Talent Acquisition: In-house or outsource? 6 steps to a meaningful business case sally hunter
Rethinking the case for change Whether it s managed in-house or outsourced, the Talent Acquisition function and its costs are continually scrutinized and assessed for potential efficiencies. While it can be frustrating for HR to be routinely challenged on cost and value brought, the creation of a robust business case can be a powerful lever in demonstrating value shoulder to shoulder with the cost/efficiency benefits. In the current economic climate, the pressure to reduce cost and improve efficiency remain a key priority, however there is increasing evidence that Shareholders recognize competitive advantage is intrinsically linked to Talent and that talented employees simply don t stay as long and attracting them in the first place takes tenacity and consistent focus. People are one of the greatest costs any organization carries, not the cost of recruiting those people, so Talent Acquisition leaders need to lead the strategy and debate about their organizations greatest assets and demonstrate their value within the broader plan and people agenda. Go further than simply accepting and absorbing change, and instead start to take control and lead the change for the commercial good of the organization. That means demonstrating the true value of recruitment across the organization, as well as how much it really costs. And here, we offer ways to do just that. 2
1 / Don t let the document drive your process Every organization has its own unique way of building out a business case. There will be documents and forums that differ from business to business, but it must ask and answer the right questions if the right case is to be made. No matter what form the business case takes, the process and the documentation must: 1. Capture what it really costs, not just the obvious costs such as that of the talent team s wages and the advertising costs of each role. 2. Map the process to find all hidden/underlying costs and to show where inefficiencies lie 3. Prepare stakeholders so that they understand why you re embarking on the business case in the first place and to ensure any general grievances or issues are addressed in it. 4. Establish the benchmark by measuring key indicators of just how successful the recruitment process currently is. 5. Demonstrate the timeline for savings to be delivered. 6. Answer these central questions: How do we deliver the most optimal talent acquisition service to Hiring Managers? How do we attract and retain the best applicants? How do we measure the value of talent acquisition to the business? 3
2 / Dig deeper to find out what it is really worth Recruitment functions must not only learn to identify the total cost of recruitment, they must learn to justify the potential investment and/or identify the potential savings from any proposed change. This might seem fundamental to the very idea of a business case, but identifying these elements takes significant effort often far more than we first assume. Understanding the total cost of the recruitment process prior to confirming the scope of any potential outsourcing or insourcing move allows an organization to identify the greatest opportunities for savings and process enhancements. To gain a true total cost of recruitment you must factor in the cost/spend related to: The existing Talent Acquisition Team Time spent by non-talent Acquisition HR resources e.g. HR Business Partners, HR Admin, HR Systems The ATS deployed to support the recruitment process including licenses, maintenance, upgrades and enhancements Maintenance of web content, as it relates to advertising vacancies and brand Creation, design, maintenance and bounty payments for candidate referral programs Agency fees Creation of recruitment marketing creative and collateral, either via external partners or in-house Recruitment marketing e.g. job-board licenses, press/online ads, events, fairs, sponsorship Hiring Manager time i.e. creation of vacancy, approval process, screening applications, scheduling interviews, interviews, offer negotiation and on-boarding Discreet resources or teams within the business that have been created to support the recruitment process i.e. recruitment champions, admin teams, Central Governance Teams Third-party assessment tools e.g. psychometric testing, behavioral analysis Background screening/reference checking and preparation of paperwork for onboarding Any communication with unsuccessful applicants 4
3 / Understand the process The act of mapping the end-to-end recruitment process can be invaluable well beyond simply helping organizations to identify and capture any hidden costs. Above all, it will highlight the complexity or gaps within the process and may offer its own insights into the real improvement solution. To ensure you have the full picture, map the entire process from all three perspectives: Candidate How/where will they find the job opening? How do I apply? How do I find out about the progress of my application? What happens if I am unsuccessful but still a valued contact? Hiring manager How do I raise my job opening? What documentation/ conversations do I need to have upfront/during/at the end? What part do I play in interviews/ selection and screening the candidate? What time/resources do I put into onboarding? What records do I need submit/update when a new hire starts work with me? HR/Procurement What documentation do I need to prepare throughout the process? What communication do I have with my own team, with hiring managers and external providers/candidates? Do I engage with different processes for different roles? 5
4 / Read the mood Even when you know what your recruitment process really costs, and you know what the process map looks like, you need to understand the conditions any change will be made under. Surveying the end users helps to determine which improvements will have the most impact, and how open to change they currently are: How willing people are to undertake major Candidate Hiring manager HR/Procurement change (especially key stakeholders) can, and will, determine the overall success of a business case. Reading the mood as it relates to recruitment processes needs to be looked at from internal and external points-of-view, and it needs to address how well people feel it delivers on their needs. What s my view of this company from outside now that I ve been through their recruitment process? How worthwhile was the process for me and would I apply again? Was the investment of time and energy too much/too little? How successful has the recruitment process been in terms of meeting my talent requirements? Do I have a positive view of the process overall? Is the process keeping pace with my hiring needs, or am I How complex and time-consuming is the recruitment process? How many staff and what proportion of their day is spent on recruitment-related activities? How effective is this investment in delivering the right people to the right roles in the right timeframes? How do the people that are using this process most feel about the outcomes it is delivering? If people are generally happy, How professional was it? experiencing long cycle times? Do I feel that there is too little/too much involvement from me in the process? What do I feel the process says about me/ my team/our business? what is the case for change dependent upon? If they re not satisfied, is that because of the process, or due to broader business issues? Do I feel the process cast us in the best light with the right talent? 6
5 / Make your benchmark meaningful When evaluating the current performance of the talent acquisition function, it is important to measure those elements that most impact the business overall. Every organization is different, and this may include measurements such as: Time to hire Average number of vacancies raised per year, by business unit and skill type Average number of vacancies filled per year, by business unit and skill type Typical sources of candidate per vacancy filled e.g. agency, direct, internal, referral For other organizations, a meaningful benchmark may look quite different. It may be about the quality of the candidates or the ability to source very specific types of candidates. In some cases, this kind of data is simply not going to be available. Hence, part of the business case may be to start capturing it. Or, you may need to benchmark and network with other similar-sized organizations with similar hiring profiles to fill the gaps. It s also possible to leverage the resources and knowledge of an external partner, which can help to broaden the organization s view of recruitment and any associated change that goes above and beyond process efficiencies. Look for external help if you need it. This will ensure informed assumptions are made as to what good talent acquisition should look like. It will assist in capturing how the organization could benefit from: Creative and innovative sourcing techniques Strategic workforce planning and talent demand planning Market data drawn from multiple clients in your market or geography Industry benchmarks, in terms of time to hire, sourcing optimization and candidate satisfaction data, from their existing client base 7
6 / Define the value of recruitment No matter which solution the business case proposes (in-house or outsourced), taking an outsourced approach to the performance measurement of the organization s recruitment function will be a major advantage in the long term. HR (like any other support function) is continually challenged to define, measure and communicate the value it brings to the organization. By using an outsourcing methodology to create your performance metrics, this value can be clearly communicated to the stakeholders. If the change gets the go-ahead, this measurement will form part of the rationale for communicating and selling the investment it requires to the rest of the organization. Measuring the performance of recruitment is about defining its value and this is why change may well be needed in the first place. Plus defining the value will resonate with Shareholders and give your Talent Acquisition function a voice in the strategy and business planning process. In defining the value of recruitment, consider how to: Set service standards, but measure exceptions, not the micro detail Measure the source of candidates, but share with the business a comparison to what you would have spent in the alternative model Measure time to hire, but find of a way of identifying time to competency and the impact on productivity of carrying vacancies Measure satisfaction of hiring managers AND candidates 8
About the Author Sally Hunter is RPO Practice Lead EMEA for the Kelly Outsourcing & Consulting Group and is responsible for the RPO proposition from client relationships via the account management team to consulting on HR transformation. Sally has extensive experience in the human capital sector, including leadership positions within strategic account management for staffing providers to operational delivery. Sally has also been on the buy/client side leading transformational efficiency projects, that have included the outsourcing of large scale recruitment and learning operations. As an independent Consultant, Sally has worked with a number of clients to build the business case for change and shape their HR model in the context of outsourcing partnerships. Sally has worked with Clients across the following key industry sectors: Financial Services, Public Sector, Manufacturing and Pharmaceuticals. About KellyOCG KellyOCG is the Outsourcing and Consulting Group of Fortune 500 workforce solutions provider, Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions, Human Resources Consulting, Career Transition and Organizational Effectiveness, and Executive Search. Further information about KellyOCG may be found at kellyocg.com. EXIT