Recruitment Processing Outsourcing (RPO) 2013: Transforming Your Talent Acquisition Strategy

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1 Recruitment Processing Outsourcing (RPO) 2013: Transforming Your Talent Acquisition Strategy Recruitment Process Outsourcing (RPO) has undergone a seismic shift over the past few years. Long viewed as tactical and administrative in nature, RPO can now be characterized as strategic, innovative, and transformative. Leading organizations are turning to RPO providers for support and guidance in not only identifying and attracting top talent but also driving business outcomes for the long-term. This next generation of RPO is rapidly gaining momentum with 57% of organizations outsourcing or planning to outsource their recruitment activities compared to 53% of organizations in 2012 and 43% of organizations in As this market continues to mature, organizations must determine their key requirements and evaluate providers that will improve their recruiting process and act as a strategic partner. This report, based on the experiences of nearly 250 respondents, will highlight the challenges, actions, and enablers associated with RPO. October 2013 Research Brief Aberdeen s Research Briefs provide a detailed exploration of key findings from a primary research study, including key performance indicators, Best-in- Class insight, and vendor insight. The Business Imperative According to Aberdeen s Talent Acquisition 2013: Adapt Your Strategy or Fail research, 57% of organizations have a reactionary approach to talent acquisition, compared to 44% of organizations in As the talent acquisition landscape grows more complex, these organizations have regressed rather than advanced in their approach to finding talent. One reason for this setback is that the internal and external pressures facing organizations have intensified over the past year leaving many organizations feeling paralyzed about what actions they need to take. The most critical challenge, the shortage of critical skills, is the top issue for 64% of organizations compared to only 55% in 2012 (see Figure 1). This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

2 Page 2 Figure 1: Top Pressures for Talent Acquisition In order to overcome these challenges, organizations are investing in RPO solutions to both lift the administrative burden of recruitment and also improve the overall strategy. These organizations are looking at RPO less as a quick fix and more as a long-term solution a significant change from how RPO was conducted in the past. As indicated in Figure 2, the trend away from selective RPO in favor of job-based and project-based RPO reveals that organizations are thinking more strategically about RPO and how to leverage this relationship. They are looking for a partner with a deep expertise of the skills needed for specific job functions as well as business-driven projects. Figure 2: Trends in the Use of RPO

3 Page 3 The Changing Face of RPO As RPO evolves, selecting the right provider and trusted partner is a difficult task. In fact, one of the top barriers for investing in RPO is the fear that these providers do not understand the company culture (32%). As a result, many organizations are starting off slowly in their RPO investment and outsourcing traditional areas such as background screening, employment verification, and sourcing (see Figure 3). An RPO relationship does not develop overnight, and as a result, companies pace themselves to establish a relationship with their provider partner. Once organizations have established trust with their provider, they often begin to outsource additional areas of recruitment such as creating an employer value proposition, conducting workforce planning or building a talent community. Fortunately, today s leading RPO providers offer a robust set of services and tools in all areas of talent acquisition (employer branding, sourcing, screening, assessment, hiring, and onboarding). Figure 3: Recruitment Elements Outsourced Best-in-Class organizations are strengthening their RPO relationship by investing in more innovative areas such as recruitment marketing and social media recruitment strategy (see Figure 4). In social media, for example, an RPO provider may create, engage, and monitor social activity for the organization in an effort to connect with top talent and strengthen the employer value proposition. For job advertising, they may provide the insight around what channels yield the best results. Overall, these organizations are looking to their RPO providers to help differentiate them when attracting top talent. They are also comfortable enough with this relationship to relinquish control over recruitment activities in the hope that their providers will represent their values and brand in the same manner that they would expect from their own employees.

4 Page 4 Figure 4: Elements Being Outsourced by Best-in-Class Companies When organizations leverage RPO in this broader context of talent acquisition, they are able to drive results, including a 9% improvement in hiring management satisfaction compared to only 5% from organizations that do not leverage RPO. For this reason, organizations must develop an understanding of their key requirements and determine the capabilities they need to transform their recruitment strategies. The Art and Science of Recruitment Talent acquisition is often a balance between an art and a science. On one hand, recruitment must become more analytical in the way it meets talent needs and responds to corporate priorities. Conversely, talent acquisition efforts must continuously build and cultivate relationships with top talent inside and outside the organization. When considering an investment in RPO, organizations may want to consider providers that can support both of these needs. Aberdeen research found that organizations with a strategic approach to RPO are able to both improve how they build a talent pipeline (art) and measure workforce planning (science) as indicated in Figure 5. They are also able to strengthen their employer value proposition. Talent Pipeline: The ability to both identify quality talent and to create a talent pipeline regardless of current hiring needs are two strategic actions that are closely intertwined. These organizations have greater insight into the talent they have and the talent they need at any given time creating a more strategic approach to identify talent. Workforce Planning: Workforce planning has become a priority for both HR and business leaders. This approach transcends traditional headcount analysis by including skill gap analysis and scenario-planning actions. The ability to identify these gaps gives talent

5 Page 5 acquisition professionals the insight needed to prepare for current and future business needs. Employer Branding: A strong employer brand can help drive quality talent to an organization by defining and translating the company s image, organizational culture, and reputation to a large audience. It also serves as the foundation of a positive candidate experience. Figure 5: Strategic Actions for Organizations Using RPO Vertical Solutions Certain industries have unique hiring needs when it comes to recruitment. When investing in RPO, organizations across industries such as financial services, healthcare, and technology for example, have requirements that are specific to their industry. As indicated in Figure 6, the priorities vary greatly when comparing various industries in terms of what and how they leverage RPO. Healthcare organizations, for example, must balance both compliance and quality when recruiting top talent, while technology organizations and financial services companies focus on efficiency to meet a competitive market. Several RPO providers have demonstrated a deep understanding of the specific needs of these industries and offer solutions to identify and attract top talent.

6 Page 6 Figure 6: Key Elements Outsourced by Different Industries A Blended Workforce Many organizations are looking beyond the long-standing boundaries that divide traditional employee talent acquisition from management of the contingent and free-agent workforce talent supply. They are adopting a single integrated framework for employee recruitment and contingent workforce supply chain management, yielding what is known as a blended workforce approach to talent strategy. In fact, nearly 50% of Best-in-Class organizations listed a blended workforce as a top priority for These organizations are considering a single strategy and, often, a single provider to manage both contingent workers and full-time employees. In order for a blended workforce approach to be effective, most organizations will require collaboration between HR, procurement, and the business. 1. Foster collaboration between key internal units. A blended workforce for most organizations will require collaboration between HR, procurement, and the business. Fifty-four percent (54%) of organizations identified collaboration as a top strategy in enhancing a total talent approach. 2. Define a formal strategy. A blended strategy should document existing processes and future goals based on the internal and external marketplace. Developing a comprehensive plan a strategy for 48% of our survey respondents enables organizations to design foundational practices in the context of long-term goals. 3. Invest in technology as a program enhancer. Forty-three percent (43%) of organizations surveyed are automating key processes in managing the blended workforce.

7 Page 7 Figure 7: Essentials for Implementing a Blended Workforce Strategy Source: Aberdeen Group, June 2012 Capabilities Enabling Success Aberdeen analyzed organizations pre-requisites regarding process design and technology options when investing in RPO. Process Process capabilities for RPO involve communication. Organizations and service providers must work together to set expectations. The top priority is for companies to determine how RPO will make the organization leaner at the beginning of the process, and ensure that hiring managers are regularly meeting with RPO providers. This plan ensures that everyone involved is on the same page and collaborating to drive success. Currently 35% of Best-in- Class organizations create guidelines on how RPO can make the organization leaner compared to 23% of All Others and 68% facilitate meetings between hiring managers and RPO providers compared to 43% of All Others. In order for this communication and collaboration to occur, providers must have an understanding of the company culture. In some cases, providers will send representatives to work from company offices or send their executive team to build a relationship and demonstrate their commitment to the client. Seventy-percent (70%) of Best-in-Class organizations believe their RPO provider understands their culture compared to 62% of All Others.

8 Page 8 Figure 8: Process Capabilities for RPO Performance Management Measuring the performance of an RPO provider is a challenge for many organizations, particularly when objectives are not clearly outlined in advance. In fact, 35% of Best-in-Class organizations have defined metrics for evaluating their providers compared to only 11% in Service Level Agreements (SLAs) are the most common way that organizations can set expectations around business outcomes. The majority of RPO engagements are anchored in multi-year SLAs. Being such an important part of creating a trusted partnership, some providers even offer reverse SLAs to provide more transparency in the relationship. The top metrics include time-to-fill, candidate guaranteed, position guaranteed, customer satisfaction, and hiring manager satisfaction (see Figure 9).

9 Page 9 Figure 9: SLA Metrics for RPO Technology Technology has become ingrained in many RPO engagements. Whether through proprietary technology or strategic partnerships, RPO providers are offering support in the talent acquisition technology landscape. These providers have a unique opportunity to establish themselves as strategic recruitment technology providers and to serve as the primary recruitment provider of both services and technology. Organizations that invest in RPO are also beginning to use their RPO providers for not only services but also as ATS system providers. More providers have been developing these systems in order to provide an improved user experience and enhanced capabilities to address the major pain points of today s recruiters such as mobile and search. Aberdeen research found that organizations investing in RPO are more likely to increase their recruitment technology investment compared to organizations not leveraging RPO (52% vs. 31%). Key Takeaways For organizations beginning to explore RPO or continuing to build a business case for their current investment, a few key points to keep in mind include: Build a trusted partnership. In order to represent an organization to the outside world, establishing trust is essential for the success of any RPO investment. Organizations relinquishing their control and power over recruitment activities need to be able to trust that their providers are representing their values and brand in the same manner that they would expect from their own employees.

10 Page 10 Consider a blended workforce. In order to make smarter decisions around recruitment, organizations need to take a complete view of their workforce and include contingent labor in any strategic recruitment and RPO engagements. Measure the performance of your vendor. In order to ensure that RPO is aligned with overall business objectives, organizations should continuously evaluate their RPO investment to make sure they are successful in hiring quality talent and improving business outcomes. What is Your Most Effective Source of Hire?; June 2013 Strategic Onboarding 2013: A New Look at New Hires; April 2013 Assessments 2013: Finding the Perfect Match; April 2013 Related Research Human Capital Management Trends 2013: It s a Brave New World; January 2013 Strategic Talent Acquisition: Are You Prepared to Hire the Best; September 2012 Author: Madeline Laurano, Research Director, Human Capital Management For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen s research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, visit Aberdeen or call (617) , or to learn more about Harte-Hanks, call (800) or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. (2013a)

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