (in-house recruiting teams vs. RPO hiring models) and would always respond: “Well, It depends.” I’d cite complexity of positions, volume, readiness for change, cost, etc.  In most cases also, that’s the right answer. Now, I’m working in RPO, and I still answer the same way. 

How Do You Decide To Go RPO?

1. Define Your Business Problem:

Are you trying to solve for short-term turnover? Improve time-to-fill?  Agency costs are too high?

After you define your problems, you should calculate the total cost of the problem as well. At a private US Education firm, there was 48% turnover for teachers resulting in hiring 12,000 teachers at a cost of approx. $1K per teacher. These are hard costs. We also determined that 3% of parents didn’t renew due to high teacher turnover which additionally resulted in over $5M in sales not renewed. This is a compelling problem. I encourage all TA/HR Leaders to work with their internal teams like finance to determine the cost of the problem.

2. Compare the Models: When to Use RPO?

Some of the key drivers to look at RPO include:

  • Cost Management
  • Scalable Solutions (especially with global growth)
  • Demand for quality talent

There are generalities about the pros and cons. RPOs are generally known for being scalable, cost-effective, and for process standardization with high volume replicable positions with the end result being better hires. They represent the company as well but are not employees of the company and have multiple clients.

Aberdeen Group research shows 43% of Healthcare organizations are investing in RPO as a way to improve efficiencies, and stay compliant.   However, Starbucks and Chipotle are examples of large volume retail that have made investments in their in-house capabilities, yielding positive results. 

When to Consider Not Using RPO?

Again, no absolutes but having been a TA Leader, there are situations I’d not entertain RPO.

  • Complex, niche based positions (ex, Statisticians at senior levels)
  • VPs and above
  • When the RPO is not willing to put fees at risk if they don’t achieve Critical Service Level Agreement Metrics (SLAs)

The Business Case:

Examine a common point of measurement to compare RPO pricing to the internal cost of providing the in-scope activities.  It should be an “apples-to-apples” comparison between RPOs (generally with a moderate amount of “normalization”). I recommend the business case be contrasted with multiple service providers but the template will be same.

Once you have examined your unique business challenges you will be able to determine if an RPO will help the firm achieve its strategic talent needs.  While it may not be the solution in every case, RPO does work for many situations.  With the RPO market evolving to a $5B industry globally you will want to weigh the option thoughtfully. The final decision on engaging a RPO model should be based on a well-articulated proposal that outlines the business impact, costs, risks, challenges and expected outcome.

If you are interested in any free templates to create a business case on RPO or not, please email shanil@pierpoint.com