RPO: Does it Make Sense for Your Organization? The True ROI

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RPO Or Not?

description

Presentation from the ERE Expo Fall 2012, presented by Shanil Kaderali

Transcript of RPO: Does it Make Sense for Your Organization? The True ROI

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RPO Or Not?

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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

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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

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  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

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  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)

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  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?

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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

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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

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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

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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

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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”)