High Offer Decline Ratio: It Takes 2 – and Sometimes 3 – to Tango!

After time and effort are placed into building the right job description, engaging in recruiting efforts, screening and interviewing candidates, and finalizing an offer, there is nothing more frustrating than having the chosen candidate decline the offer. It costs your organization time, money, and energy to move all the way through a hiring process without getting that new hire.

When an offer is declined, many of the people involved want to ask what went wrong, and move into finger-pointing mode. By then, the hiring manager and recruiters are scrambling to find a good backup candidate or trying to restart the entire process, losing more time and money, and leaving the position open.

If it happens once, this scene will play out again – and probably throughout your organization. Leaving a position open is an expensive loss of productivity for your company, and repeatedly losing candidates in the end stages of the hiring process quickly becomes costly. For many organizations, these cost pressures result in asking current employees to take on more work – reducing their effectiveness across the board – and simply leaving the open position vacant.

This becomes a vicious cycle for any organization, and fixing the hiring process is crucial to avoid damaging employee morale, departmental productivity, and the bottom line. While the offer process varies from company to company, there are some basic elements that are the same. In most scenarios, there are a number of people involved: the hiring manager, a talent acquisition resource, and sometimes an HR business partner or generalist.

These individuals must share responsibility for ensuring that the right candidate is extended the right offer at the right time, otherwise it will become impossible to make the right hire. There are a number of good starting points for any hiring team to look at when considering improvements to the hiring process. These may include:

     • Identifying trends in offer declines: Is there a certain department, hiring manager, recruiter, or pay grade that has a high number of declined offers?
     • Identify themes of offer declines: Are there common reasons candidates are declining offers, such as pay, timing, or location?
     • Identify who owns what portions of the hiring process:
          o All members of the team own the presentation of the realistic job preview, day-in-the-life information, and company culture discussions
          o All members of the team own quick response times within each step of the process once candidates have been identified
          o All members of the team own the early planning of how to describe and discuss benefits, compensation, and other important details to avoid disconnects, conflicting information, and unanswered questions
          o All team members must take ownership of developing a deep understanding of what is attractive or unattractive about an organization to candidates
          o The talent acquisition team member or department owns educating the entire hiring team on process ownership and methodology to prevent mishaps
          o The talent acquisition team member or department owns driving and monitoring a recruiting plan for each opening – however, hiring managers must also be involved in receiving and implementing advice and input, or accept that there is a risk of losing candidates

Once the high-level details of each aspect of the hiring process have been discussed, the team has a solid foundation on which to begin making improvements to the candidate selection and offer process. These improvements may include finding ways to reduce the cycle time and avoid losing qualified talent to competitors, performing a market assessment of the organization’s compensation and benefits packages, or adjust the resource allocation of the hiring team.

Examining the offer process from all angles, and ensuring that all team members are fully engaged with the candidates and the process, will help organizations reduce the number of offers that are declined, resulting in increased productivity and profits.

RPO is not Outsourcing

Recruitment Process Outsourcing – RPO – is not outsourcing. This might seem counterintuitive, since the word is right there in the acronym, but when you engage in an RPO partnership, you are not removing recruitment functions from your core infrastructure. Instead, you are making a bold decision to initiate process improvements and help ensure successful delivery for your organization. You are engaging in Recruitment Process Augmentation.

The Recruitment Process Outsourcing Association defines RPO as: “when a provider acts as a company’s internal recruitment function for a portion or all of its jobs … a properly managed RPO will improve a company’s time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance”

The definition is correct, but it’s only the minimum starting point for a true RPO solution; RPO is more than just the oversight of your recruitment functions. As your strategic partner and a subject matter expert on talent acquisition, your RPO partner should also be monitoring the industry and talent trends, informing you of opportunities, and making recommendations for process improvement, technology solutions, and best practices.

A strategic RPO provider will not limit the relationship to simply processing transactions, but hopefully will become a champion and promoter of your brand as an employer of choice. They will develop and manage processes that advocate for and leverage your employee value proposition to help attract the best candidates. With proper change management, RPO can be seamlessly integrated as an augmentation to your organization, tailoring solutions to meet your individual needs.

Whenever an organization considers modifying a process as critical as talent acquisition, there is an element of risk associated with the change. A desire for improvement is at the heart of the decision to explore RPO: there is a goal to be met, and RPO has been chosen as a means to that end. Engaging an RPO can be a dramatic transition, often accompanied by concern or resistance from internal stakeholders.

A critical step in helping to ensure successful engagement and buy-in is regular, open communication with key business stakeholders, acknowledging that the business needs will be adequately and proactively supported to assist with continuity and future success. If they feel informed, well-supported, and understand that the desired outcome is business improvement, the groundwork is in place to help ensure that the talent acquisition program will achieve your organizational objectives.

A successful RPO becomes an extension of your organization, rather than a separate entity. Whether your RPO partner assumes the role held by in-house recruiters, supplements their efforts, or manages a portion of the process, RPO should become an integrated component of your talent acquisition program. Your RPO partner is responsible for providing the consultative insight to develop and execute a recruitment process with an eye on progress. The ability to embrace new technology and best practices adapted to the ever-changing demands of a complex recruiting landscape are key elements of recruitment process augmentation, and will help keep you ahead of the competitive curb.

Creating The Foundation of a Successful RPO Partnership

Creating a successful RPO partnership requires both client and provider to set out the appropriate terms for the relationship at its start, and there are numerous factors to consider. The contract is the bedrock for the entire relationship, and appropriate service level agreements (SLAs) and Key Performance Indicators (KPIs) are the framework on which the partnership develops. Correctly established contracts and SLAs/KPIs can ensure that the partnership starts off strong.

Contract Terms

The length and pricing models of RPO contracts can affect the success of the partnership. During the recession, RPO contract length shortened to an average of 2.5 years according to Everest Group Research. Now that the economy is moving again, contract lengths have returned to the 3-year range. Many contracts retain buy-out options, which allow early cancellation of the contract with a fee.

Two pricing structures dominate the contract landscape. First is a straight 50/50 cost-per-hire (CPH) model, where half of the cost is paid when a requisition opens, and the remainder when an offer is accepted. This model requires a minimum hire threshold, which allows the RPO vendor to offer a discounted rate based on volume while still creating a proper margin outcome.

The second model is built around fixed costs plus a variable CPH. Organizations looking for less variability in overall cost structure have 50 percent of the program cost billed through a monthly management fee. This structure also requires a minimum hiring volume to maintain efficiency.

RPO platforms that incorporate an applicant tracking system (ATS) as the system of record add another component to the pricing model, and the technology fee can be billed as a fixed monthly fee. Other considerations include whether or not the client wants RPO team members onsite, which also involves monthly billing in addition to CPH costs.

Deciding on the appropriate contract length and billing model is crucial to building an RPO partnership that is geared for success.

SLAs and KPIs

SLAs and KPIs are the reporting and metrics that bind the client and vendor, and help monitor the progress and performance of the partnership. There are specific considerations to be made around SLAs and KPIs, and some important differences between them, which help determine their importance.

SLAs are the primary drivers of the RPO partnership, and business-imperative metrics should be included in the contract as SLAs. RPO providers are held accountable for meeting SLAs, generally through putting fees at risk. Common SLAs include time-to-fill metrics or other metrics focused on efficiency, diversity and quality. A common measurement of candidate quality is an interview-to-hire ratio: hiring managers interviewing 10 candidates per 1 hire are not being presented with high quality applicants. An interview-to-hire ratio of 3:1 is much healthier.

Satisfaction surveys are another important SLA. The RPO provider is branded as the client within the marketplace, so it is important to have a strong candidate care program that ensures a positive experience for all applicants. Additionally, it’s important to measure hiring manager satisfaction to ensure the RPO relationship is providing the appropriate results on the client side. Net Promoter Survey scores are an important internal measure of how well an RPO provider is doing.

KPIs are important metrics and measurements, but may not be mission-critical. As a result, KPIs are not tied to fees. However, KPIs are useful for monitoring the RPO process, including technology performance and sub-cycle times. These metrics are often included in weekly, monthly or quarterly reports through executive dashboards or as ad hoc updates.

Once an RPO relationship has been established, there is typically a 180-day stabilization period. During this time, clients and their providers should get accustomed to working together, and begin to set goals and metrics for the rest of the relationship. Choosing the right pricing structure and establishing effective SLAs and KPIs helps both client and provider get the greatest benefit from the partnership.

Operationalizing RPO: The Desire to be ‘Unique’ but not ‘Different’

“Think globally, but act locally.” This has been the mantra for business expansion across the globe for years – lately, it’s even been referred to as “glocalization.” Companies continue to migrate to one common approach for doing business in different parts of the world. Why? There is a strong desire for companies to have a holistic template, for all employees to follow the same vision while achieving the increased productivity, efficiency, and cost reduction offered by this consistency. More companies have been able to reach this goal through the increasing use of technology to make labor more efficient and communication quicker. There is a wealth of evidence that supports the benefits of this methodology, but there are also some red flags to consider.

New trends that are enabling globalization:

• Vendor relationships – Companies continue to try to find that one vendor who can ‘do it all’ within their area of expertise and on a global level: reduce transaction cost, create synergy on contract terms and conditions, leverage performance to build in desired outcomes, and expand ROI
• Process – There is much more internal engagement among operating groups across different geographic regions; having the ability to ‘speak the same language’ regarding process reduces mistakes and provides for better operational outcomes. The elimination of ‘subjective’ use of a process for local needs allows an organization to have the same inputs, outputs and timing
• Reporting – Big data and analytics continue to be refined to help businesses enhance their use of information across a global organization. Having a common approach and selection of reporting tools and outcomes allows for better planning, utilization of expenses, defined timing of actions, and consistent deliverables. When data is stuck in regional silos, companies have to make assumptions and ‘cut and paste’ what they think the other set of data is telling them. This can reduce the validity of the data and make it more susceptible to subjective interpretation
• Technology – Common platforms and tools have allowed companies to get away from integrations and ‘bolt on’ solutions for technology. Since these solutions are more seamless and have fewer touch points across different vendors, the chances of mistakes are reduced; if mistakes do occur, analysis and mitigation are reduced to a single vendor
• Partnerships – Clients and customers are no longer satisfied with multiple vendors managing their international needs. Companies are looking for a global partnership structure because there is more flexibility to have a subject matter expert at the table and act as an integral part of the strategy, pre-planning, execution, and ongoing operational excellence that companies need.

 But, in order to become more global, organizations must be aware of the challenges:

• Legal compliance – Each region and the countries therein have different approaches to how to do business: in many cases the 80/20 rule applies. The 80/20 rule says you will be able to find a common approach to developing the majority of your global solution, but you will also need to be aware of and build in contingencies to account for local uniqueness. Make sure you invest in the right lawyers globally who can work together to provide the guidance needed
• Data and privacy – The protection employees feel that they have in terms of ‘information’ is very different across the globe. Navigating the control and processing of data is extremely important in building out a global operation.
• Language – We might all like to think that English is the predominant business language, but that will not always be the case depending on the level of a certain position, the culture of the organization across regions, and the varying company locations. Having the ability to translate, train and understand how to communicate across boundaries is a need, not a want
• Culture – There are a variety of factors that must be taken into account when thinking about an organization across borders: the number of federal holidays offered in a specific company, the working hours, expectations and laws around maternity/paternity leave, approaches to gender in the workplace, and more will all have an effect on the organization. Just because a company is based in the U.S. and has global locations doesn’t mean that American rules, laws or traditions apply. Additionally, being sensitive, understanding and adaptable to each country’s culture goes a long way towards increasing employee engagement and collaboration, and customer satisfaction
• Financials – Does your organization need a separate legal entity?  Is the contract separate or an addendum?  How do local taxes apply to the work being done? How do you deal with inflation and currency fluctuation? Help ensure that your finance team is engaged and that the attorneys and tax professionals for each country you are doing business in are involved so they can assist with your commercial needs

In the end, being aware of those challenges and engaging in due diligence, research, discussion, and learning will help organizations overcome any global roadblocks. For many organizations, the most difficult part is committing to the journey. Organizations need to become comfortable with the gray areas in the beginning to develop an understanding of the viewpoints, needs, and experiences of other departments or geographic locations of the company. The process can be a great opportunity to get people involved across the organization, and give them substantial input into the decision-making, as opposed to pre-defining a global vision and strategy and asking the people on the ground to figure it out as they go.

Working with a diverse group from the earliest stages of developing global strategies helps to reduce your chance of making mistakes along the way, eases the change management process, increases global competencies and staff learning, and helps to enable your employees to tell their peers and customers that they were able to make changes from a local viewpoint while influencing the organization globally. This helps reinforce that the entire company is involved: there’s a little bit of everyone in the new strategy, making it unique, but not different.

When your organization is preparing to become global, it will require you to invest in the right people, put in the time, develop patience, become willing to let go, and engage in a lot of learning. If you can come to terms with the effort of becoming a global organization, the investment will be more than worth it.

Buying RPO

In a time when social media and mobile technologies continue to evolve in the marketplace, changing the communication landscape, the importance of adapting to these changes and staying ahead as an Employer of Choice is also evolving. According to an Associated Press analyst, the recession of the late 2000s triggered the weakest economic recovery since World War II. Companies now have an even greater need to drive higher profitability in a more cost-effective manner.  Hence, more companies are looking at ways to “outsource” certain aspects of their business in order eliminate higher internal costs and overhead. Enter Recruitment Process Outsourcing (RPO).

In most of the conversations I have with organizational leaders, the word “outsourcing” is perceived as negative.  To them, it implies they are giving up control.  However, RPO should not be viewed as giving up control of the recruitment ownership.  On the contrary, RPO is designed to help an organization add scalability to their changing business demands, create an extension of its existing recruitment infrastructure, and allow for greater flexibility in responding to hiring demands. 

It’s also important that a company view RPO as a partnership and extension of their existing business, not as a means to hand off all responsibility for the recruiting process.  As I once heard the CHRO of a prominent automotive retailer tell his HR generalists at the onset of their RPO partnership, “We aren’t outsourcing anything.  We just went and hired 500 additional recruiters to support our hiring needs.” 

So, what should a company look for when buying RPO?

1. Cheaper isn’t always better.  Everyone knows the old saying, “You get what you pay for.” Recruitment is no different.  A primary objective of partnering with an RPO provider is typically to drive savings into an organization by taking advantage of a cost-effective and variable recruiting cost solution.  However, don’t assume that the cheapest vendor is always the best.  A good RPO provider will have a solid plan of execution and be able to justify the fees, in addition to providing workforce planning or visibility into your annual hiring needs and trends, demonstrating short term and long term values and savings to your business.
2. A customizable, configurable solution is key. While the overall methodology and delivery of RPO can be utilized across all clients, the reality is no two businesses are alike. It is imperative that your RPO provider offers you a solution that meets the unique needs of your business. 
3. Technology components are essential. Whether it’s a technology-agnostic solution, a standalone applicant tracking system, a CRM component or other sourcing methodology, an effective RPO provider will have a solution that focuses on increasing the scalability and efficiency of the recruitment process. In addition to utilizing cutting-edge technology, the provider should monitor and implement best practices and current recruiting trends. Industry-leading RPO partners should provide mobile, social and/or video sourcing capabilities to attract top talent.
4. It’s a partnership, not a hand-off. The worst mistake an organization can make when choosing an RPO solution is assuming they can just hand off their recruitment process and walk away. This is a recipe for disaster. The most successful recruitment partnerships come from ongoing communication and collaboration between the client and vendor. A true RPO partner will have a defined governance plan and SOW in place so that both parties have a say in how the partnership is run. As the business owner, you need to stay actively engaged in the partnership to ensure your organizational values and company objectives are being met. In addition, you’ll want to train your provider on your business culture so they can effectively communicate with the candidates and provide positive outcomes for you and potential talent.  
5. Research their client history.  The best way to know whether or not an RPO vendor can be successful is to know their client history. Look at their accomplishments in your industry, skill sets, locations, and business culture to determine whether the partnership will be a good match. 

The best sign of a great RPO provider is their ability to infuse themselves seamlessly into your organization, creating minimum disruption to your day-to-day business operations.  The provider should be seen as an extension of your HR/Talent Acquisition team and should interact with your business in the same way.

Developing Leaders (Heroes) in a Lean World

Here’s the premise:  organizational delayering, right-sizing and centers of excellence are great for current organizational operations, but inhibit the ability to develop individuals through incremental responsibilities and career-pathing.  While this may sound obvious, I don’t know that we’ve recognized this cost of organizational efficiency – efficiency by nature eliminates redundancy and with redundancy flexibility and breadth.

Let’s start with the delayering of the organization.  I made a note during, “Defying the Odds: Prepping Employees for Success in First-Time Situations,” a January 17, 2013 Human Capital Institute webcast.  The presenter’s comment was something to the effect that promotions were no longer steps on a ladder, but rather giant leaps.  In this, succession planning exercises also become giant leaps of faith – on a good day.  On a bad day they are exercises in frustration mired by arguments about who is adequately prepared and experienced to replace various incumbents.  This is made that much more challenging with the extreme notions that the incumbents are performing in such a manner as to be either irreplaceable super-heros or to require herculean effort to turn-around their areas of responsibility. 

Centralizing specialized functions into Centers of Excellence is a great strategy to streamline operations and to improve consistency.  It’s also a great way to silo responsibilities, goals, and rewards.  We’ve created organizational blinders holding people responsible for their piece of the elephant without always insight, knowledge of or reward for the overall beast.  Want examples?  Just in HR, Talent Management may own succession planning with its processes and expectations while compensation is owned by well, Compensation and hiring the future of the organization is in the hands of Talent Acquisition.  Streamlined departments are doing everything they can to fulfill their responsibilities – minimizing their cycle-times, minimizing cost, risk and outcomes to fulfill quarterly expectations.

So what do we do about it?  Pragmatically, I have a few ideas.

1. Manage your expectations, be willing to take risks on your people (at least as much as you would someone from the outside), and invest in infrastructure including mentoring to help people make the giant leaps required by heroes.  That was ONE idea.
2. Create cross-functional teams to evaluate and to improve the overall care, feeding and yes cleaning of that elephant.  It’s not a task-force – it’s an ongoing team that collectively learns to understand and to empathize about what it takes to make an elephant thrive.  Someone will rise to lead the team – someone with a naturally broad understanding or commitment to learn about the elephant beyond their unique responsibilities.  This someone may move around through departments and ideally be contagious to others.
3. Include more stakeholders than you might normally in strategic conversations – DO IT.  Get help considering implications and get fresh perspectives from people making things happen.  You might be surprised at what outsourcers, front-line associates, other departments, new-hires or outsourcers might have to offer.

If you want innovation and continuous improvement you have to allow room, space, and time to do things differently, to hear others’ ideas, and to make mistakes.  In a world optimized for the “now” this can be tough – tough like making giant leaps in a single bound while riding and elephant can be tough.  I hope that implementing the strategies above might help you see some of your average-everyday employees as the heroes they are capable of being.

Recruitment 2.0

In a time when social media and mobile technologies continue to evolve in the marketplace, changing the communication landscape, the importance of adapting to these changes and staying ahead as an Employer of Choice is also evolving. According to an Associated Press analyst, the recession of the late 2000s triggered the weakest economic recovery since World War II. Companies now have an even greater need to drive higher profitability in a more cost-effective manner.  Hence, more companies are looking at ways to “outsource” certain aspects of their business in order eliminate higher internal costs and overhead. Enter Recruitment Process Outsourcing (RPO).

In most of the conversations I have with organizational leaders, the word “outsourcing” is perceived as negative.  To them, it implies they are giving up control.  However, RPO should not be viewed as giving up control of the recruitment ownership.  On the contrary, RPO is designed to help an organization add scalability to their changing business demands, create an extension of its existing recruitment infrastructure, and allow for greater flexibility in responding to hiring demands. 

It’s also important that a company view RPO as a partnership and extension of their existing business, not as a means to hand off all responsibility for the recruiting process.  As I once heard the CHRO of a prominent automotive retailer tell his HR generalists at the onset of their RPO partnership, “We aren’t outsourcing anything.  We just went and hired 500 additional recruiters to support our hiring needs.” 

So, what should a company look for when buying RPO?

1. Cheaper isn’t always better.  Everyone knows the old saying, “You get what you pay for.” Recruitment is no different.  A primary objective of partnering with an RPO provider is typically to drive savings into an organization by taking advantage of a cost-effective and variable recruiting cost solution.  However, don’t assume that the cheapest vendor is always the best.  A good RPO provider will have a solid plan of execution and be able to justify the fees, in addition to providing workforce planning or visibility into your annual hiring needs and trends, demonstrating short term and long term values and savings to your business.
2. A customizable, configurable solution is key. While the overall methodology and delivery of RPO can be utilized across all clients, the reality is no two businesses are alike. It is imperative that your RPO provider offers you a solution that meets the unique needs of your business. 
3. Technology components are essential. Whether it’s a technology-agnostic solution, a standalone applicant tracking system, a CRM component or other sourcing methodology, an effective RPO provider will have a solution that focuses on increasing the scalability and efficiency of the recruitment process. In addition to utilizing cutting-edge technology, the provider should monitor and implement best practices and current recruiting trends. Industry-leading RPO partners should provide mobile, social and/or video sourcing capabilities to attract top talent.
4. It’s a partnership, not a hand-off. The worst mistake an organization can make when choosing an RPO solution is assuming they can just hand off their recruitment process and walk away. This is a recipe for disaster. The most successful recruitment partnerships come from ongoing communication and collaboration between the client and vendor. A true RPO partner will have a defined governance plan and SOW in place so that both parties have a say in how the partnership is run. As the business owner, you need to stay actively engaged in the partnership to ensure your organizational values and company objectives are being met. In addition, you’ll want to train your provider on your business culture so they can effectively communicate with the candidates and provide positive outcomes for you and potential talent.  
5. Research their client history.  The best way to know whether or not an RPO vendor can be successful is to know their client history. Look at their accomplishments in your industry, skill sets, locations, and business culture to determine whether the partnership will be a good match. 

The best sign of a great RPO provider is their ability to infuse themselves seamlessly into your organization, creating minimum disruption to your day-to-day business operations.  The provider should be seen as an extension of your HR/Talent Acquisition team and should interact with your business in the same way.