Recruitment Process Outsourcing (RPO) is the practice of outsourcing all or certain aspects of talent acquisition, sourcing, recruiting, and staffing. RPO providers promise cost savings and efficiency in the procurement of a company’s most precious commodity, human talent. Outsourced recruitment and staffing is a relatively new practice, and has gained traction so far with mostly large companies with high volumes of staffing requirements.
Although RPO is considered a new practice, companies have always used third party recruiters, which do provide an outsourced service of recruitment and hiring. Most companies have established relationships with third party recruiters and staffing agencies. Therefore, when implementing a full scale outsourced recruiting function, companies must consider how to manage and govern their relationships with third party recruiters with the new RPO provider or system. (This function is sometimes also called VMO or implementing a vendor management office/organization.)
Rather than replacing the third party recruiters and staffing providers, RPO providers regulate the spend on agency recruiters and promise to rationalize and record the selection process. The RPO agency often performs a large portion of the recruitment function themselves, and then manages the supply chain of hiring and staffing needs through some form of software system. The overall goal is to deliver metrics, reduce overall spend, and ensure compliance with legal requirements with hiring. Because the work with third party recruiters and staffing agencies is often a major component of the RPO’s task, one question will always come up during the implementation: Should the RPO manage the entire relationship with third party recruiters and staffing companies? The most aggressive form of management is when the RPO provider fields all calls and relationships with outside recruiting and staffing agencies. The actual hiring company has no contact with the firm representing the candidate or contractor. When they are not allowed to directly contact the clients, third party recruiters call these companies “no call” accounts.
To the company implementing an RPO, the option of not dealing with third party recruiters and being a “no call” account seems attractive. The CFO imagines cost savings, the hiring manager envisions weeks with no unsolicited phone calls from recruiters, and the talent acquisition manager pictures an empowered recruiting and HR function and an organized, compliant system of hiring. The reasons for letting an RPO manage recruiter relationships are easy to see; however, there are serious repercussions. Here are a few things to consider before you sever your ties with third party recruiters:
- Companies that hand over outside vendor relationships to an RPO become beholden to that RPO. If you don’t maintain other external recruiting relationships, if you ever want to replace the RPO, it will make the process much more painful.
- One reason RPOs manage third party relationships is to eliminate all forms of nepotism and favoritism that relationship sales tend to cause. However, what usually happens is that the same relationship oriented sale is simply transferred to the RPO. The third party vendor simply has another client that they need to massage – and just like with regular companies, preferences are of course established.
- When third party recruiters have to solicit feedback and comments not only from hiring managers, but from the RPO, it can create unnecessary bottlenecks. In competitive hiring situations, this can be a disaster.
- Phone calls to hiring managers will not end – in some cases, confusion around the process creates more headaches for hiring managers. Additionally, third party agencies not on the vendor list will still (of course) call the managers directly.
- At the worst level, trying to eliminate the vendor relationship simply drives it underground. Hiring managers with trusted agency relationships are forced not to leverage their best providers in public. But when under work pressure, the hiring manager still uses their relationship directly, but simply does not report it. In some cases, this leads to worse procurement practices than ever before.
- Recruiting firms tend to put “no call” companies on the bottom of their list of priority clients and therefore, their best candidates go to other companies. If a company wishes to engage top talent, both the company and RPO should instead seek to engage and challenge the best recruiting partners and hold them to the highest standards of accountability.
Recruiting Process Outsourcing firms and Vendor Management Organizations can create exceptional transparency and cost savings in talent procurement. At their finest, these firms not only deliver savings, metrics, and compliance but add value by improving hiring methodology and accountability from the top down. Furthermore, RPO providers can actually better agency and staffing company relations by providing a level playing field and a culture of performance. Companies implementing or changing RPO providers should look to RPO providers to improve the overall flow of talent into their organizations and to provide a systematic process and reporting structure. Any talent procurement process that aims to reduce the relationship aspect of the recruiting process is doomed to fail.
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