RPO Helps ExxonMobil Eliminate Supply Chain Headaches | Article

truckWhat would you do if you continually had to staff positions that are vital to your company’s operation but experienced a cumulative turnover rate of 100 percent because you’re not hiring the right people? You either try to solve the problem the Mark Twain way of doing things “the same way time and again, hoping for different results,” or you try something new. In the case of ExxonMobil, it opted for the latter. Outsourcing is putting an end to ExxonMobil’s recruiting challenge.

Each day, the oil giant has 150 company-owned tanker trucks on America’s roads and about the same number of short-haul contractor-driven trucks. Each distributes up to 15,000 gallons of gasoline and diesel fuel to filling stations across the United States.

But a glaring shortage of qualified drivers, both long-haul employee and short-haul contractors, was so acute that it became a critical HR challenge. Martin Pullman, the new U.S. fleet manager, lamented too many tankers sat idle because of this driver shortage.

“When trucks sit, not only does it cost us in undelivered fuel, the fixed costs for depreciation and taxes continue,” according to Pullman. “Plus, there is always the extra cost of bringing in spot (on-demand) drivers.”

Idle hands, in this case, idle trucks, were indeed the devil’s workshop to Pullman and a very expensive one. So he did something radical in October 2007 by engaging a Recruitment Process Outsourcer (RPO) that knew the trucking industry. ExxonMobile signed a five-year contract with MTS’ Driver Recruiters for end-to-end RPO.

In the first eight months of the engagement, MTS delivered over 100 new ExxonMobil drivers at a savings of several thousand dollars for each, relieving supervisors of most of the hiring process headaches and reduced turnover.

More buyers outsource recruiting because of talent shortages, according to Jason Corsello, former HR analyst at the Yankee Group and current vice president of Knowledge Infusion, a management consulting firm. But he believes buyers also find that large providers don’t always have the capabilities to deliver what’s needed when looking to fill less-than-traditional positions. “No matter what industry, the topic-du-jour is talent management,” he says. “Buyers often wonder if large service providers are able to do that for them, so they look to niche specialists.”

Getting the right prospects sooner via RPO

Before Pullman turned to MTS, supervisors at each ExxonMobil distribution depot recruited drivers via traditional channels such as advertising in local newspapers, distributing fliers at key driver locations, and using word of mouth to keep the candidate pipeline stocked.

“But it diverted a lot of their valuable time, which would be better spent on improving driver safety and efficiency,” Pullman says. For every 10 candidates the refiner interviewed, only one met the qualifications. “But now we’ve seen a dramatic improvement in the quality of candidates,” he adds.

ExxonMobile presents MTS a list of the open driver positions. Within a week MTS identifies the best candidates, who then interview with the local supervisor and take a test drive. Prior to submittal, MTS handles all screening, including drug and alcohol testing, an initial interview, license verification, employment checks, and Federal Department of Transportation compliance.

Most MTS-referenced candidates receive a conditional offer that becomes official once they successfully complete Exxon/Mobil’s drug and alcohol test, medical check-up, and final interview.

“Ninety-five percent of the cost savings to the buyer come from significant reduction in non-hire screening and processing candidates who are not suitable,” according to MTS principal Ken Walker. “A large carrier might waste untold thousands of dollars sorting through 20,000 potential candidates to get 200.”

“Our HR department interfaces with MTS,” Pullman notes, “but now the provider handles a lot of the administrative work.” He adds that supervisor response to the RPO arrangement is very positive. “It’s a weight off their shoulders. The time to hire is much faster and the candidate quality is much improved,” Pullman says.

Driver stability in an industry where such constancy is rare

The ongoing shortage of truck drivers occurred because of adverse demographic trends and qualification barriers for applicants. “Transportation is a very different challenge,” Walker says. “With 80,000-pound trucks moving at high speeds, often in congested areas, there is a lot of government regulation that makes it difficult for new entrants to get the good jobs.”

The entry point for any new driver is commercial long-haul work, which takes drivers away from home for weeks at a time, according to Walker. Commercial carriers are limited to what they can charge for shipping, so those wages are not the best.

But compensation is higher with private carriers. For example, ExxonMobil drivers can earn up to $90,000 annually. Drivers must pass through the lower commercial levels before they can land a job with a private carrier. “That’s where the gravy is,” Walker says.

MTS uses its proprietary database of 300,000 commercial truck drivers to cut screening costs. This reduces the time to hire. The database represents the “best 10 percent” of the almost three million drivers in the United States, adds Walker. “We reach more qualified drivers in the first few hours after receiving a request than most companies themselves can contact in weeks.”

MTS has its buyers’ clients answer a long series of initial questions so the supplier can “remove all the ambiguity,” Walker adds. “They specify the pay rate and amount of travel required with real numbers, not ballpark figures. This lets us share an exact picture of the job with each candidate.”

Such close matching reduces turnover, which for truck drivers is concentrated in the first 30 days on the job. Turnover for MTS’s hires averages a mere 10 percent in the first month compared with the commercial segment average of 30 percent.

The MTS/ExxonMobil partnership is also producing real progress toward a longstanding objective to improve diversity by recruiting more female drivers. “We didn’t have much success with that, but MTS is improving the picture,” Pullman adds.

He believes the most significant RPO savings for ExxonMobil comes from freeing up supervisors so they can focus on coaching drivers and improving performance and safety. Additional cost savings come from less dependence on contract carriers because more of the company’s rigs are on the road.

“Now we take fuller advantage of our distribution assets, and a lot fewer of our trucks sit idle,” concludes a satisfied Pullman.

Lessons from the Outsourcing Journal:

  • When greater-than-normal employee verification is needed, Recruitment Process Outsourcers (RPO) can relieve Human Resource departments of much of that burden.
  • In all successful RPO engagements, providers produce a larger number of better qualified candidates faster, especially in high-turnover areas.
  • An additional benefit of recruitment process outsourcing is leveraging the suppliers’ capabilities of facilitating the buyer’s goals toward greater diversity in its workforce.

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