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Recruitment Value Insourcing Delivers Where RPO Fails

Posted By Fraser Hill On September 3, 2012 @ 5:18 am In Opinion | 8 Comments

[1]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 [2] 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 [3]


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URLs in this post:

[1] Image: http://www.ere.net/wp-content/uploads/2012/09/outsourcing-recruiting.jpg

[2] In-house Headhunting Value Model: http://www.ere.net/2012/08/28/forget-about-the-cost-modeling-the-real-roi-of-in-house-headhunting/

[3] Bigstock: http://www.bigstockphoto.com

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