Upping the Stakes in RPO

Businesses and Recruitment Process Outsourcing (RPO) providers alike are increasingly focused on talent acquisition metrics as the pressure grows to more effectively link talent acquisition results to business outcomes.

Currently the market seems to be fairly evenly divided between 3 groups:

• Those embracing talent metrics and actively working on internal initiatives or partnering with RPO providers to move to a more strategic measurement strategy.
• Those interested in measuring business impact, but still lacking the data points and systems needed to measure.
• Those focused on getting the basics in place and advancing their measurement capability over time.

While the strategies vary by organization, measures that organizations are using to link talent acquisition to business results include the following:

• The impact of improving time to productivity (time for new hires to produce at expected results)
• The impact of top performers on operating profit
• Savings as a result of improved retention rates
• Increase in sales
• How reduced time to hire impacts revenue
• Improvements to company customer satisfaction results

For example, one RPO provider partnered with a rental car company to redefine and transform the company’s sales roles from a customer service focus to a more consultative selling approach, inserting an assessment as part of the talent acquisition process. They reported an increased profit of 20% since the project initiation.  Another RPO provider partnered with an organization experiencing poor customer satisfaction results in their technical support call center. They found the issues resulted from gaps in technical skillsets (versus what was assumed to be gaps in effectively communicating with customers). Seven months later, with a change in role requirements and screening process, the organization’s customer satisfaction ratings have climbed significantly.

While hiring managers clearly care more about business results than standard talent acquisition efficiency metrics, the more strategic measures have by no means replaced standard measures. While talent acquisition functions are still not ready to let go of traditional measures such as Time to Fill or Cost per Hire, we do see an increased focus on how these metrics impact the business. One reason: organizations that have focused too narrowly on measures such as Time to Fill may find themselves with increased turnover. Ultimately organizations are recognizing that taking seven more days to find the right hire is a more preferable outcome to making a faster hire who underperforms or leaves within six months.

While organizations and RPO providers cannot expect a precise correlation, they can start to connect data to business performance to better understand where they get the top talent, and where they should be sourcing future talent. Tools such as CRM, assessments, and enhanced analytics provide better information for story-telling and provide insight to enable better hiring decisions.

RPO providers have historically struggled to commit to broader business metrics which denied them full control over the outcome. Today RPO providers are showing an increased interest in partnering with client organizations in aligning to measures that drive performance and value within the organization. Both hiring organizations and RPO providers have a strong incentive to expand their accountability to broader business results, as tying to business outcomes necessitates a deeper, more strategic and longer-term partnership.

RPO providers that can be more creative in measuring results and effectively tying talent acquisition outcomes to the business will differentiate themselves in the market and elevate themselves into a true strategic partner.

To learn more, contact ISG Principal Consultant Stacey Cadigan.

About the author

Stacey is a director and a key contributor to ISG’s human resources and talent-related technology and services. She advises clients on all aspects of human resources engagements, including recruitment process outsourcing and talent management. Stacey is a prolific blogger, and is frequently interviewed by industry publications. With nearly 20 years of experience in solutions strategy, product development, corporate HR, operations delivery, transitions and HR consulting, Stacey has deep operational knowledge of the talent space and her clients’ challenges, as well as a unique ability to ask the right questions to help organizations align their sourcing initiatives with their vision.