No Better Time to Consider RPO
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The document outlines insights and strategies around Recruitment Process Outsourcing (RPO) presented by industry experts from Pillsbury Winthrop Shaw Pittman and Pinstripe, emphasizing the importance of maintaining recruitment efforts during economic downturns. It discusses the benefits of RPO, including cost savings and operational efficiencies, while highlighting the favorable market conditions that make it an opportune time to invest in outsourcing initiatives. Key themes include leveraging strong business cases, favorable engagement dynamics, and reduced execution risks in the current economic environment.
No Better Time to Consider RPO
- 1. No Better Time: For Considering RPO Presented by March 25, 2009 GLOBAL SOURCING 0
- 2. If there is more than one person on a terminal/phone and you’d like a copy of the Presentation – please tell your email address in the “questions” box on the sidebar GLOBAL SOURCING 1
- 3. Welcome! Anne Nimke brings almost 30 years of experience in both human resources and staffing to Pinstripe. She is a recognized leader in the RPO arena seasoned veteran world of talent strategy. She has lead strategic client engagements including RPO Solutions that are the flagship programs in the industry, Anne has also lead long term outsourced talent acquisition programs for professional, non exempt and hourly staffing needs and consulting projects including applicant tracking selection and implementation, employment agency RFP Anne Nimke and contract negotiation, and HR/Recruitment Department realignment Co‐founder and and reorganization. Exec. Consultant She graduated from Marquette University with honors and is currently a member of the HR Outsourcing Association (HROA), is Vice Chair of the RPO Association, is a member of SHRM’s National Staffing Special Expertise Panel and is former President of the MMSHRM Chapter and co‐ chair of the WI State SHRM Conference. GLOBAL SOURCING 2
- 4. Pinstripe, Inc. designs, builds and manages high‐performance, large scale Talent acquisition solutions. For clients in industries that include financial services, technology, telecommunications, healthcare and others, Pinstripe’s Innovative approach to Recruitment Process Outsourcing (RPO) integrates sourcing, recruiting, hiring, on‐boarding, and engagement into a complete, end‐to‐end outsourced acquisition and retention solution. For healthcare organizations, Pinstripe’s Healthcare Group offers the provider‐side experience it takes to help clients reduce their recruitment and labor costs while continuing to provide the highest quality of patient care. Visit www.pinstripetalent.com. Source Acquire Hire Engage ROI Pinstripe’s end‐to‐end Recruitment Solution GLOBAL SOURCING 3
- 5. Thank you to our presenters today! Mr. Haworth is in his fourth year as head of the HRO consulting practice at Pillsbury Winthrop Shaw Pittman, the largest outsourcing law firm. A true pioneer in the HR outsourcing field, Mr. Haworth’s career milestones include establishing one of the first truly global internet‐based human resource delivery systems for the Raytheon Company, the co‐founding of Fidelity’s HRO business (the first full‐service HR‐Payroll –Benefits outsourcing offering), establishing the first global BPO licensing program for PeopleSoft, and founding a $400M BPO operation for KPMG. Mr. Haworth was most recently EVP at BrassRing (now Kenexa), a global leader in recruitment software and Recruitment Process Outsourcing where he headed strategy, business development, marketing, and international sales. John holds an M.A. in Technology John Haworth Strategy from the Institute of Technology Strategy and Policy, a joint institute of Boston Consulting Principal University and M.I.T. John was recently named 2009 “HRO Superstar Advisor” by HRO Today . Mr. Steinig is a member of Pillsbury's Global Sourcing practice. Mr. Steinig concentrates on advising clients in complex and strategic technology and “business process” transactions. He has assisted several large and medium‐sized corporations with major outsourcing and other critical technology transactions, including full‐scale outsourcing, system integration, software licensing, application development and maintenance, hosting and staff augmentation projects. Recently, his practice has focused on various business process outsourcings, including finance and accounting, human resources, call centers and investment‐related processes. Prior to joining the firm in April 2001, Mr. Steinig was general counsel and head of business development for Bunk1.com, a private company focusing on the summer camp industry, and an associate at the law firm of Latham & Watkins, where he specialized in mergers and acquisitions, private equity transactions and general corporate representation. He received his Michael A. Steinig J.D. from Harvard Law School and B.A. from Duke University. Counsel GLOBAL SOURCING 4
- 6. • Pillsbury Winthrop Shaw Pittman has advised clients in over 500 sourcing transactions with a cumulative contract value in excess of $450 billion • We are the only sourcing advisory firm offering integrated professional services (e.g., legal plus sourcing, domain, financial, and change management) under one roof • We guide clients through the full sourcing lifecycle: • scope modeling, delivery requirements • business case development, RFP preparation • service provider analysis and selection • contract negotiations • transition, implementation and governance • We have over 20 years of experience in complex sourcing transactions, in all domains of IT, F&A, HR, Procurement, and Facilities • We have worked with and enjoy good relationships with a wide array of service providers GLOBAL SOURCING 5
- 7. Polling Question What is your role? 1. Recruiter or Recruiting Leader – 48% 2. HR Systems / Operations / Shared Services – 19% 3. HR / Advisor to process – 10% 4. Finance / Legal ‐ 0% 5. Other – 24% GLOBAL SOURCING 6
- 8. Overview • What’s Going On? • RPO: Key Contributor to the HRO Business Case • No Better Time … For RPO • Key Insights GLOBAL SOURCING 7
- 9. What’s Going On? G BLSUCG L A ORIN O
- 10. What’s Going On? • Status of markets : affecting the sense that recruiting is necessary • Status of corporate spending : severely curtailed, except for revenue related • Status of recruiting : in many cases departments are decimated • Yet 93% of work‐eligible Americans have jobs, are progressing in their careers, and retiring − There IS demand for recruitment − The winners when the market returns will not have cut recruitment, but will have invested in process improvements, technologies, and scalable solutions GLOBAL SOURCING 9
- 11. Polling Question How do you approach recruiting now ? 1. End to end outsourcing for all or some jobs – 20% 2. Sourcing and screening by third party – 13% 3. Outsource drug test, background checks – 33% 4. Considerable use of contingent firms – 0% 5. 100% in house – 33% GLOBAL SOURCING 10
- 12. The Basics of RPO • All or a significant portion of an organization’s recruiting function ‐ from talent acquisition, to sourcing and screening, to interviewing, and the hire itself • Can be end‐to‐end, replacing an organization’s entire recruiting function − But often focuses on certain employee types, geo’s, etc. − Usually includes talent management (applicant tracking) technology – either the client’s or the provider’s own partner • Often includes rebadging and on‐site presence • Unlike traditional contingency recruiting, the RPO provider becomes a more integrated extension of the customer’s organization – with consequences for failures to make hires • Rates are pre‐negotiated, and contracts often include minimum commitments The RPO market is now reaching maturity • Relatively large volume of in‐force contracts • At least 15 credible and experienced providers The complexity of the market and the contracting for these services points to the use of advisors to speed the process and ensure the equitableness of the contract for both sides GLOBAL SOURCING 11
- 13. View from the Client / Advisor Side • What we need : data, determination, and a driver (change leader) • Business cases : now more than ever • What is possible: clients need to be realistic about the hard dollar savings, but be careful not to omit other key benefits such as : − quality of hire − employment brand building − employee engagement from the moment of hire − moving the function to a scalable and variably‐priced “utility” • Internal dynamics: balance of power has to be with HR / Recruitment going in, not with the lines of business and hiring managers – although their buy‐in is essential (“a voice, not a veto”) GLOBAL SOURCING 12
- 14. View from the Provider Side There are CRITICAL SUCCESS FACTORS! • Burning platform • Top management and cross functional buy‐in …AND Voice of the Customer (VOC) • Standardization of internal processes • Change management plan • Communication plan • Agreement on what success looks like • Partnership – continued program management • Ongoing process improvement – relentless adjustment GLOBAL SOURCING 13
- 15. Drivers of Provider Selection HROA Talent Acquisition Challenges Report GLOBAL SOURCING 14
- 16. Total Cost of Ownership • Cost per hire may not include all your “workforce acquisition costs” • Review all hiring paths and their costs/quality – Temporary help – Temp to hire fees – Agency costs – Recruiting from within – Independent contractors – Candidate travel and lodging – Relocation expenses • Travel and lodging costs should be managed more closely • Costs may be hidden in cost centers and line items GLOBAL SOURCING 15
- 17. Polling Question If you are outsourcing or contemplating outsourcing, what is your most desired outcome other than cost savings? 1. Access to advanced technology – 11% 2. Improved process and cycle times – 44% 3. Improved candidate quality and reduced turnover – 28% 4. Make recruiting expense flexible & variable – 17% 5. Improve compliance, share risks with provider – 0% GLOBAL SOURCING 16
- 19. HRO Business Case • Relentless pressure on overhead functions to cut costs • HR is often prime target – a visible back‐office expense • Primary HR spend − Workforce Administration, Benefits Administration, and Payroll − HR COEs, business partners − But in many cases, efficiencies already have been achieved • HR Systems − Systems refresh (especially employee self service) − SaaS solutions − Again, in many cases, efficiencies have already been achieved • Value‐add HR spend − Learning and Development − Recruitment − In many cases often ignored in robust markets (“not broken,” “good enough,” “the business pays for it,” etc.) GLOBAL SOURCING 18
- 20. The HR Savings Landscape: Areas of Potential Benefit • End‐to‐end HRO is in less demand in the current market • Interest in outsourcing of some major HRO processes remains strong GLOBAL SOURCING 19
- 21. The HR Savings Landscape: Areas of Potential Benefit • Recruiting, even in today’s market, remains an expensive line item, … and is often inefficient • Level of savings depends upon: • Current level of automation • Current productivity ratios (e.g. HR to ee, Recruiter to req) and appropriateness of those ratios to industry and geography • Current level of support for an altered service delivery model (e.g. self‐service) GLOBAL SOURCING 20
- 22. Sources of RPO Savings • RPO providers can apply scale economies, geographic reach, proprietary networks/databases and methodologies to reduce costs • Providers supply customers with opportunity to benefit from powerful talent management tools and technology, while amortizing the costs • RPOs can greatly reduce (if not eliminate ) the use of third party contingency firms with higher price points • Improved time‐to‐hire cycles and reduced employee turnover can produce large savings on top of reduced operations costs • Quality of hire, a metric of great long‐term value, can be made an explicit target for the RPO Savings for RPO compared to in house operations can range between 20% and 30%. Related improvements often occur as well, for example in the volume of applicants, quality of hire, time to fill and other process cycle times, as well as employee turnover GLOBAL SOURCING 21
- 24. No Better Time • Counter‐intuitively, the current economic climate may be an opportune time to consider further sourcing initiatives • The three main drivers of opportunity are: 1. Leverage a stronger business case 2. Favorable market engagement dynamics 3. Lowered execution risk Pillsbury Global Sourcing believes in, but is not a booster of, the outsourcing industry. If our clients’ needs cannot be met by the outsourcing model, we will tell them so. However, we are of the opinion that the current economic environment could represent an unusual opportunity for buyers and providers of outsourced services. GLOBAL SOURCING 23
- 25. 1. Leverage a Stronger Business Case In the current economic environment the business case for RPO is likely to benefit from these trends: • More high‐level business support and advocacy • Renewed focus on the business’s core competency • Focus on cost, but with an eye to long term scalability • RPO positioning the company to win when market recovers GLOBAL SOURCING 24
- 26. 1. Leverage a Stronger Business Case In the current economic environment the business case for RPO is likely to benefit from these trends: • More high‐level business support and advocacy Get in front of management with your plan for the recruitment function. You have their attention as never before. • Renewed focus on the business’s core competency Unless your organization is a staffing company it is unlikely that recruiting is a core competency. Take a leadership role in examining the alternatives. • Focus on cost, but with an eye to long term scalability Show that cost can be reduced, but that making the function more scalable (up and down) will provide even greater savings in the years to come. • RPO positioning the company to win when market recovers Show that investing in RPO can help to identify and select quality candidates now, and build deeper pools for the future. RPO can scale up quickly to win the war for talent in recovering markets. GLOBAL SOURCING 25
- 27. 2. Favorable market engagement dynamics In the current economic environment market Engagement is likely to produce: • More leverage for existing customers, especially if they are willing to add scope and term • More leverage for new customers to attract more provider interest than usual • More flexibility in financial terms, including potential for provider‐supplied financing • More willingness on part of providers to “think outside the box” GLOBAL SOURCING 26
- 28. 2. Favorable market engagement dynamics In the current economic environment market engagement is more likely to result in: • More leverage for existing customers, especially if they are willing to add scope and term Particularly in more uncertain environments, providers value additional scope or longer committed terms. Good time to trade this for other concessions (e.g., pricing). • More leverage for new customers to attract more provider interest than usual Providers are hungry for new sources of revenue. Deals that were too small for some providers previously may now be interesting. • More flexibility in financial terms, including potential for provider‐supplied financing Important because often “good” deals with strong ROIs are forgone because the client cannot afford the upfront investment. Providers can make this more manageable. • More willingness on part of providers to “think outside the box” This is critical because there are many different impacts on the financials, not just the per‐hire‐price (minimums, etc.). May have more opportunities to create a good deal for both parties. GLOBAL SOURCING 27
- 29. 3. Lowered execution risk In this market, some of the ordinary implementation risks of outsourcing transactions may be mitigated through: • Less questioning of the model; less rear‐guard undermining of change • Greater sense of purpose and commitment on both sides of the deal • Customer and partner focus on meeting the business case • More time to focus on future workforce planning GLOBAL SOURCING 28
- 30. 3. Lowered execution risk In this market, some of the ordinary implementation risks of outsourcing transactions may be mitigated through: • Less questioning of the model; less rear‐guard undermining of change These massive projects are often controversial, and politics/self interest often create obstacles. There may be more solidarity in this environment. • Greater sense of purpose and commitment on both sides of the deal These deals have greater importance to both parties now and are more critical to achieving their goals. • Customer and partner focus on meeting the business case Providers know that at the end of the day, if the project doesn’t save the customer money, it will be viewed as a failure, no excuses. They are incented to help you make and preserve a business case. May require looking extra‐hard to find costs that are buried in others’ budgets. Advisors and providers can help you. • More time to focus on future workforce planning True if things are slower than normal. Although, in some organizations that have become too lean, you may have even less time to devote to new initiatives. GLOBAL SOURCING 29
- 31. Polling Question What do you find most compelling about the current market conditions and the opportunities it presents? (Identify all that apply) 1. It is a good time to improve processes – 79% 2. It is a good time to engage service providers – 21% 3. I have senior management’s attention – 0% 4. Naysayers are fewer at this time – 14% 5. We can make the function scalable – 21% GLOBAL SOURCING 30
- 33. Key Insights and Observations • Pillsbury Insight – John Haworth “Don’t mistake lowered recruiting volumes for a time to “turn off” recruiting. The companies that will recover the fastest are those which keep the best talent engaged, acquire new talent and position themselves to compete fiercely in the new economy that will emerge.” • Pinstripe observation – Anne Nimke “You can’t become who you want to be by remaining who you are!” Max Depree, Author, CEO • Pillsbury Insight – Mike Steinig “This environment demands creativity and collaboration – it doesn’t have to be a zero‐sum game.” GLOBAL SOURCING 32
- 34. Questions and Answers John Haworth Michael Steinig Consulting Principal Counsel 2300 N Street, N.W. 2300 N Street, N.W. Washington, DC 20037 Washington, DC 20037 tel: 617.559.9898 tel: 202.663.8062 john.haworth@pillsburylaw.com michael.steinig@pillsburylaw.com Thank you to our speakers! Pillsbury Global Sourcing, part of the full‐service law firm of Pillsbury Winthrop Shaw Pittman LLP, is a team of both lawyers and consultants who have been at the forefront of global sourcing since 1988. We advise clients on all aspects of outsourcing, including ITO, BPO, technology transformation, and strategic services. Pillsbury has advised in over $500B in outsourced contract value.. To learn more please register for our “No Better Time” outsourcing webinar series at: http://www.pillsburylaw.com/no_better_time_outsourcing_09 GLOBAL SOURCING 33
- 35. Join Pinstripe for Future Webinars! Sourcing Talent in Today’s Economy 04/22/09 TCO and ROI in RPO 06/24/09 Top Recruitment Strategies for Uncertain Times 08/13/09 Take‐Aways! For more information – animke@pinstripetalent.com 877.797.3379 www.pinstripetalent.com GLOBAL SOURCING 34