Recruitment Process Outsourcing

RecruitmentRecruitment refers to the process of screening, and selecting qualified people for a job at

an organization or firm, or for a vacancy in a volunteer-based some components of the

recruitment process, mid- and large-size organizations and companies often retain

professional recruiters or outsource some of the process to recruitment agencies. External

recruitment is the process of attracting and selecting employees from outside the

organization.

The recruitment industry has four main types of agencies: employment agencies,

recruitment websites and job search engines, "headhunters" for executive and

professional recruitment, and in-house recruitment. The stages in recruitment include

sourcing candidates by advertising or other methods, and screening and selecting

potential candidates using tests or interviews.

Difference between recruitment and selection

1. Recruitment is the process of searching the candidates for employment and

stimulating them to apply for jobs in the organisation WHEREAS selection involves the

series of steps by which the candidates are screened for choosing the most suitable

persons for vacant posts.

2. The basic purpose of recruitments is to create a talent pool of candidates to enable the

Recruitment Process Outsourcing

selection of best candidates for the organisation, by attracting more and more

employees to apply in the organisation WHEREAS the basic purpose of selection

process is to choose the right candidate to fill the various positions in the organisation.

3. Recruitment is a positive process i.e. encouraging more and more employees to apply

WHEREAS selection is a negative process as it involves rejection of the unsuitable

candidates.

4. Recruitment is concerned with tapping the sources of human resources WHEREAS

selection is concerned with selecting the most suitable candidate through various

interviews and tests.

5. There is no contract of recruitment established in recruitment WHEREAS selection

results in a contract of service between the employer and the selected employee.

Recruitment Process Outsourcing

Steps involved in Recruitment Process

The decision is made as to whether recruitment is necessary.

The job description is prepared.

The personnel specification is prepared.

Plans are made on how and when to advertise.

Applicants are short-listed.

References are requested.

Candidates are invited for interviews and selection tests.

The successful candidate is offered the job and signs the contract of employment

Recruitment Process Outsourcing

Some regular methods of Recruitment are

1) Head Hunting:

Many organizations have active formal employee referral programs, particularly

in tight job markets or where the employer has difficult-to-fill or high-turnover positions.

These programs reward employees for referring applicants to the organization. Other

organizations have less formal programs and encourage employees to refer potential

applicants, but do not provide an incentive for doing so.

Experience and research show considerable benefit to the employee referral type of

recruitment. First, employees are not likely to refer applicants that would not be good

employees. They do not want to be embarrassed by the performance or conduct of their

referral. Also, candidates that are referred by employees typically already have begun the

orientation process and have somewhat of a realistic job preview via their relationship

with the current employee. Finally, there is a positive correlation between employee

referral and employee retention of those hired as a result.

There is, however, one potential problem that can associated with employee referrals.

Employees tend to refer their relative and friends, who most likely are of the same

ethnicity or sex as themselves. Therefore, this type of recruitment does not normally

facilitate the achievement of diversity and affirmative action plan goals and can create

Recruitment Process Outsourcing

adverse impact. This is particularly true if the organization has a past practice of

discrimination.

2) Job posting on job sites (Naukri, monster, timesjobs etc):

Job posting is the process of advertising and publicizing job openings to

employees. This might be accomplished by physically posting the opening on bulletin

boards or by electronically posting them on the company’s intranet or Internet. It is then

up to the employee to actually apply for the position.

3) Employment Agencies:

As mentioned earlier in the discussion of outsourced recruitment, employment

agencies and job search firms often are good sources of job candidates. First, all states

have unemployment offices, displaced worker units, or similar agencies performing the

same function. These are often sources of applicants.

Private employment agencies can be viable sources of applicants. These firms most

frequently charge the organization a fee for referral of candidates, either on a contingency

or retainer basis. Contingency-based firms receive the fee only if the applicant is hired,

whereas retainer-based firms receive a fee for engaging in the search even if no one is

hired. Employment agencies normally prescreen the applicants for the organization and

refer only those that are qualified. The agencies often have contacts and relationships that

Recruitment Process Outsourcing

the organization does not, and might be able to locate excellent candidates for higher-

level managerial and hard-to-fill technical and professional positions. Although using

employment agencies and search firms might be cost-effective and yield results that the

organization could not achieve on its own, doing so can be extremely expensive. Costs

for using these types of firms often run 25–30% of the yearly salary for the position being

recruited.

6) Advertisements on news papers like TOI, Hindu etc.

7) Contract staffing

Recruitment Process Outsourcing

OutsourcingOutsourcing is subcontracting a process, such as product design or manufacturing, to a

third-party company. The decision to outsource is often made in the interest of lowering

cost or making better use of time and energy costs, redirecting or conserving energy

directed at the competencies of a particular business, or to make more efficient use of

land, labor, capital, (information) technology and resources. Outsourcing became part of

the business lexicon during the 1980s. It is essentially a division of labour.

Overview

Outsourcing involves the transfer of the management and/or day-to-day execution of an

entire business function to an external service provider. The client organization and the

supplier enter into a contractual agreement that defines the transferred services. Under the

agreement the supplier acquires the means of production in the form of a transfer of

people, assets and other resources from the client. The client agrees to procure the

services from the supplier for the term of the contract. Business segments typically

outsourced include information technology, human resources, facilities, real estate

management, and accounting. Many companies also outsource customer support and call

center functions like telemarketing, CAD drafting, customer service, market research,

manufacturing, designing, web development, print-to-mail, content writing, ghostwriting

and engineering. Offshoring is the type of outsourcing in which the buyer organization

belongs to another country.

Recruitment Process Outsourcing

Outsourcing and off shoring are used interchangeably in public discourse despite

important technical differences. Outsourcing involves contracting with a supplier, which

may or may not involve some degree of offshoring. Offshoring is the transfer of an

organizational function to another country, regardless of whether the work is outsourced

or stays within the same corporation/company.

With increasing globalization of outsourcing companies, the distinction between

outsourcing and offshoring will become less clear over time. This is evident in the

increasing presence of Indian outsourcing companies in the United States and United

Kingdom. The globalization of outsourcing operating models has resulted in new terms

such as near shoring, noshoring, and right shoring that reflect the changing mix of

locations. This is seen in the opening of offices and operations centers by Indian

companies in the U.S. and UK. A major job that is being outsourced is accounting. They

are able to complete tax returns across seas for people in America.

Multisourcing refers to large outsourcing agreements (predominantly IT). Multisourcing

is a framework to enable different parts of the client business to be sourced from different

suppliers. This requires a governance model that communicates strategy, clearly defines

responsibility and has end-to-end integration.

Strategic outsourcing is the organizing arrangement that emerges when firms rely on

intermediate markets to provide specialized capabilities that supplement existing

capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an

Recruitment Process Outsourcing

arrangement produces value within firms’ supply chains beyond those benefits achieved

through cost economies. Intermediate markets that provide specialized capabilities

emerge as different industry conditions intensify the partitioning of production. As a

result of greater information standardization and simplified coordination, clear

administrative demarcations emerge along a value chain. Partitioning of intermediate

markets occurs as the coordination of production across a value chain is simplified and as

information becomes standardized, making it easier to transfer activities across

boundaries.

Due to the complexity of work definition, codifying requirements, pricing, and legal

terms and conditions, clients often utilize the advisory services of outsourcing consultants

(see sourcing advisory) or outsourcing intermediaries to assist in scoping, decision

making, and vendor evaluation.

Reasons for outsourcing

Organizations that outsource are seeking to realize benefits or address the following

issues:

Cost savings. The lowering of the overall cost of the service to the business. This

will involve reducing the scope, defining quality levels, re-pricing, re-negotiation,

cost re-structuring. Access to lower cost economies through offshoring called

"labor arbitrage" generated by the wage gap between industrialized and

developing nations.

Recruitment Process Outsourcing

Focus on Core Business. Resources (for example investment, people,

infrastructure) are focused on developing the core business. For example often

organizations outsource their IT support to specilaised IT services companies.

Cost restructuring. Operating leverage is a measure that compares fixed costs to

variable costs. Outsourcing changes the balance of this ratio by offering a move

from fixed to variable cost and also by making variable costs more predictable.

Improve quality. Achieve a step change in quality through contracting out the

service with a new service level agreement.

Knowledge. Access to intellectual property and wider experience and knowledge.

Contract. Services will be provided to a legally binding contract with financial

penalties and legal redress. This is not the case with internal services.

Operational expertise. Access to operational best practice that would be too

difficult or time consuming to develop in-house.

Access to talent. Access to a larger talent pool and a sustainable source of skills,

in particular in science and engineering.

Capacity management. An improved method of capacity management of

services and technology where the risk in providing the excess capacity is borne

by the supplier.

Catalyst for change. An organization can use an outsourcing agreement as a

catalyst for major step change that can not be achieved alone. The outsourcer

becomes a Change agent in the process.

Recruitment Process Outsourcing

Enhance capacity for innovation. Companies increasingly use external

knowledge service providers to supplement limited in-house capacity for product

innovation.

Reduce time to market. The acceleration of the development or production of a

product through the additional capability brought by the supplier.

Commodification. The trend of standardizing business processes, IT Services

and application services enabling businesses to intelligently buy at the right price.

Allows a wide range of businesses access to services previously only available to

large corporations.

Risk management. An approach to risk management for some types of risks is to

partner with an outsourcer who is better able to provide the mitigation.

Venture Capital. Some countries match government funds venture capital with

private venture capital for startups that start businesses in their country.

Tax Benefit. Countries offer tax incentives to move manufacturing operations to

counter high corporate taxes within another country.

Activities for outsourcing

Research & Development

The competitive pressures on firms to bring out new products at an ever rapid pace to

meet market needs are increasing. As such, the pressures on the R&D department are

increasing. In order to alleviate the pressure, firms have to either increase R&D budgets

Recruitment Process Outsourcing

or find ways to utilize the resources in a more productive way. There are situations when

a firm may consider outsourcing some of its R&D work to a contract research

organizations or universities. Reasons why a firm could consider outsourcing are:

new product design does not work

project time and cost overruns

loss of key staff

competitive response

problems of quality/yield.

The key drivers for R&D outsourcing are emerging mass markets and availability of

expertise in the field. In this context, the two most populous countries in the world, China

and India, provide huge pools from which to find talent. Both countries produce over

200,000 engineers and science graduates each year. Moreover both countries are low cost

sourcing countries. Other strategic drivers for outsourcing R&D are access to expertise

and intellectual property, filling gaps in the capabilities of the R&D function, managing

risk better, reducing the time to market, and focusing on the core competence or activities

of the firm.

Criticisms of outsourcing

Quality Risks

Recruitment Process Outsourcing

Quality Risk is the propensity for a product or service to be defective, due to operations-

related issues. Quality risk in outsourcing is driven by a list of factors. One such factor is

opportunism by suppliers due to misaligned incentives between buyer and supplier,

information asymmetry, high asset specificity, or high supplier switching costs. Other

factors contributing to quality risk in outsourcing are poor buyer-supplier

communication, lack of supplier capabilities/resources/capacity, or buyer-supplier

contract enforceability. Two main concepts must be considered when considering

observability as it related to quality risks in outsourcing: the concepts of testability and

criticality.

Testability, in the context of quality risk in outsourcing a product or service, refers to a

product’s or service’s coverage, or the ease of inspecting every single unit. Testability

also refers to a product’s or service’s thoroughness, or the ease of inspecting for single

possible defect. Thus, the testability of a product or service is measured by where it lies

on the coverage and thoroughness axes:

Low Thoroughness + Low Coverage = Products or Services with Low Testability

High Thoroughness + Low Coverage = Complete Inspections of Few Products or

Services

Low Thoroughness + High Coverage = Incomplete Inspections of Most Products

or Services

High Thoroughness + High Coverage = Products or Services with High

Testability

Recruitment Process Outsourcing

Criticality, in the context of quality risk in outsourcing a product or service, refers to the

potential negative impact of a quality defect - the higher the criticality of a product or

service the higher the potential negative impact. The quality risk in outsourcing a product

or service can thus be summed as a function of its testability and criticality:

Low Testability + Low Criticality = High probability of minor defects

High Testability + Low Criticality = Lowest Quality Risk

High Testability + High Criticality = Low Probability of Critical Defects

Low Testability + High Criticality = Highest Quality Risk

Quality fade is the deliberate and secretive reduction in the quality of labor in order to

widen profit margins. The downward changes in human capital are subtle but

progressive, and usually unnoticeable by the out sourcer/customer. The initial interview

meets requirements, however, with subsequent support, more and more of the support

team are replaced with novice or less experienced workers. India IT shops will continue

to reduce the quality of human capital, under the pressure of drying up labor supply and

upward trend of salary, pushing the quality limits. Such practices are hard to detect, as

customers may just simply give up seeking help from the help desk. However, the overall

customer satisfaction will be reduced greatly over time. Unless the company constantly

conducts customer satisfaction surveys, they may eventually be caught in a surprise of

customer churn, and when they find out the root cause, it could be too late. In such cases,

it can be hard to dispute the legal contract with the India outsourcing company, as their

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staff are now trained in the process and the original staff made redundant. In the end, the

company that outsources is worse off than before it outsourced its workforce to India.

Public opinion

There is a strong public opinion regarding outsourcing (especially when combined with

off shoring) that outsourcing damages a local labor market. Outsourcing is the transfer of

the delivery of services which affects both jobs and individuals. It is difficult to dispute

that outsourcing has a detrimental effect on individuals who face job disruption and

employment insecurity; however, its supporters believe that outsourcing should bring

down prices, providing greater economic benefit to all. There are legal protections in the

European Union regulations called the Transfer of Undertakings (Protection of

Employment). Labor laws in the United States are not as protective as those in the

European Union. On June 26 2009, Jeff Immelt, the CEO of General Electric, called for

the United States to increase its manufacturing base employment to 20% of the workforce

commenting that the U.S. has outsourced too much and can no longer rely on consumer

spending to drive demand.

Language skills

In the area of call centers end-user-experience is deemed to be of lower quality when a

service is outsourced. This is exacerbated when outsourcing is combined with off-shoring

to regions where the first language and culture are different. The questionable quality is

Recruitment Process Outsourcing

particularly evident when call centers that service the public are outsourced and off

shored.

There are a number of the public who find the linguistic features such as accents, word

use and phraseology different which may make call center agents difficult to understand.

The visual clues that are present in face-to-face encounters are missing from the call

center interactions and this also may lead to misunderstandings and difficulties.

Social responsibility

Outsourcing sends jobs to the lower-income areas where work is being outsourced to,

which provides jobs in these areas and has a net equalizing effect on the overall

distribution of wealth. Some argue that the outsourcing of jobs (particularly off-shore)

exploits the lower paid workers. A contrary view is that more people are employed and

benefit from paid work.

On the issue of high-skilled labor, such as computer programming, some argue that it is

unfair to both the local and off-shore programmers to outsource the work simply because

the foreign pay rate is lower. On the other hand, one can argue that paying the higher-rate

for local programmers is wasteful, or charity, or simply overpayment. If the end goal of

buyers is to pay less for what they buy, and for sellers it is to get a higher price for what

they sell, there is nothing automatically unethical about choosing the cheaper of two

products, services, or employees.

Recruitment Process Outsourcing

Quality of service

Quality of service is measured through a service level agreement (SLA) in the

outsourcing contract. In poorly defined contracts there is no measure of quality or SLA

defined. Even when an SLA exists it may not be to the same level as previously enjoyed.

This may be due to the process of implementing proper objective measurement and

reporting which is being done for the first time. It may also be lower quality through

design to match the lower price.

There are a number of stakeholders who are affected and there is no single view of

quality. The CEO may view the lower quality acceptable to meet the business needs at

the right price. The retained management team may view quality as slipping compared to

what they previously achieved. The end consumer of the service may also receive a

change in service that is within agreed SLAs but is still perceived as inadequate. The

supplier may view quality in purely meeting the defined SLAs regardless of perception or

ability to do better.

Quality in terms of end-user-experience is best measured through customer satisfaction

questionnaires which are professionally designed to capture an unbiased view of quality.

Surveys can be one of research. This allows quality to be tracked over time and also for

corrective action to be identified and taken.

Staff turnover

Recruitment Process Outsourcing

The staff turnover of employee who originally transferred to the outsourcer is a concern

for many companies. Turnover is higher under an outsourcer and key company skills may

be lost with retention outside of the control of the company.

In outsourcing offshore there is an issue of staff turnover in the outsourcer companies call

centers. It is quite normal for such companies to replace its entire workforce each year in

a call center. This inhibits the build-up of employee knowledge and keeps quality at a low

level.

Company knowledge

Outsourcing could lead to communication problems with transferred employees. For

example, before transfer staff have access to broadcast company e-mail informing them

of new products, procedures etc. Once in the outsourcing organization the same access

may not be available. Also to reduce costs, some outsource employees may not have

access to e-mail, but any information which is new is delivered in team meetings.

Qualifications of outsourcers

The outsourcer may replace staff with less qualified people or with people with different

non-equivalent qualifications.

In the engineering discipline there has been a debate about the number of engineers being

produced by the major economies of the United States, India and China. The argument

centers around the definition of an engineering graduate and also disputed numbers. The

Recruitment Process Outsourcing

closest comparable numbers of annual graduates of four-year degrees are United States

(137,437) India (112,000) and China (351,537).

Failure to deliver business transformation

Business transformation has traditionally been promised by outsourcing suppliers, but

they have usually failed to deliver. In a commoditised market where any half-decent

service provider can do things cheaper and faster, smart vendors have promised a second

wave of benefits that will improve the client’s business outcomes. According to Vinay

Couto of Booz & Company “Clients always use the service provider’s ability to achieve

transformation as a key selection criterion. It’s always in the top three and sometimes

number one.” Often vendors have promised transformation on the basis of wider domain

expertise that they didn’t really have, though Couto also says that this is often down to

client’s unwillingness to invest in transformation once an outsourcing contract is in

place.]

Work, labour, and economy

Net labour movements

Productivity

Offshore outsourcing for the purpose of saving cost can often have a negative influence

on the real productivity of a company. Rather than investing in technology to improve

productivity, companies gain non-real productivity by hiring fewer people locally and

Recruitment Process Outsourcing

outsourcing work to less productive facilities offshore that appear to be more productive

simply because the workers are paid less. Sometimes, this can lead to strange

contradictions where workers in a developing country using hand tools can appear to be

more productive than a U.S. worker using advanced computer controlled machine tools,

simply because their salary appears to be less in terms of U.S. dollars.

In contrast, increases in real productivity are the result of more productive tools or

methods of operating that make it possible for a worker to do more work. Non-real

productivity gains are the result of shifting work to lower paid workers, often without

regards to real productivity. The net result of choosing non-real over real productivity

gain is that the company falls behind and obsoletes itself overtime rather than making

investments in real productivity.

Standpoint of labor

From the standpoint of labor within countries on the negative end of outsourcing this may

represent a new threat, contributing to rampant worker insecurity, and reflective of the

general process of globalization (see Krugman, Paul (2006). "Feeling No Pain." New

York Times, March 6, 2006). While the "outsourcing" process may provide benefits to

less developed countries or global society as a whole, in some form and to some degree -

include rising wages or increasing standards of living - these benefits are not secure.

Further, the term outsourcing is also used to describe a process by which an internal

department, equipment as well as personnel, is sold to a service provider, who may retain

Recruitment Process Outsourcing

the workforce on worse conditions or discharge them in the short term. The affected

workers thus often feel they are being "sold down the river."

The U.S.

'Outsourcing' became a popular political issue in the United States during the 2004 U.S.

presidential election. The political debate centered on outsourcing's consequences for the

domestic U.S. workforce. Democratic U.S. presidential candidate John Kerry criticized

U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid

paying their fair share of U.S. taxes during his 2004 campaign, calling such firms

"Benedict Arnold corporations". Criticism of outsourcing, from the perspective of U.S.

citizens, by-and-large, revolves around the costs associated with transferring control of

the labor process to an external entity in another country. A Zogby International poll

conducted in August 2004 found that 71% of American voters believed that “outsourcing

jobs overseas” hurt the economy while another 62% believed that the U.S. government

should impose some legislative action against companies that transfer domestic jobs

overseas, possibly in the form of increased taxes on companies that outsource. One given

rationale is the extremely high corporate income tax rate in the U.S. relative to other

OECD nations, and the peculiar practice of taxing revenues earned outside of U.S.

jurisdiction, a very uncommon practice. It is argued that lowering the corporate income

tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation

where the revenue was raised, and once from the U.S.) will alleviate corporate

Recruitment Process Outsourcing

outsourcing and make the U.S. more attractive to foreign companies. Sarbanes-Oxley has

also been cited as a factor for corporate flight from U.S. jurisdiction.

Policy solutions to outsourcing are also criticized.

Security

Before outsourcing an organization is responsible for the actions of all their staff and

liable for their actions. When these same people are transferred to an outsourcer they may

not change desk but their legal status has changed. They no-longer are directly employed

or responsible to the organization. This causes legal, security and compliance issues that

need to be addressed through the contract between the client and the suppliers. This is

one of the most complex areas of outsourcing and requires a specialist third party adviser.

Fraud is a specific security issue that is criminal activity whether it is by employees or the

supplier staff. However, it can be disputed that the fraud is more likely when outsourcers

are involved, for example credit card theft when there is scope for fraud by credit card

cloning. In April 2005, a high-profile case involving the theft of $350,000 from four

Citibank customers occurred when call center workers acquired the passwords to

customer accounts and transferred the money to their own accounts opened under

fictitious names. Citibank did not find out about the problem until the American

customers noticed discrepancies with their accounts and notified the bank.

Recruitment Process Outsourcing

Evaluating Recruitment Effectiveness

The SPHR provides leadership in evaluating the efficiency and effectiveness of

recruitment activities. Efficiency evaluation is largely operational in nature, whereas

effectiveness evaluation is strategic. Unfortunately, organizations tend to do a rather good

job at developing efficiency metrics, but a poor job of developing effectiveness measures.

The efficiency metrics provide information regarding the accomplishments of short-term

objectives. However, the critical issue is the long-term strategic impact of recruitment

activities on the success of the organization (effectiveness metrics).

Typical efficiency metrics are as follows:

Quantity of applications This is a gross measure of the effect of recruitment

activities with the philosophy that the more applications an organizations gets, the

more likely it is to fill its openings with highly qualified individuals. Quantities

can be evaluated by source, giving a gross estimate of the cost-effectiveness of

television versus newspaper advertising, for example.

Quality of applications Organizations might want to evaluate the percentage of

applications that were considered qualified for the job or that were actually

offered an interview. Again, this is a gross measure of the impact of the

recruitment program and can be analyzed by the source of the application.

Recruitment Process Outsourcing

Time to fill Most organizations evaluate the time it takes to fill a position,

typically in terms of the number of days from the date the request is received in

the HR department until new employee actually reports onboard. These data are

then compared against goals, historical averages, and benchmarks to evaluate

recruitment efficiency.

Yield rates Yield rates were discussed earlier in this chapter. Recruitment is often

evaluated in terms of yield rates from one stage of the process to another. For

example, the organization needs to know what percentage of applicants were

actually considered to be qualified for the job, what percentage that were qualified

passed the initial screening, what percentage passing the initial screening also

passed the pre-employment tests, what percentage passing the pre-employment

test were offered in-person interviews, and so forth. This provides an additional

measure of efficiency in that higher yield ratios reduce wasted staff effort and

produce more viable candidates for the organization to consider.

Cost per hire Many organizations track the average cost to hire employees,

typically by dividing all recruitment-related expenses by the number of actual

hires. The measure provides an indication of the efficiency of the recruitment

program in terms of costs, but yields little information regarding effectiveness.

Also, the calculation of recruitment costs is often difficult.

Selection rates Selection rate provide some indication of efficiency because they

evaluate the number of new hires against the total number of applicants. For

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example, if 50 hires were made from an application pool of 100, the selection rate

is 50%.

However, one cannot really necessarily evaluate that metric in terms of

effectiveness. Presumably, the higher the selection rate, the more efficient and

effective recruitment process. But are selections being made using the "any warm

body" philosophy because positions must be filled with any applicant that is

minimally qualified? Selection rates along with other measures of efficiency do

not give the organization any indication of the actual performance of an individual

after being hired, nor do they tell the organization anything about employee

retention.

Acceptance rates Some organizations track selection rates, which are typically

evaluated as the number of applicants that accept the position divided by the

number of applicants that were offered the position. The higher the ratio, the more

efficient the recruitment program is considered to be. However, acceptance rates

can be significantly affected by outside influences that have nothing to do with

the quality of recruitment efforts. For example, acceptance rates could be

expected to be appreciably higher during periods of high unemployment.

This metric is frequently used to evaluate both individual recruiter and

recruitment sources. When evaluating individual recruiters, the interest is in how

effective the recruiter is in actually convincing the applicant to accept the job.

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This might be a critical issue, especially with higher-level jobs where the costs of

recruiting are substantial. The organization is also interested in knowing whether

the acceptance rate differs among the various recruitment methods so that it can

adjust its strategies.

Effectiveness measures are those that evaluate the long-term strategic impact of the

recruitment program."Human Resource Development," in the context of evaluation of

training and development there is often an inverse relationship between the value of data

and analysis and its difficulty. However, this is the value added by the SPHR. The SPHR

must develop metrics that strategically evaluate recruitment efforts in terms of their

impact on organizational effectiveness and strategic success.

An effectiveness measure frequently overlooked is that of customer satisfaction with the

recruitment process and results. In this case, customers can be defined in a number of

ways. First, management satisfaction should be evaluated. Managers should be

questioned as to their overall satisfaction with the recruitment process and the timeliness

of actions and the quality of recruits in particular. Because managers at different levels

often have different expectations, satisfaction should be surveyed at multiple levels in the

organization. The second, and probably more important, customer group is the actual

recruits themselves. This includes both those who were hired and those who were

rejected for employment. They should be questioned about their perspectives regarding

the various stages of the recruitment and selection process. These data often provide

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valuable information regarding recruitment effectiveness and identify areas that might

need improvement.

The effectiveness of recruitment efforts should be evaluated in terms of eventual

employee performance and retention. Therefore, the SPHR should lead the HR function

in engaging in longitudinal studies in these areas. In the press of current requirements

historical research is often ignored. Yet these data are the ones that allow the organization

to fine-tune current operations. Organizations that have effective recruitment evaluation

programs periodically (usually yearly) evaluate a sample of hires from previous years,

correlating retention, promotion rates, and performance data with recruitment sources,

selection tests, and other employment practices. Evaluation of individual recruiters can

also be done using the same process. These data provide rich information as to the long-

term effectiveness of recruitment programs. The potential value of these types of

evaluations is, however, moderated by the nature of the organizational environment and

the organizational strategies. These data have the greatest impact in planning and

engaging in activities to improve the recruitment program when the environment is

relatively stable.

Recruitment Process Outsourcing

Recruitment Process Outsourcing

Recruitment Process Outsourcing (RPO) is a form of business process outsourcing

(BPO) where an employer outsourcers or transfers all or part of its recruitment activities

to an external service provider.

The Recruitment Process Outsourcing Association defines RPO as follows: "when a

provider acts as a company's internal recruitment function for a portion or all of its jobs.

RPO providers manage the entire recruiting/hiring process from job profiling through the

on-boarding of the new hire, including staff, technology, method and reporting. A

properly managed RPO will improve a company's time to hire, increase the quality of the

candidate pool, provide verifiable metrics, reduce cost and improve governmental

compliance.”

The RPO Alliance, a group of the Human Resources Outsourcing Association (HROA),

approved this definition in February 2009: "Recruitment Process Outsourcing (RPO) is a

form of business process outsourcing (BPO) where an employer transfers all or part of its

recruitment processes to an external service provider. An RPO provider can provide its

own or may assume the company's staff, technology, methodologies and reporting. In all

cases, RPO differs greatly from providers such as staffing companies and

contingent/retained search providers in that it assumes ownership of the design and

management of the recruitment process and the responsibility of results."

Occasional recruitment support, for example temporary, contingency and executive

search services is more analogous to out-tasking, co-sourcing or just sourcing. In this

Recruitment Process Outsourcing

example the service provider is "a" source for certain types of recruitment activity.The

biggest distinction between RPO and other types of staffing is Process. In RPO the

service provider assumes ownership of the process, while in other types of staffing the

service provider is part of a process controlled by the organization buying their services.

History

While temporary, contingency and executive search firms have provided staffing services

for many decades, the concept of an employer outsourcing the management and

ownership of part or all of their recruiting process wasn't first realized on a consistent

basis until the 1970s in Silicon Valley's highly competitive high tech labor market. Fast-

growing high tech companies were hard-pressed to locate and hire the technical

specialists they required, and so had little choice but to pay large fees to highly

specialized external recruiters in order to staff their projects. Over time, companies began

to examine how they might reduce the growing expenses of recruitment fees while still

hiring hard-to-find technical specialists. Toward this end, companies began to examine

the various steps in the recruiting process with an eye toward outsourcing only those

portions that they had the greatest difficulty with and that added the greatest value to

them. Initial RPO programs typically consisted of companies purchasing lists of potential

candidates from RPO vendors. This "search/research" function, as it was called,

generated names of competitors' employees for a company and served to augment the

pool of potential candidates from which that company could hire.

Recruitment Process Outsourcing

Over time, as business in general embraced the concept of outsourcing more and more,

RPO gained favor among Human Resource management: not only did RPO reduce

overhead costs from their budgets but it also helped improve the company's competitive

advantage in the labor market. As labor markets became more and more competitive,

RPO became more of an acceptable option. Furthermore, through the advent in the 1980's

and 1990's of human resources outsourcing (HRO) companies that began taking on the

processes associated with benefits, taxes, and payroll, companies began recognizing that

recruiting--a significant cost of HR--should also be considered for outsourcing. In the

early 2000's more companies began considering the outsourcing of recruitment for major

portions of their recruiting need.

There have been fundamental changes in the US labor market that serve to reinforce the

use of RPO as well. The labor market has become increasingly dynamic: workers today

change employers more often than in previous generations. De-regulated labor markets

have also created a shift towards contract and part-time labor and shorter work tenures.

These trends increase recruitment activity and may encourage the use of RPO. It should

also be noted that even in slower economic times or higher unemployment, RPO is still

considered by companies to assist in an increasing need to screen through a larger

candidate pool.

Benefits

RPO's promoters claim that the solution offers improvement in quality, cost, service and

speed.

Recruitment Process Outsourcing

RPO providers claim that leveraging economies of scale enables them to offer

recruitment processes at lower cost while economies of scope allow them to operate as

high-quality specialists. Those economies of scale and scope arise from a larger staff of

recruiters, databases of candidate resumes, and investment in recruitment tools and

networks.

RPO solutions are also claimed to change fixed investment costs into variable costs that

vary with fluctuation in recruitment activity. Companies may pay by transaction rather

than by staff member, thus avoiding under-utilization or forcing costly layoffs of

recruitment staff when activity is low.

Problems

If a company failed to define its overall recruitment strategy and hiring objectives, then

any recruiting program may fail to meet the company's needs. This is especially true for

outsourced programs like RPO: RPO can only succeed in the context of a well-defined

corporate and staffing strategy.

As with any program, a company must manage its RPO activities. A company must

provide initial direction and continued monitoring to assure the desired results. Overall,

providing guidance to external activities can present a significant management challenge.

Outsourcing of company processes may fail or prove a poor organizational fit.

Improperly implemented RPO could reduce the effectiveness of recruitment.

The costs charged for outsourced recruitment transactions may total more than the cost of

the internal recruitment department.

Recruitment Process Outsourcing

RPO service providers may fail to provide the quality or volume of staff required by their

customers.

Placing all recruitment in the hands of a single outside provider may discourage the

competition that would arise if multiple recruitment agencies were used.

An RPO solution may not work if the company's existing recruitment processes are

performing poorly. An RPO solution may not work if the service provider has inadequate

recruitment processes or procedures to work with the client.

RPO may not resolve difficulties that organizations have hiring staff when the

organization is perceived negatively by potential employees. This will instead require

improved branding and an adjustment of image. The perception is that very few RPOs

can successfully integrate their client's brand and therefore do not represent their client's

brand as well as a retained search or internal recruiting resource may drive brand

representation and or marketing.

Further, most RPOs perform their staffing functions and service offsite, further

disconnecting the client's growth & recruiting strategy from the actual workforce within

the client company. This is important because during a period of rapid recruitment

growth, one of the many positive effects that a company typically enjoys is an increase in

the workforce wellness or an overall workforce positivity of sentiment of optimism that

comes with personnel additions... this may be lessened with an offsite recruiting function.

Organizations with efficient hiring process that are viewed as employers of choice by

potential staff may stand to gain negligible benefits from RPO.