RPO or Not?
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RPO Or Not?
Shani l Kaderal i – Sr Di rector, Ta lent Acquis i t ion, Knowledge Universe Recrui tment Strategy & Management ro les wi th C isco Systems, Wel lPoint
Developed internal models growing teams from 0 to 50+ recruiters for high volume and complex hiring (high tech and health care)
Worked with in RPO – Hyr ian Managed Talent Sourcing for United Health Group – 14,000 hires/year
Managed clients l ike Kaiser, Disney Interactive Group
Implemented RPO model at Wel lPoint for approx 2 -3K jobs/year
Knowledge Universe Largest employer of ear ly chi ldhood educat ion nat ionwide – 300,000 students Private Por t fo l io Company Mult ip le brands – KinderCare , Champions, CCLC $3B; 33,000 employees; 1700+ Centers in US Global d iv is ion focuses on K -12, Col lege. HQ is S ingapore
13,000 hi res/year in US 2
INTRODUCTION
IMPACTING YOUR BUSINESS WITH EFFECTIVE RECRUITMENT: WHICH IS BETTER? RPO VS. INTERNAL?
Efficient Recruiting
Increase Consistency
Reduce Time-to-Fill
Reduce Cost
Effective Recruiting
Increased Candidate Quality
Improved Hiring Manager Experience
Enhanced Selection Process
Realize Greater Business Impact
Increased New Hire Productivity
Improved Employee Engagement
Greater Revenue & Profitability
TIME
BU
SIN
ES
S IM
PAC
T
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RPO PROVIDER LANDSCAPE
Recruitment Staffing Search
Originally RPO was ..
…with metrics that affect Critical Service Levels
Strategy & Assessment Pre- Employment Processes
Interviewing Testing Screening Sourcing Hiring Offer Package
On Boarding
…Today RPO has evolved into an end to end solution..
…Supported by
Applicant Tracking
Requisition Management
Candidate Data
Management
Systems Integration
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RPO PROVIDER LANDSCAPE
Legacy Temp Staffing Organizations
> Spherion > Kelly – HR First > Momentum – Volt > ManPower > CDI
Specialty/Search Firms > FutureStep > Hudson
Pure RPO > The Right Thing (ADP) > Pinstripe
Origins
HRO Providers > *IBM > Aon Hewitt
Entering the NA Mkt > Talent 2 (Asia) > Alexandar Mann (Europe)
Subcontracting HRO providers
in RPO deals
Blend of internal recruiters, sourcers and coordinators to fill hiring needs Based on current model and lack of technology, initial investment in staff
could be approximately 45 resources for 12,000 teachers Staffing would require 3 mos. Technology investment and implementation would require min 6-9 months for
enterprise system
Does TA have leverage for economies of scale regarding job board postings investment?
Hiring teachers can (and should) be a source of competitive advantage which may occur within internal – Internal recruiters learn the culture
Internal models provide more control
Internal model has demonstrated good understanding of culture
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IN-HOUSE MODEL
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WHAT MODEL TO USE?
VS
Internal Model vs RPO Model • Full Time Sourcing Employees as part of Recruitment organization or Outsourcing it to a vendor (ex, Right Thing, Aon, Pinstripe, etc) • Internal model works well for Senior level positions (Apple, WLP, etc) - This model generally has the recruiter as main POC for hiring manager and managing the various recruitment processes • RPO works very well for high volume positions (Call Centers, etc) • • Here’s a SECRET: • You can do both! • Blended Models work the best for overall needs
RPO has become much more sophisticated in last 5 years with advancements in sourcing, technology and globalization
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CASE STUDIES
• Wall Mart reduced <90 day turnover from 54% to 30% (Over 4,000 hires )
• Pepsi - Turnover in first 12 months reduced from 28% to 6% for bottling plant employees (over 2,000 hires)
• Decreased Agency spend by 70%
• Decreased Sourcing Costs by 47% in Six Months
• RPO Examples
• Good with high volume, replicable positions (Call Center, Retail, Finance)
• In-House Models have leveraged strong assessment technology and enterprise ATS
• During tech boom, Cisco Systems hired close to 19,000 professionals in 1 year with internal recruitment, sourcing teams (FTE & Contractors)
• Successful high volume recruitment – 10,000+
• Decreased Sourcing Costs with internal hiring team
• In-House
• Complex roles, strong culture tied to brand
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COMPARE THE MODELS FOR YOUR NEEDS
In-House
• Enhanced quality of hire • Reduced time to fill • Control over recruitment processes • Potentially lower cost for KU over long run • Reduce turnover • Recruiters embedded into culture
• Large recruiting team would need to be put in place* • Higher start up costs • Technology upgrade needed? • Is it scalable quickly? • Longer timeframe to implement for labor, technology and
branding if lack of infrastructure?
RPO
• Enhanced quality of hire • Reduced time-to-fill • Scalable Model • Reduce technology investments* • Standardized processes • Reduce turnover ** • All inclusive Pricing/ Fees At Risk of SLAs not hit***
• Learning culture to manage internal hiring process • Disconnect b/w company and vender goals • Dependent on vendor quality
Benefits
Concerns
* When technology is bundled into service
** Vendors with standardized process, testing and resources improve quality
*** Fees of approximately 5-10% at risk if turnover is not reduced per Service Level Agreement (SLA)
Define your business problem Compare the models for your speci f ic needs Determine tota l cost of the problem Develop a business case
Compare the baseline (current approach) to RPO and Enhanced Internal Model?
Apples to Apples check
Cost per each model
5 year analysis
Review Price of Postings to Job Boards are covered (ex, Monster & Careerbuilder) – Reduce KU advertising spend by 50-70% (Est. Savings would equalize
Review technology advantages of each
RFP, V is i t the RPO f i rms Change Management: Ensure there is EVP HR, C l ient & CEO level suppor t
Decide and Just Do i t
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NOW WHAT DO YOU DO?
WHAT IS YOUR BUSINESS CHALLENGE? TURNOVER? QUALITY OF HIRE?
12,200 Teachers left us and required backfills!!!
25,318 Teachers worked for us
In 2011…
For RPO vs. Internal Hiring model, 1) Define the problem
2) Compare Pros/Cons of the models to help with your hiring needs 3) What is the problem costing the company? 12
What type of teacher issue did you have (KinderCare)?
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Teacher Turnover
- 48% in 2011 - 12,200 teachers
Unhappy Parents • Parent Retention • 20% of parent issues involve teacher
turnover
Future student achievement weaker due to teacher turnover
Accreditation challenges
Labor issues – ex, Managers in classrooms
(Finance) Hard Costs $12M/year $900 turnover cost per hire
Lost Revenues: $2-$18M/year*
Productivity Losses: $8M/year**
Negative Brand Impact: $TBD M/year***
TOTAL COST APPROACH – COST OF THE PROBLEM:
Negative Social Media Brand impact
Longer time to fill positions
* Estimate from Ops (Kindercare Regression Analysis) ** Estimate from TA – High Time to Fill teacher roles (+35 days) ***Estimate from Marketing
• Finance costs include advertising, EA costs, training time (Hard Costs) • Estimate for Interviewing time costs for CDs (20 hours – Soft Cost)
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DEVELOPING THE BUSINESS CASE
1. Provides a common point of measurement to compare Service Provider pricing to WellPoint’s cost of providing the in-scope activities.
2. Provides “apples-to-apples” comparison between Service Providers (generally with a moderate amount of “normalization”).
3. Becomes the primary yardstick to measure both the “total cost of delivery” and helps to determine the general size of the transaction.
4. Determine if there is a business case to move forward with an RPO model for WellPoint
Focus on RPO vs Internal
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VALUE PROPOSITION
Speed Cost
Quality
Recruitment Process Outsourcing vs. Internal Model
Managing Processes • Enterprise Workflow Management • Best Practice Consulting • Sourcing Channel Management • Vendor Selection • Process Mapping • Paperless Operations • Robust reporting and metric distribution • Data Analysis
Reducing Costs • Pre-Employment Selection • Success Profiling based on your high performers • Reduction in turnover through selection reduces refilling of positions • Direct Recruiting provides a dedicated team at a fraction of agency fees or temporary employee costs • Sourcing Channel Effectiveness Analysis • ROI Analysis will tie hiring practices into business outcomes
Improving Quality “Single Source” Accountability Continuous Measurement and Improvement Revalidation of Selection programs and retention performance Holistic program approach Overall performance accountability management State of art technology and staff training Retention Services to reduce turnover and staffing costs
RPO
$4,200K
$800K
$5,000K $426
In-House
$3,600K*
$2,200K**
$5,800K $484
KU Baseline
$6,000
$1,600K
$7,600K $633
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COMPARISON – FUTURE STATE – RECRUITING COSTS PER HIRE MODEL
RPO Includes posting costs; metrics (daily, weekly); technology
KU doesn’t have; sourcing and branding expertise and scalable resources . Cost is $350 per hire
KU would invest in ATS Technology, Sourcing,
Branding
Baseline would eventually require investment in TA
foundation (ATS, Sourcing, etc.)
Total Labor/Service Costs =
Non Labor Delivery Costs = (Advertising, Sourcing, Technology, Background Checks)
Total Costs =
Cost Per Hire =
(KU CD Time vs. In-House Recruiters VS RPO Fees)
Based on 12,000 Hires
CURRENT VS RPO MODEL
Current Model RPO (2013) Variance
Total Delivery Cost (12,000 Hires) 4,200,000 4,200,000
Recruitment Technology/Transi8on Costs 79,000 79,000
Hiring Costs (EA, Training) -‐ $486 per Hire 5,830,000 5,830,000 -‐
Sourcing/ Adver8sing 459,000 272,000 187,000
Interview Time Costs (SoN Costs)* 6,000,000 1,200,000 4,800,000
Turnover Reduc8on Benefit (1,125,000)
Total Recruitment Costs $12,289,000 $10,456,000 $1,8433,000
Turnover 48% 43% 5%
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$1.8 Million LESS cost than current baseline approach Technology – We would incur a cost for technology maintenance with the RPO Sourcing costs are reduced with RPO. Es8mate is $272K reduc8on RPO Model will save 16 hours from CD Time (20 hours with current model and 4 hours with RPO) – Source: Finance* Turnover Reduc8on Benefit – The is a guarantee of 5% points (48% to 43% ex) – Turnover Reduc8on with Fees at Risk in CY1 – For 1
year, es8mate is 1,250 hires saved @ $900 per replacement hire – Source: Finance
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RPO VS BASELINE– 5 YEAR SUMMARY – TEMPLATE BUS CASE
(in 1,000's) CY0 CY1 CY2 CY3 CY4 CY5 5 YR TOTAL Baseline 0 2,029 2,029 2,029 2,029 2,029 10,146 Supplier Price 0 1,325 1,325 1,325 1,325 1,325 6,627 Normaliza8ons 0 (227) (227) (227) (227) (227) (1,135) Retained to Go-‐Live 0 97 0 0 0 0 97 Retained Organiza8on 0 820 820 820 820 820 4,100 Governance 0 0 0 0 0 0 0 Turnover Benefit Impact 0 0 0 0 0 0 0 Total OperaYonal Savings 0 14 111 111 111 111 457 Savings % 0% 1% 5% 5% 5% 5% 5% Supplier Transi8on Costs 0 0 0 0 0 0 0 Wellpoint Transi8on Costs 200 0 0 0 0 0 200 Total TransiYon Costs 200 0 0 0 0 0 200 Net Savings Before Tax (200) 14 111 111 111 111 257 Savings % 0% 1% 5% 5% 5% 5% 3%
• One Time TransiYon Costs in Yrs 0-‐ 1 for severance
• Total transiYon esYmated cost of approx $200K (Severance & Taleo expenses)
• RTI soluYon will save WLP approx $111k/year from years 2-‐5 & $14K in year 1
• WLP will save approx $257K over 5 years
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WHICH MODEL OFFERS MORE SCALABILITY?
Requisition Volume
Peak Season/High Volume Low Volume
Resource Baseline
Incremental resources are deployed to handle peak
volume
Enables provider or internal to deploy resources as needed.
The ability to adjust increases efficiency reducing per hire cost
Teacher Hiring
Strategy
BIG PICTURE – COST, QUALIT Y, COMPANY IMPACT
Enterprise o Align sourcing channels to
strategic direction/talent goals o Increase of quality hires o Create hiring consistency
across LOBS o Potential $180M in revenue
gains o Significant benefits from 5%
turnover reduction (improved retention rates)
o $1.5M in savings vs. current approach
Candidates o Understand a clear
and compelling Candidate Value Proposition
o Experience a seamless recruiting process – their expectations are surpassed
o Generate positive feedback about KU
Hiring Leaders o Experience a seamless
recruiting process – with superior customer service
o Have an increase in quality hires
o Cost-effective process o Increased productivity
through 10% Time to fill reduction
Recruiters o Understand and
support strategic vision and innovation
o Provide seamless recruiting process
o Deliver extraordinary service and experiences
o Support cost-effective process
o Track key metrics and trends
• 10% reduction in time to fill (SLA) would potentially yield $8.8 million in productivity gains
• Hires would be onsite on average, 5 days earlier
• For every 1% reduction in turnover, there is a $18m potential revenue gain & hard cost savings of $228,000
• Pilot cost are manageable TBD) given ROI
• Recruiters can scale and manage larger number of requisitions as needed – Improved Productivity
• For every positive interview experience, candidates generally tell 3 other individuals - approximately 40,000 face-to-face interviews resulting in positive brand impact with 120,000 individuals
• Approx. 192,000 hours or 13 days given back to CDs to spend with teachers and families
• Build interviewing skills working with recruiters
Value to Families: Happy Children/Higher Parent Retention
RPO is $1.8M less cost vs. baseline model
Hire Better Teachers/Less Turnover
$2-18M in Potential Revenue Gains
Big Change Management
$3-4M Annual Incremental Cost
MAKE THE DECISION: WEIGH PROS AND CONS
Benefits = Highly Efficient, Scalable, Maximum Support for Hiring Managers, Cost Effective
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WHEN SHOULD YOU USE INTERNAL MODEL VS. RPO?
1. Complex, niche based positions (Statisticians at senior levels)
2. Roles which require sensitive political savvy within an organization
3. Directors and above 4. For ALL your hiring needs 5. TA/HR Strategy (today) – that is for TA professionals to
provide the strategy and have RPO execute it
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Performance M
gmt.
Succession Mgm
t.
Learning Mgm
t.
TOTAL TALENT MANAGEMENT – FUTURE CONSIDERATION
Manage the entire talent pipeline (Internal & External) – What supports TM better? RPO or Internal?
Talent Reporting & Analytics
ATS
Talent Management
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Anticipated change in labor flexibility techniques over the next three years: How does this impact RPO vs Internal?
7%
4%
4%
10%
9%
Hiring part- time workers
Off-shoring
Bringing back retired workers
Outsourcing 37% 56%
40% 56%
43% 53%
Using temporary / contingent workers 40% 50%
59% 32%
Decrease No change Increase
Source: IBM 2010 CHRO Study
Which model is better with systems for these alternate sources?
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And will you succeed? Yes! You will indeed! (98 and ¾ percent guaranteed).
Today is your day! Your mountain is waiting. So... get on your way!
— Dr. Seuss (“Oh! The Places You’ll Go”)
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