8 Great Procurement Questions for RPO

Getting Started with Recruitment Process Outsourcing

Will RPO help your firm meet
its strategic recruitment goals?

Outsourcing the recruitment function—a process core to identifying and securing your company’s single greatest asset, its people—is a major strategic consideration for any organization. We believe a number of critical questions—Hudson RPO’s “Great Eight”—need to be asked and properly addressed in the evaluation process and that procurement management should use as a baseline in the decision process.

1. Does outsourcing the recruitment function/process align well with the organization’s business needs/strategy? Plain and simple, if this choice does not present a compelling strategic rationale based on your competitive market priorities, don’t do it.
2. Will recruitment process outsourcing truly improve your business performance? Cost reduction may be a big driver of pursuing an outsourcing arrangement for a non-core competence in your business, and it’s one important financial measure. At the same time, you should establish other performance metrics with your business partner to demonstrate that this arrangement helps you better attract the best and brightest for your business, speed time to hire, keep your employer brand consistent and effective, leverage internal mobility, and increase employment engagement and retention.
3. How can you understand and control costs? Outsourcing relationships are commonly struck to reduce cost. However, it is important for you to understand the entire cost structure, all of its components and how an entire package of products, services and management fees may be bundled together. Being able to quantify total cost per hire is critical, and it is also important to ensure that there is shared risk in any RPO deal so the company is cost-protected during hiring peaks and valleys.
4. Are the financial projections accurate? It is important for you to take a critical look at any numbers submitted by the RPO provider. Look for assumptions, oversimplifications or just plain misleading figures that may adversely impact your overall cost/fees.
5. Will this arrangement still enable you to have the necessary internal human resource skills and expertise needed in any organization? While outsourcing may be the right direction for your recruitment function, there is still a need for internal expertise to help evaluate chosen strategies and tactics, and coordinate with the RPO provider. Your business partner should also be open to transferring all knowledge, and turning back over the people and processes to your internal team once a best-practice operation is established and running smoothly.
6. Who will ultimately manage the financial and performance metrics of the contract? People, processes and technology combine to deliver for a RPO arrangement. It is essential for the company’s internal leadership to maintain management oversight of any outsourcing initiative. Factoring into the contract terms the time and resources necessary to effectively manage the relationship and its results is smart.
7. What are the cultural ramifications of outsourcing your recruitment function? Understanding how your managers and broader employee base are going to react to this massive operational change is critical. One essential competency you should be looking for in your RPO business partner is change management expertise. Folks who have been there/done that have experienced most of the potential pitfalls and know ways to best handle to ensure organizational support and buy in.
8. Is there an escape clause in the deal or protection in place for when business conditions change? As we have seen during the recent recession, business conditions can change in a major way, and fast. You need to make sure you are not locked into a long-term contract or deal with little or no flexibility to alter scope or completely withdraw over time. Here again, making sure that there is a shared risk model for operational costs when hiring demands change is one way to help ensure some of this protection.