Issue link: https://www.e-digitaleditions.com/i/135744
Recruitment organizations, and in many instances, for the majority of the hiring. However, not all RPO providers are the same. Only a few firms can deliver full life cycle talent acquisition services. Just because the firm delivers traditional recruitment services—such as temporary staffing, contingency recruiting and/or retained search—that does not qualify as a true RPO provider. RPO is a very different beast from traditional recruitment. It requires a different approach and different delivery resources enabled by best-in-class technology to be successful. The major problem facing RPO firms today is the price point, and, unfortunately, the RPO industry itself helped create this dynamic. The RPO firms accepted an aggressive pricing strategy for the past few years in order to grow their business. In candidate processing solution scenarios, the aggressive price points can still work. However, if the openings require a direct candidate sourcing strategy of passive candidates to fill difficultto-fill openings, they frequently fail. The price points are simply too low to allow for direct candidate sourcing. They simply cannot make money on those assignments, and if there are too many difficult assignments in the mix, they are unable to have a profitable account. This obviously creates tension between the provider and the client organization. It is not uncommon in an As we look at traditional recruitment, we ask why third-party search firms charge high fees, up to 33-1/3 percent of the new hires' base compensation. Does it really cost that much to fill these jobs? The answer is both yes and no. Firms only get paid on the jobs they fill, so they charge higher fees in order to make up for the ones they do not fill. This relationship between the provider and the employer ends up being a "Catch-22." RPO environment for the client organization to pay traditional third-party recruitment fees for these difficult-to-fill positions in addition to their RPO fee structure; 10 percent, 20 percent, 30 to drive costs down, it requires a partnership. In many third- percent or more of the openings might be filled by traditional party recruitment engagements, a fee is only paid once jobs are search firms. This is an expensive alternative and not one that filled by that third-party provider. Given these price points, the was planned at the lower price. The difficult-to-fill positions employer continues to identify talent on their own in hopes to require more dollars. avoid payment of an expensive third-party fee. In other words, in most instances it is not a partnership. As a result, the traditional What is a difficult-to-fill assignment, anyway? How do we search firm only fills a fraction of the jobs it writes. According to define it? It could be based on job complexity, which includes some statistics, contingency search firms on average fill about six job requirements. It could be based on the size of the candidate percent of their assignments. If they write and work a job, but do universe. A small candidate universe commonly makes the not fill the job, does that mean the third-party firm incurred no assignment more difficult-to-fill. It could also be based on the costs? Obviously not! They charge higher fees in order to make time the job has been open. A job open for 120 days, six months, up for the ones they do not fill. This relationship between the nine months or longer is generally considered a difficult-to-fill provider and the employer ends up being a "Catch-22"resulting opening. A tier fee schedule based on this definition might in the higher fees. be the answer. Some form of governance to prevent abuse/ misclassification of the job opening is required. One method Why Go Traditional? could be labeling the job categories that fall into the difficult- The next question is why use these traditional search firms to-fill bucket. However, things do change over time. To say the anyway? One obvious answer is if the opening is a difficult-to-fill least, it is complicated and not a perfect science. position. Second, the organization might lack the resources to do it by itself. It also might be a confidential replacement. They As we look at traditional recruitment, we ask why third-party might also want access to direct candidate sourcing. They might search firms charge high fees—20 percent, 25 percent, up to want access to passive and not just active candidates. Some 33-1/3 percent of the new hires' base compensation. Does it traditional recruitment firms do this well while others do not. really cost that much to fill these jobs? The answer is both yes Retained search firms typically do it best, because they receive and no. Talent acquisition is a relationship business. In order guaranteed payments. That guarantee allows them to invest MAY 2013 | www.hrotoday.com [43]