The Evolution of Recruitment Process Outsourcing (RPO): What’s Next?

Recruitment Process Outsourcing (RPO) is one of the many industry acronyms – and models – that has found staying power over the last ten years. In this conversation with Cory Kruse, president of leading US-based RPO provider, Orion Novotus, he shares insights on the value add of RPO, the shifting dynamics in the RPO model, and expectations on how this offering will continue to evolve in a competitive recruitment landscape.

RIX: RPO has continuously gained ground after being introduced approximately a decade ago. Why do you think companies are gravitating towards the RPO model?

CK: We do see an uptick in interest as companies continue to experience pain in their recruiting and hiring processes. The market is more educated now that RPO has been around for a while, and most of the RPO providers are smarter and more sophisticated in their delivery and ability to demonstrate a positive business impact. On the opposite side, there have also been bad experiences. But overall, companies see that they need to do something less traditional to be successful. What they’ve done in the past is not meeting their business needs and they are turning to RPO which is built for future endurance.

RIX: What makes RPO built for future endurance?

CK: If you look at the staffing world, there is a great deal of sophistication when it comes to candidate sourcing. But in my experience, many staffing providers haven’t evolved to integrate with a client’s business operating model. Staffing is highly sales- and margin-driven which is attitudinally far from the consultative nature necessary to integrate with a company’s operations. We work hard to put methodologies in place that create this alignment so we’re all working towards the same solution. How can we accomplish the client’s desired outcomes? How are we going to measure success? What is the risk mitigation? What’s the contingency plan if we aren’t meeting our goals? In larger companies these initiatives are led by a CHRO or VP of HR, and then the business leaders will get involved. In certain cases, we’re seeing more C-suite involvement, but usually only with the most innovative companies. It’s typically still considered a “HR problem” with the business side pulled in later.

RIX: You mentioned some of the differences between staffing and RPO. What’s the buyer’s perspective of RPO in contrast to staffing?

CK: We see different perspectives across the board. Some buyers still see staffing as a necessary evil or have the mindset, “I’ve used them forever and they’ve solved my problem.” It all comes down to when the client writes the check, do they feel good about the value they got for the dollar they spent? When talking to clients that are still using staffing firms for a lot of permanent placement, they sometimes feel price-gouged. Typically a relationship is built on “IF.” The needs of the client vary, so we are doing both permanent and temporary hiring on behalf of clients as well. It also depends on how the talent wants to work, so we need balance their work preferences to make quality matches with our clients. We’re constantly thinking about how we connect with talent and how they want to work.

RIX: You mention flexibility, which is often cited as a pro of working in the gig economy. Where does gig fit?

CK: With companies that are moving quickly, for example a tech company that needs to commercialize a platform or killer app, they understand that they are going to have to pay for hired guns. We find them wherever they are – and will engage and onboard them in a style that is conducive to the talent wanting to work for that company. Our approach is very talent-driven so we are open to working with great candidates that prefer to work within a “gig” approach or framework.

RIX: What’s the typical RPO business model in terms of demand generation? How do you sustain your client roster?

CK: The most important result is delivering positive business outcomes. Recruiting is a big part of that – making sure that we have the right talent in the right place, qualified, motivated, and ready to go. But there are other components of growing importance: compliance, bolstering the client’s employment brand, repeatable methodologies, scalable processes, and analytics. We’re also focused on infrastructure so that we can provide these elements – and especially the right data. There’s a lot of “other” that we are doing, which continues to evolve. However, it always comes back to a conversation about business outcomes. You’re not going to cold call your way into a RPO deal in most cases. You can’t create a solution without understanding the environment and the intended outcomes as there are so many factors, influencers, and detractors.

RIX: What’s the single biggest challenge you see for the RPO model in the next 5 years?

CK: It’s hard to pinpoint just one but a few come to mind. The first is on the candidate side. We’re moving from a situation in which the candidate finds the job to one in which the job finds the candidate. The technology, AI, and data in place are changing the game. Talent marketing and branding (which lends itself to the job finding the candidate) is becoming more critical. If RPO providers don’t look at the way that candidates behave (mobile engagement, social, talent communities, and employment branding), they will be left behind. Most of the RPOs at the top of the market are progressive in this way, but the mid-market is still catching up. Some of the bigger public companies are acquiring data companies and buying data simply so they can predict candidate behavior and serve up the right jobs to them.

This brings up another challenge for RPO: compliance in a social media-driven world. Ten years ago, everyone was focused on “finding” the right candidates. Technology was all about “finding candidates you can’t.” Now almost everyone is out there and it’s about engagement: how do you understand what’s going to engage candidates and how do you then get them to engage? Social brings in a lot of highly unregulated areas as it relates to discrimination. If I go out on Facebook and I’m searching a potential employee for our internal company, and I see something like an ailment and for some reason I discriminate on that, where does that go? How does enforcement come into it?

Another element which is a stress point is that an RPO provider has to deliver a higher-value solution for less dollars in most cases which is a trend we see continuing for the next five years. So we need to be better: go higher up the food chain, have the best talent, have the best tools, and use the proven processes and methodologies to deliver the desired outcome.

One exciting development that I hope continues to grow is the concept of hiring managers sunsetting the historic way of looking at resumes: evaluating the last job, accomplishments, education, etc. People are now looking at potential and seeing candidates in different ways – how do you identify what someone can do, as opposed to what they did? It’s a promising development as a company committed to making connections between great talent and the best employers.

RIX: How would you assess the existing technology or prescribed technologies you utilize on behalf of clients? Where are the gaps or opportunities?

CK: Part of the scope of our engagement with our clients is to assess the technology that they’re using – will it support meeting the desired outcomes we’ve defined? We’ll then walk through the assessment with them to determine how we move forward. Most of the potential clients with whom we engage have an existing technology platform (a single ATS or HRIS that’s integrated) but we’re finding more and more that they’re asking us to assess or be a part of migrating to another platform, selecting it, and managing it.

Another common challenge we hear from clients and prospects is that they have difficulty getting the data that they need, but even more issues understanding how to organize it or make sense of it. What does this data mean? Who should get it? How often should it be reported and to whom? There is a formula for success around how that needs to roll out and how it needs to work from our experiences. It should start from C-suite down to the line hiring managers and everyone in between. You need to make the data actionable, but we encourage our clients to get the basic set of info that’s really aligned before you try to own the world.

Other technologies that interest our clients involve better candidate experiences and engagement to drive the brand, as well as technologies specific to sourcing. Now, front-end systems have a whole other level of automation, engagement, and selection components to give users more options for how they work. It’s crazy how fast technology is moving, all while trying to keep things simple. And we’re seeing it across all industries. For example, I got my windshield fixed recently and everything was mobile-first and automated, from where my order stands in the process to the NPS survey at the end. This type of consumerization and simplicity is being sought after in our industry as well. Regardless of the technology at play, the focus should be on the relationship between the hiring manager and the candidate. The recruiter can facilitate some aspects but it’s the candidate and the hiring manager that need to make a connection at the end of the day. A lot of times people and technology and process take focus away from that. Relationships are still the most important currency at play here.