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Last month, DoubleStar conducted a survey to determine the current state of recruiting practices in a cross-section of organizations. The survey was sent to recruiting leaders and decision makers in mid- to large-sized organizations across all industries. The results are not a summary of best practices but a snapshot of current actual practices as they exist today.

The findings (full report available) are interesting. For example:

• 95% of organizations are operating without a dedicated sourcing function. Further, 28% of organizations reported that their recruiters are performing all of the sourcing.
• 44% of organizations are engaged in some level of recruitment outsourcing. However, 82% of these organizations outsource less than 25% of their total positions.
• The biggest impediments to recruitment success are the ability to find quality candidates and process delays caused by hiring managers.
• Only 21% of organizations are using Web 2.0 tools for recruiting, with only 1% considering themselves experts. LinkedIn and industry-specific sites were reported as being the most effective.
• The most commonly tracked recruiting metrics are time-to-fill, time-to-start, first-year turnover, manager satisfaction, and cost-per-hire. Few organizations reported tracking more sophisticated measures.

The survey’s overall results show that recruiting is a function in transition from older practices to more modern ones.

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Cost has always been central to recruiting. One of the most popular (though not the most useful) metrics is cost-per-hire.

But demonstrating the value of recruiting is difficult. The reasons are simple enough — recruiting costs are tangible; the benefits less so. It takes time for new hires to become productive, and their contributions are difficult to measure with any precision. Furthermore, it is impossible to attribute an employee’s performance to the recruiter’s skill at getting the right fit, in the right place and time. Consequently, tying recruiting results to cost is nearly impossible. Few even try. So recruiting managers usually find themselves under pressure to “manage” costs better — which usually means do more with less. Some companies have just given up trying and handed over their recruiting to an RPO vendor.

RPO has its own issues, but one benefit of RPO may just be that recruiting managers begin to understand costs, and how to manage them to their advantage. I don’t mean “manage” as in “limit” (although that’s a very fine thing), I mean structuring costs to maximize flexibility, leverage in-house expertise, and limit cutbacks during down cycles. This is the “manage” they teach in B-school.

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Despite the slowing economy, more employers are requesting proposals for recruitment process outsourcing services. The CEOs of Hudson Highland Group and Spherion commented that RFP activity and the new business pipeline for RPO deals remained strong during each company’s second quarter earnings conference call.

Both CEOs also acknowledged that some existing RPO customers have ceased hiring or have opted to take recruiting back in-house, causing a decrease in RPO revenues for both companies during the recent period.

Despite what he called a severe pullback from two clients, one in telecommunications and the other in the airline industry, Spherion CEO Roy Krause said the company will continue to invest in RPO, adding that while proposal activity has increased, it’s taking longer to close new deals.

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I am keeping the Seven Wonders of the Week alive but I need your help! I picked out six of the top discussions and wanted to ask what you think #7 should be. What discussion should I add to the list? Let me know what you think by posting a comment below.

Monster and CareerBuilder- Do You Need Both?

Interesting…this was actually a topic of discussion at this month’s ERE happy hour in Atlanta. Matt Faskamp wants to know if his company can save costs by using only one job board subscription instead of two. Do Monster and CareerBuilder really have unique visitors? Mike Jenkins says you only need one but not to forget to add Yahoo! Hot Jobs to that list. He recommends looking at your companies’ specific needs (i.e., international capabilities, board that provides more candidates for critical positions, user feedback, and capabilities of your ATS). Chandra Bodapati is the first to recommend Internet search instead. Kristin Gissaro and Sam Morse agree that Matt might want to take a different approach and turn toward niche boards and social networking sites. Kelly Dingee wisely advises Matt to run stats from his ATS and ask candidates what they use. She has personally had success with all three big boards…it depends on the reqs. She agrees with others that Matt should consider niche boards, Internet search, and social networking sites. Good luck, Matt. Let us know what you decide to do!

Is Outsourcing Outrageous or the Natural Way of Things?

This topic first posted by Maureen Sharib on July 15 continues to dominate the ERE discussion boards a week later. Maureen addresses the “biggest boogeyman” in today’s campaigns…outsourcing. More specifically Maureen argues that U.S. companies are motivated to outsource their call centers because of worker productivity and efficiency not necessarily lower costs. One reason might be that these employees receive a defined career path with opportunities not available for U.S. call centers. T Tallis believes that “part of the problem is unions.” Charles Hillman disagrees, defending unions, and focusing on the negative impact outsourcing has on American workers, families, and the economy. Amanda Blazo can sympathize with both sides having managed operations for two offshore Internet research centers. Whether offshoring or not, Amanda says it boils down to the fact that “some companies do certain jobs better than others.” I am not sure Jeff Weidner would agree; he believes these efficiencies are a result of the low cost-to-hire allowing for more employees to work on one job. Mike Johnson refers to a study by Booz Allen Hamilton and Duke University reminding us that “off-shoring high-skilled functions does not replace jobs offshore.” Joshua Letourneau also refers to an article he wrote that “takes a deeper dive into the globalization and commoditization of names sourcing today,” including issues with telephone name generation training and competition. Deborah Jones agrees with Amanda that outsourcing is not outrageous but natural since these centers in the Philippines and India offer more opportunitites and agrees with T Tallis that unions are to blame. She draws a parallel to the automotive industry. Maureen Sharib shares the news the GM has cut health care benefits for its employees. Joshua Letourneau and Paul Davenport empathize with employees but defend GM’s position. Joshua reminds us that “the point of a publicly traded company is to create shareholder value — nothing more, nothing less.”

The conversation has continued to heat up this week…you might want to check it out!

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At mid-year, employers are choosing to dip their toes in the outsourcing pool, rather than jump in feet first. Attempts at wide-scale HR outsourcing haven’t been successful, mainly because vendors are underestimating the costs and companies won’t settle for cookie-cutter solutions.

A more selective outsourcing approach allows vendors and employers to tackle each function independently, understand the requirements, and then customize the implementation and refine the processes before moving on. At least for now, that’s the direction managers are taking.

“Comprehensive outsourcing of HR administration hasn’t worked out as expected for either party,” says Mark Marcon, senior research analyst and director for Robert W. Baird & Company, Inc. “I think most of the vendors under-estimated the costs and the profitability of these contracts, so there’s been significant pull-back and a more selective adoption approach.”

A survey of 182 U.S. companies by consulting firm Watson Wyatt Worldwide validates that selective, rather than comprehensive H.R. outsourcing is the clear preference among employers, with 6% of the respondents indicating they plan to outsource recruiting in the near future. keep reading…

ABC, Inc.’s three recruiters are overwhelmed with requisitions. At the end of last week, they had more than 150 open positions to fill, many of them requiring hard-to-find candidates. Most of these requisitions had been open for more than two weeks, and hiring managers are upset. Most of the managers have not seen any candidates, and the few who have want to see more. At this week’s staff meeting, Peter, the director of staffing, announced that the VP of HR, his boss, was considering outsourcing a large portion of the recruiting function.

The reasons are obvious: a perception by hiring managers of poor quality candidates and long delays in presenting candidates. His two recruiters and most of the HR team were not pleased with this decision and felt that they understood the company and its needs better than any agency. They also felt that hiring managers were unrealistic in their expectations and that they were a bargain compared to the costs of outsourcing. This situation is increasingly common. I find that many organizations are turning to outsourcing as a solution to either the problem of too many requisitions and too few recruiters, or to that of too many hard-to-fill positions and no talent pool or legitimate candidate sources.

There’s nothing wrong with outsourcing the recruiting function (I’m on the board of the Recruitment Process Outsourcing Association), and many organizations have done so with great success. Kellogg’s has outsourced recruiting for a number of years and has been pleased with the results. Some organizations have outsourced recruiting for one or two functions only, and leave the internal recruiters to do the rest. Given the scarcity of many types of talent, more organizations are turning to outsourcing as a last resort. Historically, there have been few options available to organizations, outside of keeping an internal recruiting function. Most agencies cannot (and don’t want to) recruit for all positions. They tend to focus on a market segment or a particular function and do less well at recruiting outside that. They are also expensive. But with the rise of recruitment process outsourcing organizations and the creation of broadly-skilled and capable agencies, there are a variety of choices. However, if your goal is to not be outsourced, here are a few things that you will have to do to remain successful.

Know What You Offer That Is Unique

What makes you better than a recruiter at an agency? What do you know and do that is unique or different enough to be difficult for an outside recruiter to reproduce or learn? Perhaps your recruiters have in-depth knowledge of the services or products you sell and can use that knowledge to better evaluate potential candidates and to sell the organization to these candidates. Or, maybe your team has the capability to evaluate both internal and external candidates together and make more useful recommendations. Whatever it is, you need to be very aware of it and communicate that uniqueness to everyone. If managers feel that you are a commodity, then anyone can do your job as well as you can. It is your responsibility to communicate your unique contributions in any way that you can. This includes face-to-face conversations, discussions, email, or whatever else can help hiring managers understand you better.

Learn to Build Internal Relationships

Most of the time internal functions are outsourced because hiring managers or senior managers are unhappy with the speed with which candidates are presented, or with candidate quality. They also believe that an external group can provide faster and better service. The only solution to these issues is to have built good relationships with the management team. Managers have to believe that you are not only well-qualified and capable, but also that you are trustworthy and deeply understand their needs. You can only attain that trust by, over time, getting to know these managers and letting them know you. You will need to spend time educating them about the talent pipeline and your sourcing activities, and you will need to present them with believable and quantified data when their expectations are unrealistic. I have found that in recruiting functions where the recruiters are physically close to the hiring managers and who spend time with those managers on an almost daily basis, there is no talk of outsourcing.

Suggest Outsourcing When it Is Appropriate

Sometimes, it makes a lot of sense to outsource some part of the recruiting function. This happens when there are large numbers to recruit and you have a limited staff, or when there are just a few very open positions that require hard-to-find skills. When these are the case, it is better if the proactive suggestion to outsource comes from the recruiting team and is supported with data, numbers, and facts to show the savings and to show why quality will not decrease.

Improve Your Recruiting Processes

Do you know that recruiting remains one of the least efficient processes in an organization? Transaction costs (cost per hire) are large, and there is almost no effort being made to connect that cost with delivering value (quality of hire). At conference after conference, I hear the same old measures being touted proudly: cost per hire, time to fill, number of interviews to offer, and so forth. It seems like no one is measuring the effects of our recruiting activities. Senior executives are starting to ask what value we are delivering to them, and sadly, few of us have any answers. You need to establish some time and cost reduction goals (once you have clearly determined what your current numbers are), and then set out to achieve them as quickly as possible. At the same time, you should be open about what you are doing and why, and be accountable for the results. Let hiring managers know that you are working hard to bring in better candidates and enlist their help to do so. They can be great allies once they are part of the team and understand how what they do affects what you do.

As mentioned above, the relationship between the recruiter and the hiring authority is the most important factor in the success equation. Your goal should be to be seen as contributing to the success of the organization. By acting openly, getting data and facts to support your arguments, improving your recruiting process in a systematic way, and accepting accountability for your results, you should be able to remain productively employed for a long time to come.