Very few heads of HR and Talent Acquisition wake up in the morning and say to themselves ‘I need to buy RPO today’. Although RPO is a mature market in the United States, it is less known and less utilized as a go-to strategy to deal with hiring challenges in Canada. Mindfield’s RPO model is very different than a traditional RPO model of “renting recruiters”.
For retailers looking to solve their front-line hiring challenges or invest on improving the quality of it, understanding the business case for recruitment process outsourcing is step one.
There are many different reasons for companies to outsource their recruitment to us. The major reasons are:
- Save money – Some companies have a mix of technology, job board vendors, assessment providers, internal and contract recruiters, and agency use. All of these can add up to a high cost per hire. Economies of scale from an RPO provider like Mindfield can reduce the cost per hire and be the single source of accountability for a customer. RPOs can access lower cost, and better technology to support a recruitment strategy.
- Save time – Time can be measured in three different ways – it can be measured on the reduction of time that hiring managers are spending with unqualified applicants, it can save head office time if recruiters or regional HR personnel are supporting tactical recruiting functions, and it also reduces administrative time because the RPO becomes the single vendor versus multiple to support recruitment.
- Acquire scalability – Almost every retailer has peaks and valleys to their annual hiring demand. Seasonal hiring can sometimes equate to over 50% of new hires needed per year. Holiday and summer hiring are two of the busiest times per year for recruiting talent. Building an in-house recruitment function is not a viable solution because of these peaks and valleys. An RPO can scale up and down as needed.
- Acquire capability – Recruiting is hard. The talent market is consistently shifting and the competition for good store management and front-line level talent continues to increase. Organizations need capability around employment branding, candidate sourcing, recruitment technology, candidate assessment and selection, reporting and workforce analytics to compete for the best talent in the market. An RPO like Mindfield can provide a retailer with vast resources at their fingertips to tackle recruitment challenges and objectives.
Depending on the organization’s objectives the business case can be different. One of the biggest challenges in establishing an accurate business case is the accessibility of good data. This is consistently one of the biggest challenges organizations have.
For HR departments, their major challenge is in truly evaluating the ROI of RPO. We have found that there are two core reasons why retailers choose Mindfield’s RPO solutions:
Business case #1: Cost savings
Retailers with more than 80% annual employee turnover can achieve massive cost savings. Typically companies with this level of turnover do not have the proper employment branding, candidate sourcing or selection strategy in place. Mindfield has typically been able to lower turnover by over 10% in year 1 for organizations with this level of turnover. Large organizations with more than 5000 employees can be spending north of $30m a year on the cost of turnover. The impact in year 1 from a vendor like Mindfield can be greater than $2-3m in savings.
Business case #2: Improved quality
Some organizations turn to RPO not because they have problems with hiring but because they want to acquire capability and access to technology that will enable them to improve the quality of their workforce. The business case for these types of organizations is very different. This is about investing into your workforce rather than fixing a problem. Measurement of success is typically based upon metrics such as average sales per employee, turnover rates and tenure, employee engagement, and on the job performance.
There are multiple factors that can contribute to the RPO business case. From a financial perspective, some other things to consider are:
- Reduced termination costs
- Improvement of company culture and engagement
- Mitigate overtime cost and additional training
Embracing RPO has typically been isolated to early adopters. As talent acquisition strategies evolve in Canada and the marketplace becomes more and more segmented and challenging, progressive companies will look to progressive solutions. Every company is different and each one has a slightly different hiring problem to tackle. The right RPO provider should have the expertise and industry experience to not only solve your unique problem, but also the capability to improve the quality of your workforce.
To learn how Mindfield can help improve the quality of your workforce, click here.