How and When To Outsource Recruitment

There are a few things in life that just never fail to give people the willies ó you know, those butterflies in the stomach that scream, “Hey, wait a minute! Is this something I really wanna do? If so, why am I nervous as hell?” Stuff like getting married, going to traffic court, public-speaking engagements, skydiving, or bungee jumping. They all seem to have the same nerve-racking effect on people. Similarly, many VPs of HR, CFOs, COOs, and recruitment directors get their nerves rattled at the mere possibility of outsourcing recruitment. It is indeed a huge commitment, financially and legally, and could be a major risk for any company. It’s the equivalent of hiring a contractor to construct your house or business: you know you can’t entrust the future of your entire company to just anyone. To Outsource or Not To Outsource? The decision to outsource recruitment is a decision hundreds, maybe even thousands, of executives will be making this year. Since most corporations of varying sizes slashed their recruiting departments during the recent economic downturn, many will elect to avoid possible trouble in the future and simply outsource the entire function. There are many benefits, as well as potential pitfalls, to outsourcing your corporate growth to a focused recruiting consultancy, and all decision-makers must assess them. Failure to conduct a thorough cost-benefit analysis could not only cost you your job, but perhaps even your company’s well being. The first thing in considering such a decision is to know the outsourced recruitment lifecycle. There are five general steps or events that must take place in this framework:

  • Event 1: Research and analysis
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  • Event 2: Access, engage recruiting outsourcing plan
  • Event 3: Manage outsourcing and insourcing transition
  • Event 4: Project manage outsourcing’s implementation/communication
  • Event 5: Maintain and streamline outsourcing management

Here is a diagram that’s been very instrumental during our discussions with clients. It’s helped those involved obtain the macro-corporate perspective of the outsourced recruitment lifecycle: Event 1: Research and Analysis The researching and analyzing phase of the recruitment outsourcing lifecycle is where the executive responsible for the corporation’s growth and recruitment ultimately decides whether or not to engage an outsourced recruitment provider and if so, what they will need and with whom. Obviously, if your firm does not expect to hire more than, say, 25 new employees over the course of a year, outsourcing your staffing function simply would not make sense. In such instances, a seasoned individual contract recruiter would likely make more financial and strategic sense. There are economies of scale at work here, and we always recommend that only if there is going to be a large-scale effort to grow and recruit new talent would there be a point to outsourcing the talent acquisitions function. A checklist you as the decision maker could use may look something like this: 1. Involve all the right players. Typically, deciding to outsource the entire corporate staffing function will involve all the senior executives. The VP of HR and CFO are common players in this decision, usually along with the CEO, CIO, CTO, and even the board of directors. In each instance, know the department’s business language, concerns, and questions. Have concrete and empirically based responses to all of their inquiries. Remember, this decision will have far-reaching impact on the entire company, and as such it will require that all feedback is solicited and considered. Some of the questions that your CFO may ask and that you should be prepared to respond to could be: What cost-lowering guarantees are being offered? What will our overall savings be? What capital costs will we avoid via an outsourced solution? On the other hand, the senior HR executive or project staffing manager may be more concerned with questions such as: What kind of reporting accuracy and accountability (i.e. metrics) will the outsourcing provider give? What are the benchmark recruitment methodologies that have set the market standards in outsourced staffing? Can we exceed such standards? How much will productivity increase having the staffing function outsourced to an outside provider? How will the outsourced provider assure that our corporate strategic objectives are further driven and met (diversity, mission, training, etc.)? Should we have the outsourced recruitment function onsite or off? What are the ramifications in either scenario? What impact on corporate culture, morale, products and services will the outsourcing solution have? Will the provider represent our brand at an excellent level? Make sure to conduct an in depth corporate impact report (CIR) to answer such questions. In a nutshell, make sure you’ve sliced and diced thoroughly. 2. Decide what’s important. After you’ve sliced and diced all the possibilities, look at what’s before you and decide which functions are strategic to your business and which are not. What can you afford? Remember that you don’t have to achieve everything, and the fact is you shouldn’t try to. After all, there is an impact on the outsourcing provider’s transitional capabilities should a company demand the moon and stars from the outset. An honest and professional recruitment outsourcing firm will be upfront and say no to certain corporate requests. This is why you must only consider outsourcing your recruitment to experts and reputable providers. 3. Assess integrated options. It may be a viable option for you to consider providers who can effectively and efficiently integrate multiple business process functions into one outsourced business solution. For example, some firms, along with outsourcing their recruitment functions, are also seeking to outsource their third-party (also popularly known “employer of record”) payroll to vendor management software providers. Many want to outsource their entire HR function, including benefits, etc. Some of these corporations may decide to go with a single outsourced human capital solution instead of using individual vendors for each function. 4. Evaluate client services. Ask the outsourced staffing provider what their periodically live and web-based customer service departments are offering and how they function. If they can’t answer that, move on to the next possible provider. Find out how well the provider monitors its customer support. Have they implemented total quality management checks and balances? As a client, you can insist on particular levels of client service actions. Accountability will be a big concern during your decision-making process. The core outsourced recruitment provider may want to subcontract out your business to another provider. Ask yourself if this is what you want. If you decide to work with such an outsourcer, who will in turn “outsource” your business, make sure the original outsourcer is held totally accountable, and make sure the new subcontractor on the scene is completely aware of your requirements. Remember, you write the check! 5. Don’t settle for less. Don’t settle for mediocre or questionable recruitment solutions. Call around to colleagues who have already gone through this process and ask lots of questions. If a solution provider sounds like they are promising too much, they probably are. If you read about a benchmark recruiting practice, ask what the provider’s experience is in implementing such staffing strategies. Another important consideration is that you not be seduced by the possibility of lowering your outsourcing costs by breaking up and compartmentalizing the various business functions you want outsourced to different providers who may have responded with “cheaper” proposals. Although on paper separating your outsourcing needs to various providers who manage only some aspects of your business may look good, it may very well be a more efficient and effective solution to outsource your entire human capital process to one vendor. 6. Remember that reputation counts. Many people may presume that this is the point where I urge you to check on an outsourced provider’s references. But references and sales presentations are not the only indicators your firm should check. Be very exact and know precisely what you’re seeking. One of our previous clients, a telecommunications company, told us that they’d selected Humanatek as their recruitment outsourcing partner because we’d met all four of their RFP’s requirements: expertise and reputation; solid online support and training; flexibility in working with the implementation and integration of their new HRIS system; and financial stability. The other providers our client had considered also possessed similar expertise and pricing, but our references revealed that we had a higher level of client service and a history of architecting and driving recruitment strategies. The one consideration that put us over the top was that we were willing to contractually offer a lower cost-per-hire guarantee. 7. Sleep at night! Assure that your outsourcing provider has measurable controls of its own project deployment infrastructure. They should have built-in measures protecting your information and your employees’ privacy. Non-disclosure and non-compete agreements should be in place, along with intellectual property protection documentation. You absolutely can and must have an ironclad and mutually beneficial contract between you and your service provider. Conclusion If you find yourself responsible for deciding whether to outsource an entire recruiting function, remember you are the lynchpin that will either make or break your entire company. So, consider that nervous and scary sensation you’ve been having as a normal part of your decision-making process. And if such feelings remind you of when you first went bungee jumping or the day you lost your virginity (okay, so I’m writing late in the evening!), you may want to look at it this way: Making a thoughtful, empirically based decision on which outsourced recruiting partner to choose is a lot like practicing safe sex for the first time or making sure your cord doesn’t break during a bungee jump. In my next article, I’ll continue this series and walk you through the field of landmines you’ll face when deciding on an outsourced recruiting provider. Remember I’m here to serve ó your new “Trojan Man” in the recruiting world!

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2 Comments on “How and When To Outsource Recruitment

  1. Martin,

    This is a good start in applying basic checklists to an important decision however, there is one metric that is not mentioned. Retention. If a potential client is approaching the decision on whether or not to outsource their recruitng function and the whole gist of their decision is based on ‘compatability’ and ‘potential cost savings’, this is a flawed process, IMHO.

    As the economy heats up and the inevitable pendulum swing begins to point in the direction of ‘recruiting’ and not just maintaining, it is critical that recruiting take on a more strategic footing.

    Metrics are good for those that follow the adage ‘you can’t manage what you don’t measure’ and cost savings are always good for those focused on the bottom line. I would like to invoke a little Ben Franklin at this point in the negotiation. As Ben said ‘Take care of the pennies and the dollars will take care of themselves’. In our profession, the pennies are the right candidate in the right job.

    A true RPO(Recruitment Process Outsourcer) will have a recruiting methodology that, as Stephen Covey asserts, ‘Begin with the end in mind’. Or, as Mr COvey also states, ‘Seek first to understand, then to be understood’. These are important tenets in the recuiting process as well. What makes a successful hire? What are the success factors that will insure that this new hire meets with our expectations? There are many more deliverables than CPH and TTH that will determine the success of an outsourced decisions. We should elevate the discussion, from the beginning to ‘Strategic’ vs ‘Tactical’ measurements and planning. It is essential that we measure the effectiveness of the process, not just the metrics of time to hire and cost per hire.

    To accomplish this requires a true partnership between the Company and the RPO. There are two sides to every equation and success can not be the sole purview of one side. The hiring company must open up their Human Capital planning to include the RPO. The success or failure of the venture is equally applied to the hiring manager and their willingness to partner in the process. At the end of the day, if the RPO fails, it is just as much a failure of the hiring company.

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