Over the past two years, the way we think about work has changed. Perhaps accelerated by the recession, there is more focus now on finding satisfying and rewarding work than on just finding a job that pays the most.

More people are thinking about finding something interesting, challenging, and perhaps even fun to do that provides enough income. The key words here are interesting/challenging and enough. Fewer expect to get rich and there is less focus on the money. There is more focus on lifestyle, flexibility, free time to pursue other learning or hobbies or sports, and less interest in family. I’ll do more columns on these trends soon, but partly because of them here are the major changes that I see happening this year.

Internal Recruiting Goes Mainstream

Perhaps one of the most significant trends will be a greater focus on finding current employees to fill existing jobs. Rather than continue time-consuming and expensive external searches, more hiring managers will opt to go with an almost-ready internal candidate who is a good cultural fit and is willing to learn fast. Although hiring managers may push back at this, management will encourage it, and the increasing difficulty in finding and recruiting top talent will help accelerate the trend.

Over the next few years there will be a move to enlarge the skills of current employees so they can be moved around to different functions as demand fluctuates. Employee development will morph from delivering training, to providing accelerated apprenticeships, developing simulations, and finding ways to encourage informal and on-the-job learning.

Recruiters should focus on encouraging hiring managers to look at these internal employees, encourage them to hire internally, and develop better internal talent communities to expose hiring managers to talented employees and employees to opportunities.

Social Goes Mobile

When recruiting does look externally, more of it will happen on mobile devices. The explosion of Android and iPhone apps means fewer potential candidates will be using traditional computers.

Clearly candidates with technical edge and savvy — the ones you are probably the most interested in hiring — will be spending most of their time on smart phones, iPads, and other tablets. If you have not developed specific recruiting apps that take advantage of these mobile platforms, you will be at a disadvantage as we roll into the middle of 2012.

More applicant tracking systems are now capable of using a social profile rather than a resume, and as most candidates already have such a profile it only makes sense that they use it to apply for a position.

Everything from branding to screening to even doing interviews is moving to mobile platforms and using such things as simulations, video, and chat. Twitter, Google, Facebook, and other major players will introduce more mobile apps and functionality during this year.

By the end of 2012, the traditional career site will be mostly obsolete. If it exists at all will be little more than the place where the candidate makes the formal application. Smart firms will make everything they do mobile-friendly and compatible and encourage candidates to interact more with hiring managers, other employees, and even alumni in online forums, chat rooms, Twitter chats, and via video, Skype, and other similar media.

Just-in-time Sourcing and Recruiting

Sourcing has already moved from searching static databases to using social media, and this trend will continue to grow. Rather than build proprietary databases or talent pools, recruiters can participate in and look for potential candidates in many different online forums and communities. As almost all professionals have an online presence, whether in LinkedIn or Facebook or elsewhere, and as many are also likely participating in Twitter chats, Facebook conversations, and so on. Searching for talented people is getting easier each month.

A recruiter can find an interesting potential candidate, start a conversation, provide the candidate with a variety of information sources about the organization and position, and even direct the candidate to screening apps and apps that allow the candidate to apply.

Recruiters can also use their network of current employees, alumni, friends, and colleagues to crowdsource good candidates and leverage referrals.

Entire recruiting campaigns can be run in a matter of days or weeks by using referrals, crowdsourcing, social media, mobile technologies, and by rethinking the recruitment process. Through streamlining, simplification and by getting hiring managers more involved, candidates can be found, screened, assessed, and hired in days.

Continued Rise of Contingent Workers

The use of contractors, part-time employees, and consultants has soared during the recession. And it will continue to grow for two reasons: the first is that it provides employers with the flexibility they seek to manage costs and headcount easily and much more cheaply than by frequent layoffs. Second, many people are finding that contingent employment suits their lifestyle and interests well. They can plan other activities around their work schedules, they can budget according to the amount of time they are willing to work, and they get variety in the kind of work they do and who they work for.

It will be hard to return to the model of employment where just about everyone is a regular employee. Strategies changes frequently, world events and business cycles make it necessary to adjust priorities more often than ever before, and people are less and less willing to commit to a long-term employment arrangement that is uncertain and stressful.

The Beginning of Applied Analytics

Look for more vendors to offer analytical software specifically for human resources and recruiting. We will begin to see how various independent events have an effect on the quality of hire by tapping into data hidden away in their ATS and HRIS systems. They will begin to seriously track and use data to decide the best sources of candidates, what key traits lead to retention and on-the-job success, and where they can reduce costs or efforts and still get good results.

All in all, the economy and the election will dominate this year and, as a result, this should be a year of modest employment growth, a focus on hiring returning military veterans, and even more growth in outsourcing volume recruiting and hard-to-fill positions to RPOs.

ADP

The $10 billion company announced today it is acquiring The RightThing, a leading recruitment process outsourcer, which three years ago acquired AIRS. Terms of the deal weren’t announced.

It’s the second acquisition for ADP in as many months. In September it bought Asparity Decision Solutions, a supplier of  employee health benefits decision support tools.

Besides giving ADP a strong and immediate presence in the burgeoning RPO business, The RightThing’s AIRS unit brings a sophisticated recruitment technology and a well-regarded recruiter Internet training component.

However, the announcement strongly suggests that it was the RPO side of the house that ADP was after in the acquisition.

“With the addition of The RightThing’s industry-leading RPO services, technology and management team, ADP will not only expand into a strategic adjacent market, but will also immediately become a principal player in the RPO industry,” said Regina Lee, president of ADP’s National Account Services, Major Account Services, GlobalView and ADP Canada business units. “Expansion into complementary markets — such as RPO — will be of great benefit to our clients and is a critical element in our plan to grow our business.

As a privately-owned company, The RightThing does not disclose its financial details. However, when the company acquired AIRS, which reported its 2006 income as $9.1 million, CEO Terry Terhark reported The RightThing was the larger of the two companies. At the time of the sale, AIRS had a staff of 62. The RightThing had about 450 employees.

ADP, which has more than 51,000 workers, has been aggressively pushing into the human capital market for several years. Even though it’s widely known for its payroll processing and benefits administration, ADP has a strong HR technology lineup and services for auto dealers.

At the HR Tech show last week in Las Vegas the company unveiled Vantage, its first full-lifecycle talent suite. Its huge show booth featured its talent management product line.

ADP started building out its HR tech products in 2006, when it bought VirtualEdge, which had a strong talent acquisition system. Over the years, it has added a number of other companies to strengthen its business process outsourcing, as well as to expand its HR tech services. In 2010, it acquired Workscape, giving it a compensation component.

The year before, ADP and Cornerstone OnDemand partnered up with ADP, gaining the rights to license and sell Cornerstone’s talent management suite, which included succession, performance, and learning. Now, Vantage integrates all those components into an HR suite aimed at the enterprise market.

The RightThing acquisition helps ADP fill in one of the few remaining gaps in its obvious quest to be a 360-degree, HR services provider. By its own count, the company already does business with 500,000 companies of all sizes through its payroll and benefits handling arm. That gives it unique access — and intelligence — into the hiring practices of its customers. With The RightThing, ADP can now provide recruitment services of one type or another to even the smallest — or the largest — of employers.

I approached this conundrum earlier in my career with the help of my talent acquisition team at that time. As we began an examination our own processes, we tried to keep a “lean-esque” perspective on what we see is the incremental value recognized through individual process steps. The central challenge became whether we could change the way in which something is executed, while still retaining (or increasing) its incremental value. Ultimately, can we do it quicker, cheaper, and not cannibalize our effectiveness and efficiency?

After mapping our processes, we determined posting jobs was a laborious task that had 1.5 FTEs committing their college-educated minds (and a fraction of the P&L) to data entry. We were posting to local boards, niche sites, contracted megaboards, etc. We began looking to see who could do this for us and liberate the recruiters to function in other capacities day in and day out.

Abandoning our nature to be risk adverse, we took a page from mental giants in the manufacturing industry and began a trystorming prototype process. Our path to enlightenment routed us to an India-based company that could provide us with a very fiscally responsible service through its dedicated and scalable client service teams. During our relationship, we realized a few things:

1. The cost of posting jobs was materially lower due to less-expensive partner labor hours being used as opposed to our team paid at a higher wage and payroll burden rate.
2. We reduced by 2/3 the time we spent on posting activities, enabling team members to begin some special projects.
3. Their newfound freedom mitigated their “attrition through boredom.”
4. Our reservation about whether the vendor could deliver to our client’s expectations since they were not part of our organization was quickly pacified by their timely communications whether by email, phone, and/or IM.
5. We had enhanced financial scalability since we paid only for the hours, leveling the ebbs and flows of our client needs.
6. It offered an optional prepaid monthly fee arrangement. Historically, each time we wanted to post to a board only one time, we would buy the individual ads and later provide a month-end reconciliation against cost centers. Under the pre-pay model, we paid a fixed fee at the beginning of the month and simply sent each job description with job board destination. Operating as a declining balance and supported by emailed receipts and monthly reports enabled an internal control mechanism self-monitoring our current month’s job board expenditures.

Once our process was optimized and rolling, we began to dig into more services it offered to see if there was other value that either we could change in our existing practices or add to enhance our departmental offering. To our pleasure, the vendor was able to take a prescribed list of key skills needed per position, review incoming candidates, and tag in our ATS which ones meet the criteria. It also offered to source active, qualified candidates who have resumes online and send an invite to apply to the ATS. We could smell the cost savings–so long as the quality was there, of course.

Finally, we were limited in supporting our recruiting needs globally by having a monolingual team. The vendor with a more linguistically trained workforce was poised to provide postings in other countries in the language necessary to attract and engage the right talent.

In summary, our relationship with our new partner enabled our team to act more strategically and spend less time downing our office coffee. Our blended mix of transactional execution enabled the recruiting team more time to be client-facing and positioned management to able to giving back care to the recruiting team members by focusing on individualized growth-related talent-management activities.

Internal functions don’t have to do any of these things. They are entrenched in almost all organizations, and because their function is perceived as incidental to overall organizational performance or success, not much in the way of efficiency is really expected or, unfortunately, rewarded. This means that few recruiting leaders have any incentive to improve their function. In fact, doing so may mean a smaller budget, less headcount, and even less status.

So this leads to the headline question: Do we need an internal function at all? Does it do something that an external provider cannot do? Can it do it at least as cheap or as fast? Can it provide a higher-caliber candidate?

Some thoughts:

1. Internal recruiters who are employees should have one major advantage over any external provider. That is a deep knowledge of the corporate culture and what success criteria are, and also what individual managers are looking for in candidates. The deeper and more scientific this knowledge is, the more it can be repeated, refined, and taught to others. A really outstanding internal function would nurture and develop a core of highly knowledgeable and trained recruiters who would have this knowledge. HP, in the old days, and IBM today, have this kind of built-in DNA that is very hard to replicate. External functions will always have difficulty achieving this level of intimacy with their clients, even when co-located, primarily because their employees have less motivation to invest in gathering this information and may be interchanged frequently. This is one area where length of service and commitment to the culture can pay dividends.
2. To remain competitive with outside providers, an internal function has to be as efficient as or more efficient than an outside provider. This means constantly improving operational excellence, adding appropriate technology, providing detailed market information and coaching to hiring managers, and building a reputation for adding real value through the quality of talent it provides. I have never seen this in any client or organization I have worked in, and I think this is the area of greatest potential return. Internal functions are never very efficient, primarily because leadership is transitory: I am not sure of the average tenure of a recruiting leader, but I would guess it is less than three years. This means there is little to no continuity of planning, no oversight of process improvements, and little opportunity to choose, install, learn and refine technology. Most organizations I have worked with change processes, procedures, and technology with each leader who arrives. Plans that have taken months to create are thrown away overnight. Recruiters know that they can do what they want, for the most part, because there will be no accountability or continuity. This is the area where an external provider, with a profit motive and an efficiency goal, can beat an internal function hands down.
3. Recruiters also need to be retained, trained, and incentivized to perform. External agencies can offer commissions, bonuses, and other rewards for outstanding performance. They can fire inefficient or incapable recruiters quickly. Internal functions are usually tied to traditional reward structures that do not provide the shorter term, efficiency-based rewards that would be more effective. A recruiter can barely perform at all and survive (and even thrive) by courting a few hiring managers or by being a good bureaucrat. And employment laws and internal practices limit when and how a recruiter can be fired, and the process is lengthy. Again, it is essential that internal recruiters be selected carefully based in skills and motivation and offered whatever incentives are available to encourage short and long term performance as well as retention.
4. The emerging prominence of social media should offer internal functions hope. Social media inherently dependent on intimate knowledge about the firm, candid communication, and the ability to take advantage of the networks of current employees. All of these give internal functions an edge.

Yet I am not convinced that this will make much difference. The RPOs and agencies are rapidly adopting social media and are even offering to manage the talent communities of individual firms. Many medium or small firms are not even looking at social media as a recruiting channel, and larger firms have widely divergent opinions and practices.

Effective social media use requires time and dedicated people who can interact with candidates, generate content, provide advice, and screen candidates for individual jobs. These are all strengths that internal recruiters have if they are given the time and charter to do so. Unfortunately again, corporate policy, management’s inability to see the benefits of social media, the fear of litigation, and lack of staff depth usually means this does not happen.

Given the state of recruiting functions today there are few compelling factors to recommend retaining an internal function. I have outlined where they could gain advantage, and a handful are doing these things, but by and large they offer little that would make them indispensible. By negotiating tough performance-based outsourcing agreements and allowing outside recruiters access to hiring managers, firms could eliminate the administrative and benefits costs of retaining employee-recruiters and the function could be reduced to a few liaison folks and vendor managers.

Partly this is driven by the commonly held assumption that these skilled and experienced people have been affected by the recession and are actually in the job market. Recruiters know this is not the case and that many candidates have become even more difficult to find and entice away from a secure position.

While demand for lesser-experienced, educated, and skilled candidates has slacked, it has risen for those with higher-level skills. Many firms are trying to replace the employees they had with moderate skills or who were in learning roles, with people already accomplished in their profession.

This is a poor time to be an apprentice or a mid-level worker, as the focus is on paying a bit more for people with better skills who are more capable of achieving goals with minimal help right away.

This has put a huge burden on recruiters. It has increased the number of searches needed for the hard-to-find candidates while almost eliminating the need to source for the easier-to-find positions. This, in turn, has driven recruiting leaders to take a hard look at developing specialized internal sourcing functions or finding an outside firm or individuals to do it for them.

Things to Consider

Before deciding whether to keep sourcing inside or find an external provider, a recruiting leader needs to make sure they have answered three questions carefully: (1) is there a sufficient volume of need that will last over some period of time to justify focused sourcing, (2) do you need to simply have the names and contact information of potential candidates so that a recruiter can screen and assess them, or do you also need screening and assessment or even more than that, and (3) do you have the internal staff with the capability, knowledge, and bandwidth to be effective?

If there is an ongoing need and you lack staff, looking at an outsourcing provider might be both time and cost effective. Building an internal sourcing capability can take months of training in addition to the time needed to find recruiters with the needed skills. Many firms turn to contractors for this service, and that may make sense. Contractors are often local, may be very familiar with your organization and both its culture and skill needs, and work for a reasonable fee. However, they also often increase the leader’s workload significantly.

When sourcing needs are high, timelines are short, needs varied and changing, and the skills hard to find locally, then other solutions may be better.

What Kind of Outsourcing Do You Need?

There are three types of outsourcing:

1. Generating names of potential candidates, often called research, which results in a list of names and contact information. These may turn out to be viable candidates, but many will not. All screening and assessment is made by internal recruiters and hiring managers. Results are most likely measured by how many names were generated, how quickly it was done, and how closely they met the previously-agreed-to specifications.
2. Generating names and then screening and assessing them. This usually means that only candidates who meet certain qualifications are presented. Results are measured by how many qualified candidates are presented and by the speed with which this takes place.
3. An emerging type of sourcing involves all of the above but also includes developing and managing a proprietary talent community of qualified candidates. This might include frequent communication with candidates, setting up and maintaining a Facebook page or something similar, and providing a means for internal recruiters and perhaps hiring managers to communicate with candidates.

Tips for Outsourcing Success

Clarity and Transparency: You need to have a clear strategy that outlines how sourcing fits into your overall success, where it is most needed, and be very open about why you are seeking an outside source.

Know which of the three types of outsourcing above you are primarily interested in: Obviously that choice will affect which outsource partner to use and will impact what level of relationship you need to have. Names generation can be performed by individual contractors and they can be located almost anywhere. The major choice criteria are ability to find the people you are looking for and the speed they can do it. Other sourcing arrangements are more complex; often need face-to-face contact at some point; and require a more sophisticated level of negotiation.

Choose an appropriate partner: Many times I see recruiting leaders choosing outsourcing partners without full knowledge of how deep their skills go or what their previous clients thought about them. You need to get references, spend time making sure their expertise matches your needs, and perhaps even start with a trial to see how they perform. You also need to make sure they can grow with your needs and fit your corporate culture.

Define your service level expectations: Work with your outsourcing partners to write down a set of expected performance levels, including time to find candidates, how many need to be presented, and what constitutes quality. Defining what a quality candidate is often becomes the most difficult aspect of a relationship. Take the time to be sure the definition is clear and how it will be measured is agreed to by the hiring manager, the outsourcing provider, and yourself.

Establish a vendor relationship manager: Relationships don’t just happen, and they are far more than a contract. Good communication, access to hiring managers when needed, and a willingness to negotiate through difficult issues are necessary components of any successful relationship.

Having a single person who acts as the account manager with the outsource provider is the best way to begin building a long-term-success model. When I speak with parties to failed outsourcing arrangements, lack of communication and difficulty to get issues resolved are significant factors.

Develop conflict resolution processes: Be sure to set up some informal and formal ways for conflicts, disagreements, and uncertainties to be addressed. This can be through the vendor relationship manager or through a committee or other body that is set up to deal with conflicts. The more defined this process is, the better it will be. It should answer questions such as: when is a conflict at the level of needed more formal resolution, how is a complaint raised, and whose decision is final.

Allow access to hiring managers and other key employees: Make sure you allow an appropriate level of direct interaction between the outsource team and the hiring managers. After all, the goal should be finding and placing a quality candidate, not about internal power struggles and politics.

There are many success stories, and all of them are because these basic steps were followed.

Instead, he found that hiring in some niche areas greatly exceeded his expectations, but that overall, hiring was slow. The slew of candidates just applying for anything grew all year, swamping his team’s ability to evaluate and respond to each candidate. But at the same time, the candidates he desperately needed were not among them. Internet searching turned up a few candidates, as did employee referrals, but there were many unfilled requisitions as 2010 came to a close.

As he crafted his plans for 2011, he pondered the use of social media, which they had only dabbled in and not very successfully in 2010, and well as whether he really needed his sourcing team — at least as it had been designed with a heavy emphasis on Internet sourcing of passive candidates.

If this story rings true to you, here are some ideas on what 2011 may bring. And, some strategies that be effective as we continue to evolve sophisticated sourcing methods and better online tools.

Hiring Situation

There will be no hiring boom or any return to the pre-2009 years. 2011 will be another year where demand for highly experienced and skilled technical experts will continue to grow, as will the need for people with global experience. Demand will drive more global recruiting efforts, and more work will move to wherever the skills are. This means that knowing how to recruit in Central Europe, India, China, and Brazil will outstrip most organizations’ capabilities. It will drive the need to set up remote sourcing teams or find people locally who can source in those countries and regions.

Mid-level hiring will remain slow, and there will be few additions to support or administrative staff. Much of this hiring will be outsourced to RPOs and agencies that specialize in specific areas. The demand for workers with minimal skills will shrink even further as technology replaces them. Many organizations have already replaced receptionists with automated sign-in systems and automatic call systems. Accounting and bookkeeping systems are using OCR to automatically input receipts and other data into their systems.

The bottom line is clear: recruiting internally will be focused on hard-to-fill, business-critical positions, and if the internal function cannot meet the needs, external agencies and RPOs will be called in.

RPO

RPO will continue to grow as a service with more sophisticated approaches and more technology. Some firms will focus on specific regions or on functional verticals. These RPOs will invest the time and conduct research that will help them build large communities of candidates with narrow, deep expertise. They will do this cheaper and better than a corporate recruiter can because of dedicated resources and investment in technology. Corporate recruiting functions need to build better ways to assess RPO firms, establish firm performance criteria, and negotiate contracts based on how well your needs are met, rather than on cost.

Talent Management

I have long advocated that every organization should increase its focus on developing a holistic and integrated approach to talent. That will begin to happen in earnest this year. Every major survey, including those from Pricewaterhouse Coopers and the Boston Consulting Group, indicate that CEOs are now relentlessly focused on getting better people in their organizations are are willing to put the resources in place to make it happen.

Critical positions need to be clearly identified, and there should be a plan as to how those positions will be filled. The plans should rely on a mixture of internal promotions/transfer as well as external placement. Development should be a key component and lead to a percentage of positions being filled by newly trained internal candidates. Entry-level hiring can feed this pool, as long as development and assessment are in place. Rigorous performance assessment in real time as well as feedback to recruiting on success traits are also important parts of a successful talent management plan.

Employment Brand

Building a believable and vigorous brand will consume more time and resources than it did in 2010. A recruiting website will be much less critical, although still important, to success. It will be more important to use a variety of marketing tools, including targeted marketing, Twitter, and Facebook, as well as LinkedIn, to interest more people in learning about your organization and opportunities.

Global brand building will be essential for firms looking for global talent. Qualified people in many countries identify closely with the brand of the firm they work for. If your firm has no brand, is not well known, and does have an attractive product/service offering,recruiting will be very difficult, given the competition. That is why the focus should be on identifying your uniqueness and on developing a marketing campaign to emphasize it and use it to find key talent.

Internal Sourcing Teams

Internal sourcing teams will morph from a focus on Internet search, which will remain a small part of the process, to a major focus on social media. The purpose of the sourcing team will be to ensure a supply of interested people who can be turned into candidates by a combination of skilled recruiter involvement and sophisticated marketing tools. These teams will be small, technically highly skilled, and capable of being community managers, marketers, and expert in identifying and assessing key candidates virtually.

Social Media

In every way, the backbone of the recruiting function will be its ability to use social media — the tools that connect and engage millions of potential candidates. Their success will be in how effective they are in convincing people to take part in the sub-communities that they create for their firms. This will require a strategy that has been carefully thought out and is revisited constantly and updated as its effectiveness is evaluated.

Whether they use Facebook, Hyves, LinkedIn, or another community is immaterial. What matters is that the community they choose attracts the kind of people they need. New smaller specialist communities may arise over the next year, and staying abreast of these, or even creating them, may make the difference between success and failure.

In light of this, John may want to rethink his priorities and spend time to really strategize about what the needs of this organization will be and where he needs to put his resources.

In many ways 2011 will look a lot like 2010 but with more focus on implementing the initiatives that were started in 2010 and in being realistic about the use of RPO, outsourcing, and the need to focus on critical positions.

That we are in the dog days of August? That we’ve been in the summer sun too long? That I’m being Punk’d?

Turns out the press releases about these ventures are for real.

The LeafBuilder clothing line is an assortment of T-shirts that you use to flaunt your recruiting prowess. The number of maple leafs on the shirts corresponds to your placements — and the price. The entry-level T with a single leaf (corresponding to between 1 and 1,999 candidate placements) is $21.95.

Make it into the agency ownership ranks and a seven leaf, long-sleeved version will set you back $293.95. Somewhere on the site there’s a product that will run you over $1,500.

Founder John Sudds (I’m not kidding about his last name, but you can understand why I thought I was being punked) insisted recruiters will spend the money and wear his stuff because of the pride in their accomplishments. “It gives recruiters something to shoot for,” he tells me during our conversation. “It gives the industry a sense of inspiration.”

After that, it was TalentHole, and that line about removal services, that inspired me to think of those  few people from my past life I wished I could have had removed. Permanently. If you catch my meaning.

So I was a little disappointed, though not unexpectedly so, to discover that TalentHole.com’s idea of removal really means outplacement. Its founder, an independent recruiter who wants me to call him Carlos, sees this project of his as something of a holy mission.

“There are so many bad employers now and they are asking employees to work their — I’ll use “behinds.” Carlos had a different noun — off, that I wanted to do something to help,” he says.

And then there are employees with attitudes that would scare away Atilla the Hun, but whose work quality is good enough to keep them from getting fired. “A person is a Talent Hole, when he or she makes everyone else miserable by the very nature of their actions and in-actions.” It says that right on the website.

Tell TalentHole about them and maybe Carlos can help them find another job.

He works splits, fills reqs, sources candidates, and might just be able to facilitate the divorce in a way that is speedy and amicable.

If he earns a placement fee, great. He doesn’t charge otherwise.

But Carlos, I asked him, what recruiter wants your loser candidate with the bad attitude?

Reasonably enough, he explained that not every worker who wants out has an attitude problem. Many just don’t fit the company or the boss. “75 percent of the time,” he says, “that Talent Hole, somewhere else, is a super star.”

Maybe. Me, I’d ask questions if a Carlos from Santa Monica were to pitch me a candidate. On the other hand, if my boss is a Talent Hole, I’d at least be comforted to know I have a champion in Carlos at TalentHole.

What are the consequences for employers? What are the long-lasting changes the recession has wrought on the recruiting and retention of workers? There are several, say industry leaders, vendors, suppliers and individual recruiters.

Foremost, probably predictably, is the need to rebuild recruiting programs. Beyond that, there are almost as many opinions concerning the recession’s impacts as there are people I asked about it. Some predict that the cuts to job board spending will be permanent; others say social media recruiting will become a key sourcing tool, others suspect it will never amount to more than a minor tool; most expect that recruiting will be held to a higher standard of performance and economy.

Out of all the predictions and expectations — those I solicited and those I came across in discussions and blog posts and even tweets — I distilled four broad trends. You can read about these in more depth in the July issue of the Journal of Corporate Recruiting Leadership. For now, here’s a brief look at these trends.

More will be demanded of recruiting efforts as employers focus on ROI.

The data shows that worker productivity rose during the recession even in the face of such demoralizing necessities as layoffs, wage freezes, and cut or limited benefits. Recruiters will be pushed to hire more of the kind of workers who can maintain the momentum, and will be increasingly judged on the performance of their hires. The emphasis to control costs won’t abate, sending recruiters looking for alternatives to traditional sourcing channels. Among the beneficiaries will be pay-for-performance job posting, SEO, and corporate career sites.

Reliance on RPOs and staffing firms will grow.

This is a controversial trend in that there’s not general agreement it has longevity. The RPOs right now are flush, as employers who gutted their recruiting departments suddenly find themselves in a hiring bind. Smaller companies, who may have relied on a generalist to handle recruiting, are making first time calls to RPOs. Mary Delaney, CEO of Personified, CareerBuilder’s RPO and recruitment consultancy, says the agency’s revenues jumped dramatically in the first quarter as her 120 recruiters conducted an ever-increasing number of searches.

The question is: can the RPOs hang on to the new business and gain acceptance as a replacement for in-house recruiters, or are the services destined to be mostly supplemental?

Assessment usage will expand as companies struggle to make better hiring choices.

Whether it’s done in house or outsourced, candidates are undergoing reviews that are more rigorous and demanding. And as the stakes get greater, so does the testing. Forbes reported this week that “psychological scrutiny and rigorous simulations are fast becoming a requisite part of the interview process.” The magazine said that a two-day CEO assessment can cost as much as $25,000 per candidate.

Retaining and promoting talented workers will present unique problems as senior staff delays retirement.

Mark Mather, associate vice president of the Population Reference Bureau, says boomers are now expecting to work beyond the traditional retirement age of 65. A Rand study says that the proportion of workers ages 65-75 is expected to rise to 25 percent this year, up from 17 percent 20 years ago.

A few weeks ago he took the desperate step of sending a plea for money to his LinkedIn network.

“It was a slow, downward spiral,” he told me recently. “I could see it happening, but I thought, ‘It will get better. I’ll find a job. Something will come through.’”

At 6.9 percent, Hawaii’s unemployment rate is among the nation’s lowest. For Nale, though, it hardly matters. “I don’t know where the jobs are,” says the one-time Manpower recruiter who two short years ago was being interviewed for his launch of a jobs TV show for the Islands. “I was a recruiter. You would think I should know how to find a job.”

His last TV appearance was as the central figure in a news story about Hawaii’s unemployed.

Nale’s story may among the more desperate, but his difficulty in finding work is not at all unusual.

A survey by the Society for Human Resource Management cited in Fortune found that 47 percent of out-of-work HR professionals who found jobs last year had been searching for 6 to 12 months. For 27 percent, the job search took more than a year.

Now comes the good part: CareerBuilder says there were 17 percent more recruiter job postings in the first quarter of this year. Even more hopeful was the 37 percent jump in searches on recruiter resumes.

Mary Delaney, CEO of Personified, CareerBuilder’s search and marketing arm, said demand for recruiters “is coming back very strongly.” Surprising even to her is that the uptick is not just in contract recruiters, but in full-time recruiting staff as well.

At The RightThing, an RPO, companies that “downsized their recruiting functions …  are now looking for ways to re-build capacity and expertise quickly,” says Terry Terhark.

“We are seeing a significant surge in urgent requests to rebuild recruiting capacity,” he adds, which means relying on The RightThing’s recruiters, besides hiring their own.

When I talked to John Sumser about the improving picture for recruiters, his take was that it will be a while, maybe a long while, before the recruiting groups can get back to even.

The layoffs of the last three years pushed out so many experienced recruiters that now there may be a shortage of them. With few companies hiring anyone, let alone recruiting teams, Sumser suspects that a good number of the unemployed recruiters turned to other work.

“We end up,” he said, “with an industry that needs to be trained from scratch.”

That has its downside, since companies will need to supplement their own recruiting efforts with RPOs and independents at least for a while. But it also gives employers an opportunity to realign recruiting efforts.

In fact, Qualigence CEO Stephen Lowisz has noticed companies are combining the task of sourcing with recruiting. He doesn’t say what he thinks of this, though he did note that “many companies hired ex-search professionals and created an in-house search function that has been both a cost savings, and in some instances, a documented improvement in candidate quality.”

To augment the labor load balance of supply and demand, talent acquisition leaders restricted by headcount and budget limitations are partnering with external suppliers. Recruitment process outsourcing or RPO service providers are seen as a logical choice to partner for recruiting labor support. However, RPO service standards do not exist, and vary between organizations. Talent acquisition leaders are left to decipher between service offerings to identify the right partners to align with. With the term RPO being uses loosely by many suppliers, the marketplace can be confusing.

To contribute to the confusion, many of the true RPO providers have evolved from pure outsourced providers to offering specific task-oriented services to support the individual steps of the recruiting process. I describe the move from broad scope to narrow scope as the emergence of micro-recruiting services. In an attempt to understand the change, I will explore the relationship between RPO providers and their customers and the catalyst for transformation.

The RPO industry is evolving driven by client demand. The need for full-scale outsourcing has shifted as hiring activity waned last year. By definition, the PO in RPO means process outsourcing or shifting the burden of day-to-day management of a process to an external supplier. The idea is that the process, albeit important, is not part of the core business offering and can be better managed by a specialized vendor. An example would be the outsourcing of call center recruitment or a short-term recruiting project to ramp up a new business unit. The value being that internal recruiting resources would remain focused on critical employment and not be distracted by spikes in demand or less strategic initiatives.

As many companies hunkered down in 2008 and 2009 and implemented cost-cutting measures, hiring slowed and corporate recruiting functions were fighting for relevance as the downturn continued. The broader RPO services were not needed and RPO suppliers found themselves in the dubious position of being perceived as a threat by corporate recruiting functions. The term “outsource” became a cause for concern for many talent acquisition leaders as layoffs cut deeper into organizations. RPO businesses needed to reinvent. In performance review meetings and sales calls, RPO representatives changed their language from touting the value of outsourcing to supplemental or support services. They positioned themselves as an ally and not a threat to internal corporate recruiting functions. They listened to their customers challenged by req creep.

Many talent acquisition leaders evaluated their current operations and looked for ways to become more efficient in handling the demand. The obvious challenge was to figure out how to balance the load. They found that most full-cycle recruiters working on 20 or more professional openings lose their sourcing effectiveness and become project and relation managers. The more innovative functions divided the labor into sourcing, administration, and recruiting but found limitations to scale as the req load increased. Contract recruiters are a viable option; however, training and workspace issues burden ramp up time and the cost of additional ads and sourcing tools burden tight budgets. Creative RPO providers jumped at the opportunity to close the gap on recruiting labor shortages. They unbundled their broad offerings and developed individual services such as full cycle, co-sourcing, response management, and pipelining to better meet their customer requirements.

In deconstructing the recruiting process, talent acquisition leaders evaluated the effectiveness of hybrid models, using a blend of supplier-provided services with internal recruiting resources. They found they could expand their recruiting teams with full-cycle services without expanding headcount. Internal recruiters at load capacity would benefit from co-sourcing assistance which allowed external recruiters to work with the internal recruiters to populate their pipeline of talent with qualified candidates, while internal recruiters maintained ownership of relations with the hiring manager. Sourcing and administration teams burdened by the candidate-rich market and the overwhelming response from their efforts, welcomed the extra support from external recruiters offering response management in helping to qualify resumes and phone screen qualified candidates. And for those functions with candidate relationship management strategies put on hold, pipelining support allowed them to reinitiate strategic talent efforts to help position their organizations for growth and finding key talent.

Talent acquisition leaders are attracted to three key value propositions of these micro-recruiting services: cost, scale, and intelligence. At this stage in the economic recovery, companies are varied in their levels of investment in recruiting. For example, technology companies are investing heavily in recruiting as product development and marketing initiatives increase demand for talent, whereas healthcare companies are cautious as they interpret the impact of reform but still look to position themselves for growth. In both cases, companies are investing at some level and hiring more recruiters is not always the answer. Talent acquisition leaders are looking for ways to maximize their investment.

With regard to cost, micro-recruiting services are significantly less than broader project-based or standard search fees. Micro-recruiting service fees are anywhere from $1,000 to $5,000 based upon project or monthly cost and include advertising, phone, and computer related burden. Versus hourly rate or percentage of annual salary, the cost is typically contained and predictable, allowing for accurate forecasting in measuring against cost-per-hire benchmarks. With regard to scale, as compared to hiring recruiters or engaging contract recruiters, micro-recruiting services can be engaged within 24 hours, if not sooner. It is a true plug-and-play resource with recruiters on call. Obviously size of project and volume of recruiting labor needed affects the time to engage, but in the spirit of the service, it is on demand. It can be disengaged just as rapidly when it is no longer needed. As for intelligence, the information gleaned from sourcing is not lost. Companies are paying for recruiting labor and the recruiting labor is an extension of the existing corporate recruiting team. Candidates sourced and qualified belong to the corporation, and that data or intelligence is shared and input into the client’s ATS. And in some cases, a seamless relationship is developed where the external recruiters work directly in the client’s ATS. Applicant and diversity tracking requirements remain intact.

This is an exciting time for corporate recruiting functions as they continue to evolve and define their value within organizations during the economic recovery. The ultimate goal remains the same: to find top talent as quickly as possible. But how they execute against that goal is rapidly changing, with the advent of suppliers offering new services to augment and support their initiatives. The challenge for talent acquisition leaders will be to identify, pilot, and find the right supplier with the right services. And as RPO organizations continue to partner closely with their customers, new services will be developed and the industry will continue to advance. Ultimately it takes a cataclysmic event such as the Great Recession to enforce change and the adoption of new ideas. We find ourselves in some stage of evolution of recruiting services and some experts are predicting full-scale outsourcing, but ultimately change is driven by demand. Today less is more, flat is up, and micro is in.

In a world where work was primarily done physically and where there was no ability to spread information easily or communicate on a global scale, centralization and formal structures brought efficiency, speed, and a better life. Formal organization allowed the consolidation of people, machinery, and money, which led to mass production and lower prices. Societies moved from tutoring a small number of elite children to the creation of formally organized and regulated schools that were designed to educate the masses.

For as long as people have lived together, there has been a tendency to centralize and create hierarchy. We have seen the growth of many huge, centralized systems,  including government, corporations, schools, utilities, health care, the movie industry, the music industry, and so on. In fact, most of us currently work or have worked in one of these organizations, and most of the recruiting practices that we use have evolved and been shaped by the needs of these organizations.

Even in the creative world, formal organization became important for a while. Movie companies could muster the capital and the equipment to produce complex and expensive movies and distribute them to physical movie theaters. Actors were hired by one production company and signed up for life. This changed over 30 years ago for the movie industry, which is an example of how almost all organizations will be structured and staffed in the future.

Decentralization

The Internet has accelerated the movement toward decentralized, distributed systems, particularly when it comes to breaking up the traditional media distribution hierarchies: television networks, movie studios, music producers and distributors, and newspaper empires. All of these have been battered by the more decentralized, multiple-input capabilities of the Internet. Distribution requires no physical movement of stuff, but only the movement of electrons through space. Then need to centralize has been reduced in almost all cases and eliminated in many. Automation has contributed to this as well by making it possible to produce physical things with fewer and fewer people. This means manufacturing has become smaller and more distributed: a product is designed in one place, prototyped in another, and manufactured somewhere else. Marketing is outsourced, as is distribution, sales, and service.

The Shrinking Corporation

This trend is now moving into corporations, which are sensing what E. F. Schumacher said long ago: that small is beautiful. More organizations are trying to stay small or at least “right-sized” for the goals they set out to accomplish. The idea of growth for the sake of growth is dying, and more organizations are discussing how to spin off business units, outsource transactional work, and simplify their core businesses. There is an understanding that centralization reduces creativity and creates barriers to communication. The largest automobile companies are failing, and the outcome will be smaller car producers, perhaps many dozens of them, innovating on a larger scale than ever.

The people who staff these newer firms are less traditional in how they think and tend in most cases to be open to trying new models of employment. This is partly why we are seeing more contingent workers — maybe making up as much as half the workforce within a few years.

Schools

Schools are slowly following this pattern. With the ability to distribute information through the Internet, they are undergoing significant change. School systems are experimenting with virtual classrooms, and fewer are investing in new physical campus buildings. Online tutoring, individualized learning programs, and project-based lessons are becoming more common and are likely to change the way we think about educating people. I don’t see any future in physical classrooms or in most of the pedagogy we have taught teachers.

This means college recruiting will look very different in a few years from today. Articles I have written earlier this year point out some of the changes in college recruiting that are already happening, and others that are on the horizon.

Recruiting

This move to decentralized and smaller organizations means that the structure of recruiting is undergoing change. A few weeks ago I wrote that corporate recruiting was doomed because of this shift, and I underline that this week.

While corporate recruiting won’t disappear, it will morph into a very different function. The evolution may take several years for large multinational firms, but is already reality in many small and start-up firms.

Rather than the large functions that many organizations fund today, the remaining ones will be much smaller and will be staffed with broadly skilled and experienced talent professionals who are comfortable talking with senior management, who can build relationships with recruitment vendors as well as internal managers and candidates, and who can contribute to (or even create) strategic talent plans.

But the bulk of recruiting will be outsourced or insourced to firms who specialize in quickly finding and presenting qualified candidates. And even in these firms the recruiters (if we call them that anymore) will need to be highly skilled in multiple areas. I could imagine a recruiter who focused on sourcing and on managing a community of similar people for a specific client. They might be able to do this for multiple clients, given the evolving technology and skills of both recruiters and younger candidates. Another recruiter might focus on career development, candidate assessment, and coaching in order to fuel the pipeline for a talent community. The competencies involved will include sales, relationship building, technical savvy, business knowledge and skills, sourcing and social media skills, as well as the ability to move between these competencies with ease.

At a high level what is going on is the continuous movement from systems that are formally organized by a management team and where entry is closed and controlled to systems that are self-regulating, open, distributed, and filled with individuals making choices about their roles and outputs. It’s about the rise of collaboration and sharing of ideas in less structured ways. I wrote about this on The Future of Talent website where I also linked to a very interesting video on this topic that you may enjoy watching,  given by Clay Shirky at TED. Clay is the author of “Here Comes Everybody: The Power of Organizing Without Organizations,” as well as many other books and publications on collaboration, organizations and the changes we are all facing.

No matter whether we like this trend, agree with it or embrace it; it seems that nothing will stop us moving in this direction. The only question is: how fast? You should ask yourself if you are getting prepared, building the right skills, and moving into the right place to be.

However, our U.S. economic situation may not allow for expansion of RPO or the conversion of contractors to full-time hires.

• HR transformation (defined as increasing the percentage of HR specialists in recruiting, compensation, OD, and other HR disciplines) has been a trend for several years.
• Many organizations have already made the decision to re-invest in their internal recruiting organizations or transfer to RPO
• Out-of-work contract recruiters and those working for RPO/search firms who were laid off are going to find that their brothers and sisters in corporate recruiting have also been let go. So how is there possibly room for an executive search or RPO veteran on the inside, let alone getting transactional business?
• Hundreds, if not thousands, of corporate recruiters have their goals and objectives directly tied to open requisitions, and with requisitions being down, why outsource?

How did we get to our current situation? How did we so closely link the entire function to transactional work? Why didn’t we align recruiting to business objectives, like procurement, finance, and information technology have done? We had the opportunity to transition to talent organizations built with strategic leaders and rely on partnerships or flexible staffs to do variable work. As staffing experts, we should have known better.

We should have learned from our manufacturing colleagues, who eliminated part-time workers and outsourced shift labor in exchange for full-time efficiency, quality, and safety experts. From our IT colleagues, who stopped programming in house and swapped headcount for MBA business analysts that sit with the business and solve problems. But what is done is done. There are recruiters with no jobs to fill, and thus no need for recruiters.

Our leaders need to retool the function and staff to a headcount level that disregards the number of positions filled annually.

What? You want me to build a recruiting organization and not use the number of hires we have to indicate how many people should be on the team? Exactly.

Let’s admit something first. For years we have been measuring time to fill, cost per hire, and all these different metrics, and benchmarking ourselves against world-class companies. Google does this, and Microsoft does that. Honeywell does this and GE does that. Now we have no reqs open (or considerably fewer open) and we have a bunch of managers looking around saying “what are you doing recruiting?”

Well, most companies don’t have brands like Google or Microsoft, and many don’t have the HR/project management excellence of Honeywell or General Electric. So why do we continue to try to mimic their every move? While mimicking we used inflated numbers and transactional data to build our recruiting operations and now we have nothing to operate on, and thus we are expendable. We became the manufacturing plant that needs to be shut down because nobody is buying cars.

Take this time to look at your remaining group and rethink. Here are some steps to get you started on building an indispensable team, and one that will retain employees in the new economy:

Evaluate the Team

Figure out if there are team members in your organization who were hired based on the simple fact that they can handle managers and fill reqs when open. This group may need some training. Get them trained up on project management, special initiatives, and communicating with managers regularly and regardless of hire. Of course they may feel like they are targets for dismissal now, and may be looking at industries that are hiring and ready to make a switch. So talk to them. Get an understanding of their point of view, and then craft personal development plans as needed.

Talk to Leaders About Their Plans

Get a handle of the attrition and retention rates of your company historically, and ask the CEO and executive suite what the real plans are. Are you letting people go? Acquiring? Divesting? Get a handle on the new volume — not so you can divide up the reqs, but so you can create a service organization that can enable the business. You need to plan on some hiring eventually, and your team needs to be customer-service oriented, and ready for anything in this new economy. Now is not the time to start adding hiring managers to each member of your team; instead, set a tone where each recruiter spends more time with each hiring manager.

Prepare for More Work

Assume that it will be harder than before to perform staffing. The talent marketplace may have increased, but that does not always mean it is easier. Look at the facts: we were already on track for talent shortage with the baby boomers retiring, and that generation lost 40% of its net worth. You think they are retiring now? No, they are staying put, and likely not moving around. With real estate in the tank, few can sell their houses. With more dual income families than ever before, having the spouse leave the other job is going to be difficult. We already have more applicants applying per requisition, meaning more to go through. We are having more conversations with managers about hiring the unemployed or the underemployed. There are more people on LinkedIn, Twitter, CareerBuilder, and Monster than ever before. By the way: remember that we stripped recruiting resources to the bone, so all this extra work has to get done by fewer people. So plan accordingly. Use technology, outsourcing, and flexible staffs to get the extra stuff done. Don’t simply hire more recruiters. Remember you are on a roller coaster.

Keep Driving Initiatives

Lay out all the projects that need to get done in the next 12 to 24 months and assign project leaders with retention in mind. This includes ATS upgrades, university relations programs, interview training, etc. Assume that you are staffing like you used to, so what areas needed improvement then? Start now. Figure out how long it will take and how much your team is capable of doing. If you can do it all, great. Likely you can’t. I may live in a house, but it does not mean I can build one. Use your internal teams, other departments, vendors, partners, consultants, and contractors to augment where your need. Push your team to projects that teach them something, and stretch them, but don’t wear them out. Don’t assign your recruiting team the admin work. Indispensable means you can’t throw them away, but it also means you can’t dump on them. Figure out who is working on what, and get the OK from management, and make those goals and objectives bonus-driven.

Build for Scale

Make a case right now that some of your new core organization will never touch an open requisition. Of course others may have to, so build that in. Now go and get the flexible team (RPO, contractors, rotation personnel, etc) to surround your core team. Maybe those resources are full time. Maybe not. They could be internal or external. My advice is make it easy to turn them on and off, and make the ROI justified. You want an internal sourcing group using search strings and blogs to save on search fees? Fine. Make sure you can still justify it. If you are not hiring executives or have been able to attract executives without hard core sourcing in this economy, then your justification for a full-time internal sourcing team may have changed or is no longer valid. Remember there is great part-time talent out there. One hundred dollars per hour may be expensive, but part-time work for 60 hours a month @ $100/hour is cheaper than a full-time sourcer at $75,000 in salary, overhead, and management.

The watchword is value (it always has been that, by the way). We are under pressure now to drive value in recruiting and prove our existence. It will look different in the coming months, but with planning we can be much better off than where we were.

Ernest Feiteira picked up on an item I posted and started a conversation about the value of such recruiting tools. A couple others chimed in about the ROI, something I’m looking into for a future article.

At this point in the discussion, there’s no resolution to the question of how you would calculate the ROI.

However, Down Under, the Aussies must believe that outsourcing their military recruiting pays off because they have been doing it for some years. I know that because I talked with a Manpower spokeswoman about a press release announcing that the Milwaukee  firm just won a $200 million recruiting contract from the Australian  Defence Force. 

In the release, Commodore Tim Barrett, director general of defence force recruiting, is quoted saying: “Manpower’s capability in managing and delivering large-scale and complex recruitment services is necessary to attract the calibre of military recruits that we are looking for. The breadth, nature, and complexity of this recruitment program can be considered critical to national security.”

The nation of 21 million people has an enviable problem. Its unemployment rate has been declining for years and is somewhere around 4 percent for 2009. (Incidentally, the Aussies think that’s a recession.) Even though its total military force is only about 53,000 active duty, the military has been hard-pressed to find enough volunteers to fill its ranks, especially when it comes to certain types of jobs that are in demand in the civilian sector.

The problem is so acute that a newspaper analysis a few months ago reported the Navy didn’t have enough submariners to staff its six submarines.

“By any measure,” says the report in the Australian, “the latest figures on recruitment from the Defence Department make for depressing reading.”

Manpower will employ 300 people to manage what it’s calling the “largest and most complex” RPO project in the world. It’s an end-to-end recruiting contract, that includes marketing and promotion up through onboarding.

The transition is already underway with the official launch set for February. Incidentally, it’s worth taking a look at the ADF recruiting website. The videos may not be as action-packed as some of the U.S. Army’s, but the ones I watched give you a pretty good idea of the nature of the jobs the military is looking to fill.

A new study from outsourcing research firm Everest Global suggests that while the recession is reducing the size of RPO contracts, interest is growing, especially among employers with 8,00-15,000 employees.

“RPO buyers are attracted to a value proposition with cost reduction and scalability elevated due to the current economic climate, followed by improvement of recruitment processes, access to best-of-breed options and technologies, and enhanced employer branding,” said Katrina Menzigian, Global’s VP of  Research.

Growth has been strongest among high tech and telecom firms, with the largest employers — those with more than 15,000 employees — accounting for about 60 percent of the business. North America and Europe are the focal points, but employers with a global presence are adopting RPO for their overseas operations.

In the report — Recruitment Process Outsourcing (RPO) – Moving Beyond the Pioneer Stage — Menzigian and her co-authors observe that one of the challenges buyers and RPO suppliers have is confusion over just what recruitment process outsourcing is. The report notes that buyers consider RPO to be “synonymous” with staffing and headhunting. Though there are certainly significant similarities, RPO, say the authors, “is a much more strategic decision that requires buy-in from senior executives and a long-term partnership with the supplier to achieve business output and outcome.”

Because of the lack of clarity, RPO market entry by staffing and recruiting firms is common, though many lack the expertise, the report says. It cautions buyers and counsels suppliers that they must educate their customers about the differences between RPO and other types of recruitment outsourcing.

Perhaps the broadest message in the report is that RPO is not a niche, interim service to address a short term recruiting problem, but an increasingly important part of a company’s recruitment strategy that depends on a close working relationship between buyer and supplier.

“There are multiple drivers moving this forward,” Menzigian told me. While the anemic recovery has gotten more employers looking at outsourced recruiting, rather than adding in-house recruiters, Menzigian said another consideration is the technology. Not all companies necessarily want to manage an ATS or invest in upgrades or replacements.

The technology, therefore, is an ingredient in the strategic recruitment decision process.

If, though, there is one point to emphasize, Menzigian says it’s that the RPO space is a dynamic one, with more companies entering the space as the business grows.

This part of the solution is called a “Recruiting Project Manager.” Recruitment Process Outsourcing has often failed when the client believed it to be a wondrous pipeline, where money flows out and perfectly qualified employees flow in, without effort or oversight necessary on the part of hiring managers. As in other areas of business process outsourcing, RPO requires considerable upfront planning and the provision of adequate onsite project managers. Because of this, I believe that the development of a new kind of employee — the Recruiting Project Manager — will be a significant milestone in the evolution of corporate recruiting.

As segments of the recruiting process are outsourced, it will become increasingly important to hire individuals who are capable of acting as liaisons between onsite enterprise clients (including hiring and recruiting managers) and offsite RPO resources. These recruiting project managers will oversee different functional groups (such as Internet sourcing, phone sourcing, candidate development and recruiting, coordinating and scheduling), often in dispersed locations. The skills required to be successful in this role are considered to be “high-touch” and “high value-added” in that they require a great deal of direct contact. They also are considered to be of greater value than other skills that are more routine.

While a number of these skills can be taught, many members of recruiting organizations who are highly competent in the traditional roles will not possess the necessary skills to function in a new recruiting environment. These newly required skills include competencies in the following areas:

• Formulating business strategies and goals
• Outlining the competencies needed to achieve those goals
• Identifying core competencies — those competencies that the organization must have in-house
• Analyzing current competencies and identifying gaps
• Formulating hiring strategy for addressing the gaps, including bringing in new skills and developing competencies of current staff
• Monitoring and managing ongoing requirements for organizational capability
• Interpreting and analyzing explicit and implicit social communication
• Articulating and representing diverse organizational interests

Some of the competencies in this list are common to many types of project management. However, I have included the last two competencies that are based on managing social relationships because of the greater interpersonal requirements of the hiring process.

Recruiting Project Managers will be critical in the new recruiting environment because they will serve as necessary bridges between hiring companies and outsourced providers of services.

But I am not so sure that a contract recruiter should want to be an employee. While the functions that HR performs may be essential, they don’t necessarily have to be performed by an employee. Organizations are realizing that they have more employees than they need — and very often in the wrong place. Why should any organization spend salary, development, and retention dollars on employees who do not generate new products or revenue? What does a recruiter contribute that an contractor could not? There are already hundreds of companies that have replaced their recruiting team with contractors and third-party recruiters and have had success. Unfortunately, most HR professionals are convinced that their organization could not function without them as employees, but I think they are wrong.

Given what is happening in business strategy, HR is about to undergo the biggest reduction in workforce it has ever seen.

In an article written just a few days ago, Cowan analyst Peter Goldmacher says “. . . large companies will outsource an increasing amount of HR functions. . .” and raised his predictions for Kenexa stock. The Human Resource Outsourcing Association’s membership is growing rapidly, and more organizations are finding that they can successfully outsource large portions of the HR function and enjoy good service with lower costs. Over the next decade, outsourcing and automation will accelerate and other administrative functions such as IT, finance, and legal will also be outsourced. I am fairly certain that over the next decade, self-service, automation, and outsourced services will replace the majority of HR jobs within corporations.

That puts any independent professional in a good position. Outsourcing firms as well as corporations will be looking for people willing to work on fixed contracts with performance clauses. This will panic many HR professionals, but recruiters are in a good place. Except for the ATS, they are able to perform with little other internal support. Sure it will require recruiters to develop marketing skills, invest in some branding, and learn to negotiate, but it will pay back with many dividends.

Here are seven reasons that being a contract recruiter is better than being an internal employee.

Reason #1: Job Security. There is no job security working as an employee. I think anyone in a job that does not generate revenue, invent new products or services, or interact with customers in a strategic way is in jeopardy of being laid off in the next year or so, as I indicated above. There is no better security than that you create for yourself. If you build the networks, skills and put aside the resources to weather the downtimes, you will find much greater security in working for yourself.

Reason #2: You Do More and Do it Better. As an entrepreneurial recruiter, you will have to develop more cost-effective, and efficient recruiting methods, lower costs, and improve customer satisfaction. These have been elusive goals for corporate recruiters, who struggle with internal bureaucracy, an HR leadership team that does not understand or appreciate what a recruiting function needs to be successful, and few dollars for investment. There is almost no benefit to a corporate recruiter in being more efficient or cost effective. If they try to do so, they will lose budget dollars and staff. Contract recruiters can make prompt decisions and invest where they need to and therefore better serve their customers, and reap the greater profits.

Reason #3: You get more respect. As an independent professional you automatically get more respect from clients. If your demeanor and attitude are also professional, you will be listened to and hiring managers will take your advice. Contrary to the experience of many corporate recruiters, managers will solicit your opinions and market knowledge. The expert contract recruiter understands the labor market and can explain it to hiring managers. They can give examples of what other clients are doing and can apply the best practices of many. These are benefits that are hard for a corporate recruiter to offer.

Reason #4: You are rewarded for your performance. No one keeps a contract recruiter because they are nice people or because they have been loyal. Contract recruiters are rewarded for performing well — no matter the circumstances. You are always paid the amount you convince and show managers that you are worth. That’s why internal recruiters are often jealous of contract recruiters: they are only paid according to some general HR pay scale that has very little or nothing to be with how well they perform.

Reason #5: You can have more fun and be more flexible. Being on your own is scary at times, but it has its rewards. You get to take on the work that excites you and interests you. You can say no. You work where you want, you work your own hours, and you take vacations when they suit you. You can adjust your work load to match your energy levels, abilities, and motivation. This flexibility and freedom to enter new markets can be enough reason to go independent.

Reason #6: Candidates and employers will trust you more. Independence is associated with neutrality. Providing you give honest opinions and represent both employers and candidates fairly, you will gain a reputation as someone who fairly assesses candidates and employers. Candidates value that above almost anything else, in my experience. If you can let a candidate know that they are not a good fit for a particular employer, both appreciate it. Hiring managers often turn to outside recruiters when they wish to keep searches private and when they are seeking the widest reach and most objectivity. These are powerful assets for a contract recruiter.

Reason #7: You are cheaper. No matter what your hourly rate, assuming it is market competitive, you cost an organization less than the loaded salary of an employee. You also do not require internal promotions and you pay for your own training. There are no pension requirements or expectations of continued employment.

It is challenging to learn new behaviors. Working for corporations is a very established way of behavior that takes time to “unlearn.” Over the past decade the number of independent workers has grown faster than any other type and lots of people who were laid off in past recessions have learned to love being independent.

You may be asking what the difference is between a contract recruiter and a head hunter? It’s really about how you work and market yourself. Contract recruiters usually work for a particular corporation or other recruiting firm and do not own their own business. It’s a fine line and you may decide to become a third-party recruiter. Either way, you maintain your independence.

The time you spend looking for a new job can probably be better used to develop the marketing, selling, and negotiating skills that you will need as an independent. Hopefully these are challenges that you are willing to face. Even though you must face the consequences of your choices, nothing is better than being free to make those choices.

“Maybe it is a crazy time,” laughs Mark DeChant. “But our clients were asking us for this. There might even be a bigger need now, with HR departments handling so many other things.”

DeChant is managing director of Worklight, LLC, Bayard’s new RPO subsidiary. He comes to the company from CareerBuilder, where he was an area sales manager. His background includes a stint as business development manager at staffing firm Ranstad.

Although Bayard is only the second large recruitment ad agency to branch into RPO (the other is Bernard Hodes) DeChant says it’s a natural extension of the business. “The deliverable at Bayard, without an RPO, is an electronic version of a person,” he explains. Adding the recruiter between the sourcing and delivery to the client simplifies the process for an employer.

It also gives Bayard another service to offer its 1,100 clients. DeChant says Bayard reps are routinely asked to recommend screeners, sourcing firms, RPOs and the like. “This allows us to keep the revenue in house and makes it easier for the client since we already know them and helped them plan their recruiting strategy,” he adds.

Worklight is offering a complete RPO menu from screening of resumes to the complete sourcing and vetting of candidates. Worklight also provides HCM consulting and training. “Sourcing, interview techniques, OFCCP compliance,” are part of the training curriculum DeChant notes.

“Now,” he adds, “with this set of services, when a client asks, we can say, ‘Yes, we can help with that’.”

The staffing and RPO company’s 4th quarter revenues were $507.5 million, down $74 million over the same period in 2007. For the year, Spherion reported revenue of $2.19 billion versus $2.02 billion the previous year.

“Challenging economic conditions adversely impacted our company’s performance during the fourth quarter,” Spherion President and Chief Executive Officer Roy Krause says in the financial release announcing the results. “Our focus on cash flow and containment of operating costs continues to improve our financial stability and flexibility during these challenging economic times.”

The revenue figures were below Wall Street’s expectations. Analysts estimated 4th quarter revenue between $518 million and $522 million.

The news, however, didn’t negatively affect the already battered stock price. Spherion was up 3 cents on the day to $1.37. The stock price has been as high as $7.08 in the last year, but began a downward slide in April before dropping precipitously in October as the extent of economic crisis made headlines.

In releasing its numbers, Spherion said, “The continuing economic volatility makes it difficult to predict with any certainty the amount of demand that will be seen in the market, and therefore management has elected not to provide revenue and earnings guidance for the first quarter of 2009. The company believes that a combination of existing cash balances, operating cash flows, and existing revolving lines of credit, taken together, provide adequate resources to fund ongoing operations.”

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