2020 flipped the world of recruiting on its head. Gone are the days of in-person interviews and full in-house talent acquisition teams. These traditional dynamics and processes are now being replaced with zoom interviews and liquid workforces. Some organizations had no other choice but to limit their internal teams. While working amidst tightening budgets and unforeseen challenges lurking around every corner, outsourcing roles just makes the most strategic sense for many organizations. This option offers flexibility and cost savings, which happen to be two of the most important factors for business success in this new era.
It’s true that outsourcing recruiters can be a smart move for companies, but organizations should be mindful about their specific needs and the downstream impacts it can have on your business. Oftentimes, companies approve recruitment process outsourcing (RPO) agreements that are broad, lengthy and vague, which can result in unexpected costs and negatively impact the quality of new hires.
To find a value driven RPO agreement, companies need to know what to look for. In this blog post, we’ll share three tips to finding an RPO agreement that provides the most value to your organization.
- Cost-Efficient Pricing Model
Businesses seeking RPO agreements are often looking for a more cost-effective recruiting option. Generally, RPOs are cheaper than in-house recruiting teams. But if you don’t look closely at the RPO agreement, they can tack on extra unexpected costs.
Ensure your RPO agreement isn’t going to cost you more than anticipated by looking closely at the pricing structure. There are several different RPO cost models, such as management fee model, cost per transaction and cost per slate. However, the most common RPO agreement is based on a cost-per-hire model. This pricing model means the organization pays for every hire made. Even if an internal employee gets promoted or an employee refers an applicant for a role and they receive the job, the company is responsible to pay, according to the cost-per-hire model. This pricing structure can inevitably lead to an uptick in cost spent for efforts that don’t require it.
By identifying the pricing model prior to signing off on the RPO agreement, your company can ensure value is being brought to the company in a manner that is cost-effective.
2. KPI Tracking
RPO agreements do not only include hidden costs for hires; they can also require an additional payment when the firm hits or exceeds its key performance indicators (KPIs). Crushing goals is great, but oftentimes, recruiters are prioritizing metrics not beneficial to the quality and growth of new hires and the company. Looking critically at the RPO agreement and outlining specific metrics to track can assist not only your company but your outsourced team members in aligning strategies. This ensures they focus on exceeding goals that can have a positive impact on the organization and recruiting process.
Instead of tracking surface-level KPIs, such as speed to hire and number of candidates, try tracking metrics such as application-to-offer rates, candidate satisfaction and employee retention. These KPI’s signify the quality of new hires who are being brought in and can outline the success of recruiting efforts long-term.
3. Malleable Contracts
Today’s market could be totally different to tomorrow’s market. Therefore, it is crucial your RPO agreement reflects the ability to be flexible. If the hiring landscape changes and you need to change your RPO strategy — either by decreasing or increasing services — it is best to ensure your contract allows you to do so before the need arises. Otherwise, your company could be overpaying or not receiving necessary efforts to align with the landscape.
The best way to ensure your company can modify its needs as the industry changes, is to either sign an agreement that can be adjusted or stick to short-term agreements.
RPO deals can provide great value to organizations looking for cost-savings, flexibility and hiring expertise. But with any agreement, it is crucial to be attentive to details and make certain you’re receiving value for the price you pay. For more information on recruiting strategies, check out our blog on Recruiters Are the Salespeople of Hiring: Here’s How to Equip Them to Sell Your Brand!
Recent Comments