AVOIDING

GROUNDHOG
DAY
The business case for
recruitment process outsourcing

Tim Meehan
MANY FIRMS STRUGGLE
TO FIND TOP TALENT.
THIS ISNT A NEW
PROBLEM, BUT SOLVING
IT CAN BE AN ENIGMA.

The talent is out there, learn how to break the

code and find more than your fair share.
3 / I N T RO D U C T I O N

A new talent landscape

The inventor Charles Kettering once said, a problem well stated is half solved,
so heres how we define the problem.

An organizations supply of talent acquisition resources (recruiters) is built to

support a business plan
However, for many reasons, business plans often change
This means the demand for talent (hiring needs) often varies from the
original business plan
To respond, Talent Acquisition implements countermeasures, but often costs still
increase and key performance indicators (KPIs) decline
As a result, HRs focus shifts from executing strategy to managing transactions

Sound familiar?

Given that business-planning cycles are now much shorter and more likely
to change, organizations need a far more agile talent acquisition model to
keep pace.

In this paper, we seek to frame the problem and propose another

approach as outlined below, in four parts.

Part 1: The structural challenges facing Talent Acquisition (TA)

Part 2: Quality and cost implications

Part 3: A new talent acquisition performance model

Part 4: Five decision factors to consider before making a change

PART I: THE STRUCTURAL
CHALLENGE FACING
TALENT ACQUISITION

Why agility isnt part of the business plan.

5 / PA R T I: T H E S T R U C T U R A L CH A L L EN GE FACI N G TA L EN T ACQ U ISI T I O N

Establishing your Talent Acquisition plan:

Start by grouping your investments into strategic and operational. Strategic might include employer branding,
workforce planning, mobility, HRIS, regulatory, talent communities, and digital, just to name a few. Operational
includes investments directly supporting a hiring transaction such as job postings, sourcing, screening, logistics,
recruiters, recruiting managers, hard-to-fill escalation tools, and on-boarding.

These strategic and operational resources are combined and represented in the dark charcoal line in figure 1.

TALENT ACQUISITION LANDSCAPE - FIGURE 1

Recruitment Resources
QUANTITY

TIME

CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME

6 / PA R T I: T H E S T R U C T U R A L CH A L L EN GE FACI N G TA L EN T ACQ U ISI T I O N

The structural challenge Talent Acquisition faces with this planning approach is reflected in the purple line in
figure 2. The line shows how actual requisition demand often doesnt come in a nice smooth line like planned.
Economic conditions, site expansions, mergers, or competitive activity all affect hiring and thus the demand for
Talent Acquisition resources. The result is periods of imbalance, or disequilibrium, between requisition demand
and the supply of recruiting resources.

TALENT ACQUISITION LANDSCAPE - FIGURE 2

Recruitment Resources

Requisitions
QUANTITY

TIME

CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME

BUT REQUISITION ACTIVITY IS SELDOM AVERAGE
7 / PA R T I: T H E S T R U C T U R A L CH A L L EN GE FACI N G TA L EN T ACQ U ISI T I O N

The light blue line in figure 3 shows how talent acquisition departments often use supplementary resources such as
contract recruiters, borrowed resources, and agencies to respond during peak periods.

Note how the light blue line never quite syncs up with the purple line. This reflects a lag between requisition demand
and the supply of operational recruiting resources. The lags during growth or peak demand cycles are caused by
the time to onboard, and make productive recruiting, borrowed, or agency resources. It is further exacerbated by
leaderships own inability to find and train resources because they are themselves most busy dealing with unplanned
hiring volumes. The lags during decline or valley cycles are caused by the hesitation to release these resources once
the volume drops, since they worked so hard to add them.

TALENT ACQUISITION LANDSCAPE - FIGURE 3

Recruitment Resources

Requisitions

Supplemental Resources
QUANTITY

TIME

CLIENT RESOURCES ARE OFTEN BASED ON AVERAGE OVER TIME

BUT REQUISITION ACTIVITY IS SELDOM AVERAGE
SUPPLEMENTAL STAFF IS USED, BUT NOTE HOW ON-BOARDING, OFF-BOARDING AND PRODUCTIVITY LAG
PART 2: QUALITY AND
COST IMPLICATIONS

Whether the demand is at a peak, in a valley,

or in equilibrium, cost and quality are impacted.
9 / PA R T 2: Q UA L I T Y A N D COS T I M PL I C AT I O NS
The real cost of that peak:
The yellow areas in figure 4 reflect periods when demand for
recruitment services exceeds the supply of available recruitment
resources. During these periods, talent acquisition managers
experience a range of obstacles that result in reduced KPI
performance and higher costs.
During periods of peak demand, recruiters have more requisitions
than they can reasonably support. Leadership must divert resources
to recruit and train supplementary recruiters, borrowed resources,
and agencies so they can recruit the talent. In effect, Talent
Acquisition leadership must go backwards to go forwards.
This negatively impacts the business in many ways.
TOTAL COST OF OWNERSHIP - FIGURE 4
QUANTITY
TIME
REQUISITION DEMAND EXCEEDS RECRUITING SUPPLY, LEADING TO KPI ISSUES
Cycle times increase because experienced resources are diverted
to training roles. Next, candidate quality declines as new resources
engage and take time to be effective. Combined, cycle times
increase and quality of candidates decrease. By now, hiring manager
satisfaction has declined so Talent Acquisition is focused on filling
requisitions, not strategy. Unfortunately employment brand is
impacted as job seekers encounter undertrained recruiters and
slow hiring processes. Finally, and most costly, contingent search
fees increase.
Counted together, these outcomes can greatly reduce Talent
Acquisition productivity and cost effectiveness and thus business
performance.
Recruitment Resources
Requisitions
Supplemental Resources
10 / PA R T 2: Q UA L I T Y A N D COS T I M PL I C AT I O NS

The real cost of that valley

The red areas in figure 5 reflect the periods of time when Talent
Acquisition leadership has more resources than requisition demand
warrants. This is caused by a hesitancy to release recruiting
resources and agencies until they are certain demand has subsided.
These requisition valleys result in a range of cost and
quality implications.
The first and most obvious cost is contract recruiters and pending
agency fees for candidates already in process. But whats important to
understand isnt their total cost, because they were supporting a real
business need. Its more important to understand the cost, in lag time,
between when requisition volume started to decline and when they
(and their tools, licenses, systems, etc.) were actually off-boarded.
Another less obvious cost is the increased cost of quality. While
KPIs improve during valleys, its typically because the organization
is over-resourced. Thus they are spending too much to deliver an
acceptable quality of service.
Finally, if the valley is deep or long, than Talent Acquisition
leadership must in the costs associated with downsizing. The
most obvious one is severance to right size teams, but perhaps
even greater is the impact on team morale. Watching team
members and friends, who helped the organization survive a peak,
be released, impacts team morale, employee engagement, and
ultimately loyalty to the organization.

Recruitment Resources
TOTAL COST OF OWNERSHIP - FIGURE 5
Requisitions

Supplemental Resources
QUANTITY

TIME

REQUISITION DEMAND > RECRUITING RESOURCES SUPPLY = KPI ISSUES

REQUISITION DEMAND IS LESS THAN RECRUITING RESOURCE SUPPLY, LEADING TO COST ISSUES
11 / PA R T 2: Q UA L I T Y A N D COS T I M PL I C AT I O NS

Even equilibrium isnt safe

The green shaded areas in figure 6 represent the equilibrium periods
when Talent Acquisition resources meet the demand for recruitment
services. However, even this period harbors a hidden cost for
employers.
Organizations must deploy solutions that increase agility. Otherwise,
it will be like Phil Conners, Bill Murrays character in Groundhog Day,
who awoke every day to the same problem over and over again.
Leadership must take heed to adapt their strategy. If they dont
integrate agility into their delivery structure, team members will
not want to repeat the pain of past peaks and valleys and thus use
equilibrium periods to explore their career options elsewhere. Thus,
the team members most needed to support the next peak may not be
there further exacerbating the challenge.
No one wants to repeat the stress-filled disequilibrium
cycles. In fact, they probably expect their leadership to
deploy solutions that will ensure they dont keep living the
same day over and over again, like Phil Conners, Bill Murrays
character in Groundhog Day.

TOTAL COST OF OWNERSHIP - FIGURE 6

Recruitment Resources

Requisitions

Supplemental Resources
QUANTITY

TIME

REQUISITION DEMAND > RECRUITING RESOURCES SUPPLY: KPI ISSUES

REQUISITION DEMAND < RECRUITING RESOURCES SUPPLY = COST ISSUES
SUPPLY AND DEMAND IS IN EQUILIBRIUM, LEADING TO THE GROUNDHOG DAY
PART 3: A NEW
PERFORMANCE MODEL

Recruitment process outsourcing (RPO) lets

Talent Acquisition easily scale recruiting capacity
to meet demand, better understand recruitment
costs, and resolve the tensions associated with
peak, valley, and even equilibrium requisition
demand cycles. Follow these four steps to
capture the RPO Total-Cost Advantage.
13 / PA R T 3: A N E W PER F O R M A N CE M O D EL

Step One: Separate strategic and operational investments

In Part 1, we looked at how rapidly changing business requirements
affect demand for talent acquisition resources. Part 2 explored
how regardless of a peak, a valley, or equilibrium cycle, costs and
quality are impacted. In this third section, well show how using
a recruitment process outsourcing (RPO) firm lowers total cost of
ownership by embedding agility into the business plan.
As figure 7 shows, the first step in the transformation requires
Talent Acquisition to separate strategic activities from operational
activities. Resources for operational activities, such as sourcing,
screening, recruiting, and on-boarding candidates, become the
responsibility of the RPO firm. This shifts accountability to experts
while also lowering internal fixed costs.

RPO LANDSCAPE - FIGURE 7

Recruitment Resources

Requisitions

Supplemental Resources
QUANTITY

TIME

LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT

14 / PA R T 3: A N E W PER F O R M A N CE M O D EL

Step Two: Invest in your RPO Core Team

Figure 8 shows the shift when an RPO partner is engaged and
integrated into the Talent Acquisition team. This dedicated RPO
core team is tasked with understanding the clients processes,
tools, culture as well as hiring manager expectations. They will
also determine how to improve KPIs by integrating RPO resources,
methodologies, best practices and continuous improvement ideas.
The core teams role is also to act as the conduit to the RPOs team
of scalable resources. Thus the blue line is removed because the
client greatly reduces or eliminates the usage of contract recruiters,
borrowed resources or and agencies.

RPO LANDSCAPE - FIGURE 8

Recruitment Resources

Requisitions

Supplemental Resources
QUANTITY

RPO Core

TIME

LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT

ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM
15 / PA R T 3: A N E W PER F O R M A N CE M O D EL

Step Three: Leverage the RPOs agility resources

Figure 9 demonstrates how RPO helps improve outcomes during peak periods. Contract recruiters are
replaced by the RPO providers own scalable resources that are more productive, sooner, because they
leverage the core teams tools and processes. This approach better aligns the supply and demand for
recruiting resources to improve KPI performance while freeing up Talent Acquisition leaderships time
to focus on strategic considerations.

RPO LANDSCAPE - FIGURE 9

Recruitment Resources

Requisitions

RPO Scalable Resources

QUANTITY

RPO Core

TIME

LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT

ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM
ACHIEVE PEAK PERIOD KPIs: USING RPO SCALABLE RESOURCES
16 / PA R T 3: A N E W PER F O R M A N CE M O D EL

Step Four: Capture the RPO Total-Cost advantage

Figure 10 shows the quality and cost benefits of this new model. Fixed costs are reduced while agility
increases. This improves KPI performance during peak periods while reducing cost during the valleys,
ensuring the business secures necessary talent efficiently and on time. And since operational resources
are provided by the RPO and not the Talent Acquisition function, customer hiring and downsizing is
minimal. Thus, employee morale, engagement, and loyalty actually increase regardless of the hiring cycle.

Yes indeed, Phil Connors, your Groundhog Days are over!

RPO LANDSCAPE - FIGURE 10

Recruitment Resources

Requisitions

RPO Flex
QUANTITY

RPO Core

TIME

LOWER FIXED COSTS: CHANGE APPROACH TO STRATEGIC OVERSIGHT

ACHIEVE STEADY-STATE KPIs: USING DEDICATED RPO TEAM
ACHIEVE PEAK PERIOD KPIs: USING RPO SHARED RESOURCES
MODEL LOWERS TOTAL COST OF OWNERSHIP
IS RPO FOR YOU?
FIVE FACTORS
TO CONSIDER.
18 / IS R P O F O R YO U? FI V E FAC TO RS TO CO NSI D ER

RPO provides fast-changing organizations with a scalable, more cost-effective way

to manage recruitment resources. But are you ready to make a business case? The
following five considerations may help you decide whether RPO is the answer:

1. Review current recruitment practices
Be honest: how does your firm respond to
unexpected peaks in recruitment demand? Do
you see them coming? Or are you one phone
call away from another Groundhog Day?
2. Tally the costs Look at the cost implications
we described in Part 2. How long does it take
you to train and make a recruiter productive?
How many quit before succeeding? Do search
fees increase? Do you keep the recruiters too
long? What about severance costs?
4. Consider testing the waters Many RPO
programs start off focusing on recruitment
for one aspect of a business. Engage the
stakeholders where a critical challenge exists
and determine if a pilot program may be
beneficial. Keep in mind that an RPO program
requires enough volume in the pilot to warrant
the assignment of dedicated resources over an
extended time. Ideally a pilot with a core team
in place would run a minimum of one year.
That core team then becomes the gateway
to an extended RPO engagement.

5. Find a catalyst Deploying an RPO program is

3. A ssess the quality Try to measure the
not complicated but it does require adoption
change in KPIs between steady-state and peak
and ownership with the hiring managers and
periods. Do critical projects suffer because
end users. Driving organizational alignment is
resources are diverted to train new recruiters
enhanced when there is a common challenge
or staff? How does your recruitment process
motivating the need for change. Using the
affect your employment brand?
examples outlined in this paper, identify a
handful of recruitment difficulties within your
business and consider how RPO could make
life simpler for your talent acquisition team.

If you are seriously exploring options for outsourcing your recruitment process, KellyOCG
would love to discuss your current state with you and make recommendations on how to get
started. Send a request for consultation to solutions@kellyocg.com or visit kellyocg.com for
more information on our full suite of Talent Supply Chain Management and RPO solutions.
19

About the Author

Tim Meehan is one of the futurists in KellyOCG's RPO Center of Excellence. His job is to see
around the corners and help keep KellyOCG out front. Prior to his current role he sold and
managed KellyOCG solutions in the Americas and Asia.

About KellyOCG
KellyOCG, the Outsourcing and Consulting Group of workforce solutions provider, Kelly Services, is the
leading global advisor of talent supply chain strategies that enable companies to achieve their business
goals by aligning talent strategy to business strategy. We recognize each clients goals are unique to their
business drivers. Whether your talent requirements are focused on speed, quality, compliance or cost, we
apply supply chain management principles to help companies fully leverage talent across all categories: full-
time employees, temporary employees, freelancers, independent contractors, and service providers, as well
as alternate sources of workers like retirees, alumni, and online talent communities.

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