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Recruitment Value Insourcing Delivers Where RPO Fails

by Sep 3, 2012, 5:18 am ET

In recent years issues with the RPO model have been well documented. It’s not so much the model itself because the theory is sound, on paper. It’s the execution of the model and competition driving cost-saving promises which can’t be met unless corners are cut or high volumes of lesser-experienced RPO recruiters are hired to fulfill demand.

Whether it’s an RPO model or simply an in-house direct recruiter model, the same conundrum exists.

There exists a tipping point (in terms of volume of hires per recruiter) where optimal volume of hire and value add cross paths, after which a negative linear correlation between the two exists. As the number of hires per recruiter increases, the level of value-add decreases. This is fine for high-volume recruiting for junior or low-skilled positions but when it’s mid to senior-level hiring, the tipping point is a serious issue that RPO hasn’t yet addressed.

In a previous article I introduced the In-house Headhunting Value Model which sought to graphically illustrate the true value of bringing headhunting in-house (market intelligence and relationship on top of finding the best candidates in the market, not just those on the market). Headhunting in the true sense (competitor market mapping, org chart building, and direct cold-headhunt calling) is a time-intensive approach. As an in-house headhunter I would work on around 15 to 20 roles per year when my recruiter colleagues would be working on 100+ roles. The roles that I worked on were carefully selected as being the 20 most senior, niche, or confidential (where it was replacement for someone still in post) roles.

In speaking at various industry workgroups and forums I’ve been shocked to discover that this role is still very rare across all industries. I’m not speaking about the corporate recruiters who send the occasional Inmail or dabble in some headhunting techniques. I mean true in-house headhunters who act exactly like a senior search firm 100% of the time working on delivering executive search documents with complete target company org charts, market intelligence, and short lists of the best candidates in the market.

This role, pure headhunting, and the need for it to exist as part of our internal recruiting efforts is what I refer to as Recruitment Value Insourcing — bringing the most value-add recruiting assignments in-house and recognizing the same divide the external market acknowledges in its approaches to contingency and executive search respectively. As we all know, in the external market generally speaking contingency hiring is suited to higher volume and more transactional-based hiring, whereas executive search is reserved for more senior, niche, hard-to-fill, and highly confidential roles. So why doesn’t this distinction exist in the RPO world, or indeed in the in-house market?

For clarity, Recruitment Value Insourcing is about ring-fencing the most senior, niche, hard-to-fill and confidential roles and giving these roles to a skilled internal headhunter who can build out market maps and target company org charts from scratch, cold-headhunt call a long list and create a short list from the best candidates in the market. They will work on no more than 15 to 20 roles per year and when not actively recruiting, can be working with the senior leadership team to put together pipelines of target talent in the market.

Internal recruitment divisions have struggled for years to articulate their value to the internal budget holders and translate it into something tangible. If there wasn’t a struggle, we wouldn’t have in-house recruiters having to deliver 100+ roles per year and drowning in paperwork and process. CEOs all over the world talk about how talent is their most valuable asset, so why do HR departments continue to have to fight for every dollar of budget, year over year having to do more with less (external economic challenges aside)? RPO firms came along as the cost solution but promises of such low margins of cost and then new competition in the RPO world has left the value proposition being lost or at best diluted by the focus on cost.

Recruitment Value Insourcing is not to replace RPO but rather to recognize that RPO is not the all-encompassing recruitment solution it often promises to be. It’s flawed in its blanket solution approach. If RPO focused on what it’s good at (below senior level), it may not have suffered the criticism of recent times. Contingency recruiters will never be as effective as headhunters for senior roles and vice versa, and RPOs under their current guise will never deliver the best senior hires. Recruitment Value Insourcing can plug this gap and co-exist with the RPO model.

We don’t have to look far to find successful models to replicate. The external recruitment market has made the distinction clear for many years, and the good ones do it extremely well. Senior external headhunters, generally speaking, get paid much larger base salaries (than contingency recruiters) and focus on identifying each and every potential candidate in the market for a given assignment. Contingency recruiters get paid much smaller base salaries and are better suited to volume recruiting. Also, contingency recruiters may get away with presenting the best candidate currently on the market (responding to job ads) rather than having to conduct the intense market map that a headhunter may have to undertake. So if we wouldn’t hire a contingent recruiter to work on a role that required an executive search approach, why are we not refining the RPO model or how we approach senior and niche roles internally and adopting a Recruitment Value Insourcing model?

 

photo from Bigstock

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • http://www.designsontalent.com/ Linda Brenner

    Very well done, Fraser. It’s a battle that we, too, see regularly – the idea that outsourcing will fix problems that are broad and deep.

  • Ty Chartwell

    Good article Fraser. Completely agree w you and i see the problem as one that exists because most CHRO’s and SeniorHRBP’s don’t have a clue or are so caught up in their self-promitional activities, that they won’t support something that might get too much pushback from the business leaders.

  • http://www.purerecruitmenttraining.com Fraser Hill

    Linda – thanks for your kind comment. Keep fighting the battle! :)

  • http://www.purerecruitmenttraining.com Fraser Hill

    Thank you Ty – I appreciate your feedback. I’m not sure if HRBP’s are caught up in their self promotional activities – narcissistic characters exist in all functions of organizations but I think that’s more of a personality defect found in certain (few)individuals rather than across a particular function.

    I agree that one of the many intertwined issues that lead to this is to do with the relationship between HR and the business. Not in all organizations, but I think for many we still live in a world full of more optimism than reality (about HR’s place in the boardroom hierarchy)and despite the HR function becoming so much more strategic over the years, it still doesn’t have the voice or seat at the table that we’d all like to think it has (with exception of course).

    I think more could certainly be done to educate the business in a way they can understand about the value over cost conundrum, and HRBP’s would play a key role in doing this.

  • http://superecruiter.blogspot.com/ Morgan Hoogvelt

    Great article and great points. We currently utilize a hybrid model where we outsource our individual contributor level roles to an RPO; typically these are high turnover positions.

    We then have a small internal team focused on manager and above positions and we execute each position as you mentioned above – search firm style. So in fact, we have a small executive search firm built in.

    Outsourcing does take a bad wrap and in fact, when it is not done correctly, or the model is chosen for the wrong reasons – sure it can fail. However, if the RPO model is chosen for the right reasons AND the right RPO partner is identified and selected, the model can work very well as in our case.

  • http://blog.npaworldwide.com Dave Nerz

    I have a concern with the broad brushed approach to recruitment indicating that contingent recruiters don’t do headhunting and that headhunters don’t do work opening like contingent recruiters.

    The result delivered is often more about the investment an employer is willing to make to find the best of the best talent rather than the label being placed on the recruiting professional that does the search.

    Contingent recruiters and RPO services have the ability to find talent in many different ways. Most can and do modify their process but will not do so unless there is an economically reasonable payoff. Headhunters do not return payment to employers when they have fast or easy close to opening. Contingent and RPO should not be expected to provide exhaustive searches for jobs when their payoff my be minimal and the effort expended tremendous.

    If you are talking about “contingency recruiters” as a model the model is evolving more quickly that you might realize. More and more “contingent recruiters” are creating new blended models for key roles and key clients. These are contingent searches on steroids. There might be a higher payoff, a limited time exclusive, a container/retainer, an up front engagement fee or many other options. These are still contingent recruiters doing a contingent search with a slight modification.

  • Keith Halperin

    Thanks, Fraser. If a company can afford to pay an internal headhunter a reasonable percentage compensation to what s/he could make at an executive search firm or as an independent,it makes a great deal of sense to hire someone internally FT. However a company shouldn’t expect to get $250k/yr-quality headhunting for $100k/yr…

    Cheers,

    Keith

  • Leslie Morgan

    I’ve been involved not only in this kind of discussion for years but actually working in the trenches. My key learning is there is a severe shortage of recruitment professionals who actually have the skills and experience to evaluate and implement an in-sourced or blended solution. I’ve done it and several times. Better results, happier internal clients, more control, ownership of all the data (a couple hundred thousand resumes is VALUABLE), ability to gather and evaluate data and work to continually improve….and at a fraction of the alternative costs.

    It’s a beautiful thing.