By Jeremy Clarke
There's a growing trend in our industry: a talent solutions trend known as Recruitment Process Outsourcing (RPO). RPO is not a newcomer to the world of recruiting, by any means. Companies in many varied industries have taken advantaged of RPO-type services for a number of years, but the movement seems finally to have gotten a foothold in the AEC industry, and the timing couldn't be better.
In simplest terms, RPO service providers act as external teams of corporate recruiters for the clients they serve. When a company decides to partner with an RPO service provider, they are entering into an arrangement that allows the RPO provider to collaborate within (or even oversee) all of the recruitment functions of the company. So we're talking about a solution that is much, much broader than simply finding talent. We're talking about your own dedicated (albeit, outsourced) corporate recruiting team.
When should you consider an RPO arrangement? That's a tougher question because client needs vary. For the most part, an RPO can be an effective arrangement for organizations anticipating significant recruiting volume but having only limited in-house recruitment staff. It's also an excellent option for firms that may have numerous recruiting needs but do not have the scale or resources yet to hire internal recruiters.
Perhaps the biggest consideration — and advantage — is cost. Most contractual arrangements under an RPO span one calendar year, and usually incorporate all or most of the open positions that a client company may anticipate throughout the year. Because that's true, RPO arrangements are much more cost effective than single-search arrangements because they virtually eliminate all of the multiple large fees associated with individual placements and replace them with a single, flat monthly fee paid to the RPO service provider during the life of the annual contract. Typically, the flat monthly fee is determined by the number of anticipated positions during a calendar year, and sometimes is accompanied by a nominal "success fee" paid to the RPO provider for each placement made.
Here's a generic example of this pricing model: Let's say that ABC Engineers has budgeted 10 openings during the next 12 months. At a median salary of say $80,000 for each position, and assuming an average third-party placement fee of 20 percent of base salary, you could anticipate paying about $160,000 to fill all 10 positions. On the other hand, under an RPO arrangement you may pay an RPO provider an $8,000 fee per month for 12 months — $96,000 — for the same number of positions. Not only have you saved $64,000 in base fees, but you have gained the added advantage of soup-to-nuts management of all recruiting processes rendered by the RPO provider.
Which brings me to my next point: Because an RPO provider assumes much more ownership of the client's entire selection process (as dictated by the client) than single-search arrangements, HR teams and RPO providers typically experience greater collaboration, continuity, and accuracy in candidate-selection processes. Additionally, long-term familiarity between the two firms tends to increase the speed with which jobs are filled, while also improving consistency and compliance throughout the selection process.
Ultimately, the goal in any RPO arrangement is to see the RPO provider work as a more seamless extension of your firm's recruitment interests. In my experience, it's the hands-down optimum solution for growing firms quickly in an improving market; an excellent strategy for any enterprise to hire better people faster, and at a far friendlier cost.
Jeremy Clarke, is director, Executive Search Consulting for ZweigWhite. He can be contacted at 479-582-5700 or at firstname.lastname@example.org