Editor’s Corner: Why Companies That are Laying Off Workers Still Need an RPO Provider | Article

A Conversation with Claus-Peter Sommer, Vice President and Global Practice Leader for RPO, and Zachary Misko, Global Director for KellyOCG

Claus-Peter Sommer, Vice President and Global Practice Leader for RPO, and Zachary Misko, Global Director for KellyOCGKelly’s Outsourcing & Consulting Group’s (KellyOCG) Recruitment Process Outsourcing (RPO) practice has delivered talent acquisition, sourcing, and recruitment solutions processes to clients ranging from 75 to 75,000 annual hires through its experience in advanced sourcing techniques, LEAN methodologies, and recruitment process design and management. In business since 1985, KellyOCG devotes 100 percent of its global business capabilities to RPO, with over 500 recruitment professionals across 43 sites in 27 countries.

Q: What is your prognosis for 2009?
A:
We see increased demand. In the last eight weeks, we have seen more opportunities than in the last 18 months.

Q: Why?
A:
Many companies are using their employees within HR and recruitment in the midst of hiring freezes and layoffs to engage in more social networking and passive recruitment. Unlike the economic trials after 2001 when companies had no interest in RPO or developing recruitment skills, this time they want to retain and expand their knowledge of the current job marketplace during the slowdown. Also, today they want a more flexible cost structure, so they are looking for RPO providers that can become their long-term partners. Companies are transitioning knowledge now so the RPO provider will be prepared when the economy turns around and they are ready to hire.

Q: Why are companies interested in RPO if they aren’t hiring right now?
A:
Because they realize the importance of reviewing and restructuring their hiring processes now, precisely because they have the time since they are not recruiting as much as they have been. Hiring and restructuring at the same time can be overwhelming, so many look to an RPO simply for that reason. Today there is a great emphasis on process and efficiency, so companies have time to focus on that. KellyOCG has the ability to create an efficient process, share best practices, and introduce LEAN concepts to eliminate waste and enhance processes. Those who want to be ready for when they have to hire are taking a fresh look at their hiring processes now.

Companies realize there are benefits if they outsource during hard times. They can downsize their HR department now and still be able to hire people when they need to.

Q: Does the war for talent still wage in times of layoffs?
A:
Yes. It’s more important than ever to reach into your network and talk to passive candidates. Companies need to build their pipelines now.

Q: What happened after 2001?
A:
Companies cut back their recruiting during the downturn. When things got better, they discovered it was difficult to get back into the marketplace. They learned that it’s not a good idea to cut all your recruiters because you pay a high price when the market picks up again. That is not happening this time.

Q: How did 9/11 affect your company?
A:
We experienced leaner times in October 2001 and after. We went into survival mode. We carefully managed our cost and then hit the road to personally talk to all our customers to try to win new business. The formula worked because we survived.

Q: How has RPO changed in the last five years?
A:
It has matured, especially in the Americas. It’s now global, with Europe and Asia emerging (except for Australia which is already mature). Now it’s often end-to-end management of the talent acquisition process and customized hiring projects. The emphasis on RPO taking over advertising, assisting with branding and actively sourcing candidates through unique channels are key factors in a successful RPO today. Our own sourcing technology and candidate management tool has been a key success driver for us lately.

Q: Will the supplier landscape change?
A:
I don’t think we’ll see any new suppliers. I don’t think this is the time for anyone to take the risk of investing in a new company for a function named recruitment. We predict there will be some consolidation. Small companies will disappear while other players will become bigger and stronger. Also, providers will have to be global if they will thrive in the future.

Q: Do you see any changes in service level agreements or governance?
A:
Before the economic crisis there was a lot of pressure on getting the time-to-hire down. Companies want us to get a slate of candidates to the hiring manager as soon as possible. Now that SLA is a little more in the background. But once the market picks up, I think the pressure on the time-to-hire SLA will increase. Currently there is a lot of focus on understanding all components that go into reducing overall cost per hire (CpH).

Respondents to our 2009 global RPO survey cite a variety of challenges that are slowing the hiring process. Fifty-four percent said the most common challenge was quality of hires. Following that, challenges include time to hire (37 percent), cost to hire (28 percent), hiring manager satisfaction (27 percent), performance monitoring (21 percent), and quality of recruiters (18 percent). All of these can be important components in an SLA.

Q: What should buyers do to make their RPO deployments more successful? What mistakes should they avoid?
A:
They have to get a buy-in from the company’s business leaders. These people have to understand what the new business model is. In terms of work, there have to be clear lines between the RPO and the company.

Q: What about change management?
A:
In my opinion, this is the biggest cause of failure. Buyers need to invest in change management when the program starts. They often underestimate the efforts they need. This is not about cost. They don’t need thousands of resources for effective change management. They just have to pay close attention to what’s happening. Companies must have their hiring manager and internal customers engaged and supportive of the model. Challenges occur when the executive leadership decides to outsource but the hiring manager community is not supportive.

Q: How important is the process?
A:
Many companies have business centers or specific practice areas that have their own recruitment practices. Buyers should not try to replicate this when they outsource because they will lose the efficiency and cost reduction we can bring to the process. It is best to set up straightforward, standardized processes that have minor customization. Buyers need a robust and reliable applicant tracking system (ATS) with capabilities to report accurate metrics.

Q: What do you do if the buyer won’t do these things?
A:
If we discover the buyer is not committed to a true partnership, we know we can’t be successful, so we won’t accept the assignment.

Q: How do LEAN methodologies help you?
A:
We’ve been using LEAN thinking and methodologies for two years; we are one of the few RPO providers that has had good success using LEAN methodology. For example, at one of our client companies, LEAN helped us reduce our hiring cycle time from 91 to 60 days. LEAN thinking helps us reach ever higher levels of performance. And the journey continues.

Q: How long does a successful RPO implementation take?
A:
Three to five months. Double that if the company has poor change management and increase it for global RPO programs. In a global deployment, the buyers may use a phased implementation.

Q: What’s your advice for selecting an RPO provider?
A:
Always issue an RFP. The exercise gives the buyer a good overview of who’s in the market and their solutions. I view RFPs as a free consulting job because the prospective supplier will study your process and make recommendations.

Be precise when designing the RFP. We suggest engaging an external consultant who has experience; a consultant can help evaluate the recommendations that come in. Be open and willing to share information about your current process, environment, volume, structure, etc. and set clear goals about what the RPO program needs to achieve to be successful.

Q: Are there any major mistakes RPO buyers make when putting together an RFP?
A:
Companies often start out with a broad scope and desire to quickly implement and get started. This isn’t a good idea because they lose synergies and efficiencies when trying to engage an RPO too quickly. We recommend companies take the time to review and understand process and associated metrics and costs when they first go out into the market. Ask for an implementation project plan and understand how discovery and communication will take place during this plan.

Q: Why are pilots effective?
A:
They are not always necessary but sometimes can help companies with their learning curves and change management plan to more gradually introduce RPO. They also help to get initial buy-in from all stakeholders and can be easier to evaluate one department or vertical within a company and then roll out additional businesses after.

Q: What has been the hardest position you had to fill?
A:
We had to find a quality-control expert in semiconductors; there were only 10 people globally who could do the job, so every recruiter was reaching out to these same people. We found a person in the Philippines through our recruiting network.

Q: How do you find candidates?
A:
We have a proprietary sourcing technology that spiders the Web 24/7. We can launch global searches using Internet boards and social networks. We believe tools like this will be crucial for success in the RPO market in the future and ensure we fully utilize Web 2.0. We have to stay educated and be aware of tools available to candidates, professionals, and recruiters on the Internet. These tools save time and money for the buyer because they don’t have to learn them themselves.

The tools recruiters use today and skills they need to be successful are very different than they were even 18 months ago. RPO buyers have to hold RPO providers accountable to knowing what tools to use and how they can be a key differentiator in the recruiting process.

Q: What were some interesting findings in your global RPO report?
A:
This is the report’s second year; we conduct it jointly with HROA. In 2008, 70 percent of U.S. companies reported recruitment difficulties. It’s 54 percent now. The number is 64 percent in Europe.

Q: Claus-Peter, how did you get into RPO?
A:
I have been in talent management for 18 years. I founded my own talent acquisition company called Access; we ran recruitment databases for companies all over Europe. I sold the company to Kelly Services and am now the global lead for the RPO practice. I am based in Geneva, Switzerland.

Q: Where did you grow up?
A:
I grew up in Bavaria, Germany, close to Bayreuth. I attended Munich University and received a master’s degree.

Q: Zachary, how did you get into RPO?
A:
Actually, I was on the other side of the table until seven years ago; I was an HR director who used outsourcing suppliers. When I needed to relocate back to the Milwaukee area, I found KellyOCG.

Q: Where did you grow up?
A:
I grew up in Milwaukee, Wisconsin, where I still work. I attended Carroll College and started in the HR field over 15 years ago as a practitioner. I enjoyed the diversity within HR.

For more information, contact Zachary [email protected].

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