What HR function are you or would you outsource in 2010?

An HR Director's focus should be on the human components of attracting, measuring, motivating, and sourcing a safe and productive environment that enables a successful organization to exceed it's goals.

HR professionals should seek the support of professionals and organizations for all non-core administrative, benefits, compliance and technology functions. Most firms already outsource repetitive or tedious tasks such as payroll or 401k administration. By outsourcing to professional third parties, HR professionals can concentrate on more strategic and profitable assignments.

Organizations can also benefit from outsourcing "project" type work or levels of expertise/support for which full time staff would not be cost-effective. For example, companies often successfully outsource the design and implementation of programs, such as performance management; succession/workforce planning; design and documentation of HR processes; development of training curriculums, compensation design; etc.

Also, it's important to ensure that there is a defined implementation plan whenever project work is outsourced to ensure the ROI expected by management.

Recruitment

One of the natural outcomes of a capability review is an evaluation of approaches to recruitment and resourcing. Typically the choices are whether to create an in house function or whether to outsource to an external partner? If the choice follows an internal model, questions arise around what kind of investment, structure and performance measures are required? If resourcing is outsourced, the questions relate to whether a purely transactional relationship with agencies is appropriate or whether a more intelligent solution is crafted?

Choosing a recruitment/resourcing model must be based on a defined strategy that identifies the organisations hiring objectives. Without a strategy it is unlikely either approach will deliver value. A reactive model without a strategy is time consuming, costly and likely to have a negative impact on your ability to source and attract good people. A recruitment strategy should encompass a quantitative cost benefit analysis and a qualitative assessment of the beliefs and principles that the organisation values.

The choice to outsource recruitment can have different levels of intimacy and confidence. On one level it can be a purely transactional service model based on vacancy generated needs where an agency charges a margin on the salary of the candidate. At another level it may be a contractual relationship with a preferred supplier, featuring elements such as volume discounts, mutually agreed performance standards and value added services; or at yet another level it may be a recruitment process outsourced (RPO) model where a provider serves as an organisation’s internal recruitment function for some or all of its jobs.

The choice of solution can be calculated to be relatively cost neutral however outsourcing decisions have evolved from focusing purely on cost savings to encompass a strategic consideration of which business processes or activities provide a comparative advantage and which do not. What capabilities are unique to the organisation and are core to its success and what are not . The recruitment function is a case in point. Is your internal recruitment function hard to copy and replicate? Does it distinguish your organisation from others? Does your recruitment function mark your organisation out as a leader in your sector with a brand that attracts the talent you need?

Differentiation of RPO models from traditional recruitment

In RPO, providers manage the entire recruiting/hiring process from job profiling through the on-boarding of the new hire, including staff, technology, method and reporting. This differs from recruitment agencies and search providers in that RPO assumes ownership of the design and management of the recruitment process and accountability for results.

The key value proposition of RPO

The key value proposition is resourcing leverage where an RPO provider can provide the employer with detailed and quality information on resourcing ratios (how many people are needed to sustain ready to fill databases); by working in a hub context RPO recruiters can engage with needs across multiple sectors for multiple needs and populate the talent pool to enable reduced vacancy ratios and the costs of lengthy time to fill.

A strengths based choice

Measurement is critical to cost and value accountability. You cannot manage that which you cannot measure and it is inherently easier to manage suppliers than it is to manage staff. The RPO approach to service delivery is that it brings dedicated recruiter expertise into the organisation with its own infrastructure and information systems that enable economies of scale and scope. Database tools and networks enable the organisation to rapidly access IQA candidates. RPO changes fixed under utilisation costs to variable but actual utilised costs and working in-house with managers on a day to day basis mitigates the organisational fit risk.

Internal recruiters have the advantage of resident organisational and cultural knowledge. However unless correctly incentivised around results, there is a risk that they do not have the same service delivery and results accountabilities. Maintaining an effective internal function also requires an investment in purchasing and maintaining information systems if the organisation is to remain competitive in a labour market that is now virtual. Depending on recruitment volumes, internal functions carry a cost risk around underutilisation. Multi tasking in broader HR tasks to mitigate this utilisation risk threatens the focus and development of recruiter competence. In today’s labour market, your recruiters better have developed a competitive sourcing strategy; have well developed networks and the capacity for speed.

Three compelling reasons stand out in support of an RPO model:
• gaining outside expertise not available in concentration internally;
• resourcing leverage that improves systems quality; and
• focusing on the core business of the organisation