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It doesn’t matter if you are just starting out or have been in the game for a while, every business needs to decide if it is better to keep recruitment operations in-house or outsource the responsibilities to a Recruitment Process Outsourcing (RPO) provider.
While both options have their merits, the decision primarily depends on your Return on Investment (ROI).
Key ROI Metrics to Assess
Before deciding on whether to keep recruitment operations in-house or hand it off to an RPO, you’ll first need to evaluate your ROI against five (5) key recruitment metrics: Direct cost before hire, time spent to hire, new hire performance, onboarding costs, and retention.
The direct cost before a hire includes the multifaceted expenses used to recruit talents, such as marketing on job boards and social media, as well as implementing strategies to proactively source candidates.
Time is a precious commodity that cannot be squandered on dead-end leads. While evaluating if the time spent to hire is not being wasted, take a good hard look at the type of candidates applying and walking in for interviews. If you see that many of them are unqualified for the position, it’s a clear sign that the time spent to hire is being misused.
To figure out if your current recruitment efforts are worth the investment, you will need to predict the expected performance of a new hire based on your existing employees’ performances. Doing so will enable you to set a justifiable price tag to modify recruitment expenses going forward.
Onboarding expenditures are easily measurable because you already know how much training and equipment costs. What is slightly more complicated, however, is predicting the loss of productivity that the onboarding period may cause.
Consider it a nail in the coffin if your company’s retention rates are poor. If people are not sticking around for very long, then it’s a sure bet that your company’s recruitment foundation is crumbling apart.
Why an RPO Makes Sense
The time and costs needed to modify your recruitment systems are dependent on ROI. If the costs are heavily outweighing the benefits then action needs to be taken immediately to stop the bleeding. Since it is a slow, difficult, and costly project to fix a broken in-house recruiting system by yourself, it would be prudent to hand off the repairs to a professional. RPO providers are built to use the latest recruiting trends and advanced technologies, not normally available in-house, to help you successfully navigate through a crisis.
Putting a cushion underneath your ROI freefall is just one of the many beneficial services an RPO can provide. By taking a much more hands-on approach, RPO providers position themselves to be long-term partners with a company, even if the immediate need is only for a short amount of time. Through close collaboration, they function as the talent acquisition arm of the company and recruit under the organization’s brand. Such a partnership provides sustainable talent pipelines, widens the talent pool, and enables HR to focus on strategic initiatives to maintain growth.
Much More than Money at Stake
Many companies are hesitant to hire an RPO due to the higher costs involved. However, if your ROI is plummeting, then the real question you should be asking yourself is: how much does it cost not to have an RPO?
If you do not have a strong recruiting strategy, experience high turnover rates, and lack the optimal resources to fix the problems quickly, then it can end up costing your business much more than dollars and cents.
ROI Will Show You the Way
Depending on your ROI calculations, employing one or a couple of in-house recruiters can be more than adequate. However, there are cases where your in-house team does not have the time and resources to fix the issues causing your checks to bounce. In such a situation, it is prudent to hire an RPO who can not only turn the ship around fast but also develop a long-term relationship with you geared towards success.
Because your company’s success depends on the ability to attract and retain the top talent, it is imperative to keep constant tabs on your ROI. If calculated properly, the question on whether to keep recruitment operations in-house or outsource them to an RPO should be already answered.