What a rollercoaster the last three years have been for recruitment. And, as the ride doesn’t appear to be slowing down just yet, it will come as no surprise that reducing hiring costs and increasing risk control are top priorities for finance, HR and talent acquisition (TA) leaders. These priorities, however, can conflict with aspirations of hiring the best talent. With investments in recruitment being scrutinized, companies are left with the daunting prospect of cutting costs without negatively impacting hiring performance

Not only can Recruitment Process Outsourcing (RPO) transform recruitment cost control and achieve substantial efficiencies and savings, but the right RPO supplier will be a talent partner focused on adding strategic value. Jan Mueller, Global Vice President, Sales Excellence & Operations at Korn Ferry and David Ellis, Vice President, Talent Acquisition Transformation at Korn Ferry discuss six key benefits of adopting a fully or partially outsourced solution.

1 Mitigate the risk of headcount costs

In recent years, fast-changing demand for new hires has forced some firms into a constant cycle of raising and reducing headcount within their TA teams. Organizations without sufficient internal resources saw their spend increase on agency recruitment fees, or found themselves unable to acquire sufficient quality talent to meet business needs.

“From a cost and delivery perspective, this way of operating isn’t sustainable for talent acquisition, or justifiable to the finance function.” Says Ellis. “A regular churn of in-house recruiters can also be damaging to the employer brand and reputation.”

Mueller adds “An RPO solution enables you to remove significant internal fixed costs from the balance sheet. In close partnership, you design a model exactly tailored to your needs, tightly monitored via a modern reporting suite and measured against the KPIs and SLAs that fit your business needs.” This can lower headcount, yet the RPO team will still be an integrated extension of the internal function. “Effectively, you transfer hiring responsibilities while still retaining control” Mueller continues. “In fact, your organization assumes far more control from a cost and risk perspective, and gains operational agility without the need to add, or reduce, corporate headcount.”

This also takes away the challenges and extra costs of staffing your internal recruitment team. A fundamental strength of an RPO partner is the ability to scale up and down quickly to meet fluctuations in hiring volumes; such a rapid flex would be unfeasible for internal teams.

In a recent Korn Ferry poll, 86% of HR professionals said they did not know the total annual cost of acquiring talent for their organization.

2 Understand the true cost of hiring an employee

A common concern for employers is that hiring costs need to be tightly controlled – but there is little clarity on what the true costs entail. Without access to relevant data on cost per hire, it is a thankless task to analyze and reduce spend.

“A mature RPO provider will work with your talent and finance leaders to establish an accurate picture of current costs – and set realistic aspirations” explains Ellis. “RPOs have the process, methodology and tools to get to the bottom of your numbers and make recruitment fee costs transparent and visible”.

Moreover, when you engage an RPO partner, in most cases there will be a signed agreement on cost-per-hire for the duration of the contract. Hiring costs will not rise suddenly or be impacted by market forces (which is an ever-present risk for in-house teams). Ellis adds, “Your partner should commit to meeting a Service Level Agreement and to delivering measurable results evidenced by regular reporting on KPIs”.

The transparency of cost in an RPO model gives you clear visibility of your spend – while the performance data enables you to quantify the financial impact and ROI. Data and insight also inform decision-making at a tactical and strategic level. Budgets can be changed or reinvested based on outcomes, not inputs.

3 Reap the hiring cost benefits of global RPO standardization

Standardizing and professionalizing the talent acquisition model is one of most impactful ways to drive cost efficiencies for complex, multi-site operations, especially if hiring practices vary by location or function. The centralization, economies of scale, and process consistency of an RPO solution have potential to deliver significant cost benefits – without removing local presence, insight and expertise. In addition, smart use of technology is key to saving money and providing a consistently good experience for hiring managers.

RPO providers constantly analyze the market of TA technology to select the most effective options. The best RPO firms have proprietary tools and platforms geared toward improving quality outcomes and reducing spend. “Recruiter productivity, the employer brand, and the candidate and hiring manager experience can all be vastly improved while spending less” comments Mueller.

Consistency is embedded through technology platforms and standardized, cost-efficient, best practice procedures. There is a solid framework to underpin the fundamentals of talent acquisition. Yet there is still room to flex to different job families and local markets. “Hiring hourly paid manufacturing operatives in the U.S. is very different from recruiting executives and leaders. Recruiting tech specialists in Asia is very different from hiring them in Europe”, explains Mueller. “Your RPO partner should combine a flexible approach to attraction and assessment with a sound understanding of local conditions and nuances”.

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4 Speed up internal talent acquisition transformations with RPO support

A further advantage of implementing an RPO solution is that it makes the process of transformation smoother and faster. You may currently be planning improvements for your in-house teams. But it is rarely straightforward to drive change across non-centralized, internal talent acquisition teams. “There will be competing viewpoints to reconcile, as well as structural hurdles to overcome” says Ellis. “After the disruption of the last few years, there may also be a feeling of change fatigue that will hold progress back.”

RPO providers have dedicated implementation teams; professional business consultants with a proven track record of driving change painlessly and swiftly within a TA function. Using project management procedures, methodology and tools that have supported the most complex change efforts, they can turn the big wheel – and deliver the quick results the business wants to see.

“Crucially, the right RPO partner will make change happen at the speed you want to travel, without losing the best of what your organization did before” says Ellis. “They know exactly what to do to improve the TA function and achieve the desired commercial results – and change is more likely to be embraced internally when it is led by a specialist consulting firm that has been there before”.

5 Use technology to optimize recruitment spend and results

Controlling costs through an RPO solution does not mean sacrificing quality or performance. In fact, outsourcing is an opportunity to enhance your approach to talent acquisition while optimizing spend.

A credible RPO partner will co-create a best-in-class solution to deliver specific hiring volumes within agreed budgets. “Ideally, they will provide an objective view on what will and won’t work, informed by experience and data gathered across many different clients, markets and countries” says Mueller. “Their approach should be to advise, guide and challenge where required, with a laser-focus on delivering ROI”. It will be mutually beneficial to build cost optimization into the new talent acquisition model.

When it comes to delivery, an RPO solution should combine cutting-edge technology with the latest best practices in candidate attraction, assessment and management. Candidate sourcing channels, for example, will be constantly optimized based on the results they are delivering. The use of talent supply and demand data will allow budgets to be focused on where the talent is. Messaging to candidates will be adapted and updated to maximize ROI.

“The outcome is usually a drastic reduction in agency spend – alongside an uptick in key measures and metrics", explains Mueller. “High quality reporting provides assurance that efficiencies and value are being delivered”. Because the RPO partner will be focused on meeting KPIs, they will be continually looking for marginal gains and enhancements throughout the lifetime of the contract. The top RPO providers are constantly investing in recruitment innovation, knowledge and technology. So, while the biggest efficiencies might be achieved near the start of the relationship, those will continue to be delivered throughout.

6 Drive improvement beyond cost per hire across the employee lifecycle

The ambitions of an RPO should stretch beyond reducing direct costs while delivering quality hires. Implementing leaner, more efficient processes will reduce time to hire, as well as cost per hire, giving a further boost to operational performance. TA can work to drive down recruitment spend, while being mindful of the disruption and high costs incurred by taking too long to recruit or making the wrong hires. “A high quality RPO will also look to strengthen the quality of applicants, and shortlisted candidates”, says Ellis. “Quality of hire can be improved by enhancing sourcing, promoting the Employee Value Proposition, and improving assessment and the candidate experience”.

Making the right hires also has the added benefit of reducing attrition. If a high percentage of new hires are quitting in the first six months, that hurts operational performance and adds significant costs to the bottom line. A well-designed talent acquisition model will boost retention – by ensuring cultural fit, setting realistic job expectations and potentially even taking care of onboarding.

Case study: Saving 2.4 million USD across 2,000 hires

Korn Ferry showcased the impact of RPO through a new partnership with a global leader in Health, Nutrition and Bioscience. The client had complex volume and specialist recruitment needs – with 2,000 annual hires across 30 countries in North America, Latin America, EMEA and APAC.

Korn Ferry built an end-to-end RPO model featuring multiple process enhancements and a fresh approach to EVP, localized to each region. New sourcing, assessment and reporting tools were put at the heart of talent acquisition. Over the course of two years, the Korn Ferry RPO has reduced agency usage from 50%+ to 4%, with an annual saving to the client of USD 2,400,000 in the first year alone.

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