I was working for a $500 million-dollar publicly traded company in the industrial construction and maintenance sector running, as most mid-market companies do, a successful, but bootstrapped version of talent acquisition. We were limited in terms of resources and budget ‚Äì and as proactive as we tried to make our sourcing, we always found ourselves struggling to balance corporate hiring needs with the temporary staffing that needed to be done quickly for our revenue-generating projects. I knew that we could do one of two things:
- Outsource our temporary labor hiring to a third party ‚Äì the biggest problem with this option was that a large majority of the margin we made on a project was a result of labor.
Basically, we‚Äôd be eating into our margin substantially and damaging the profitability of the company.
- We could outsource our corporate hiring to an RPO. Honestly, between what we could cut out of our corporate overhead and agency spend, we‚Äôd stand to save about a million dollars a year ‚Äì not a bad deal.
I pushed for option number two for two years unsuccessfully ‚Äì I even ran models to show the potential cost savings of RPO and presented my findings in front of executives and boards to no avail. My logic was sound, but the business was facing too many other challenges to try and fix something that we seemed to be managing to hold together. So, I left ‚Äì and went to work for an RPO.
What I‚Äôve seen on the other side has been exactly what I expected. RPO is a game changer, especially for mid-sized organizations that have hiring cycles that experience a wide variation in the number of hires they add throughout the year.
Think about it ‚Äì corporations can‚Äôt effectively manage job board costs, resume databases, external vendor spends and the non-employee related costs effectively. These are generally fixed costs that span only one year at a time, and those companies lack the ability to leverage any kind of buying power through scale. They can‚Äôt react quickly enough to the ever-changing demands in hiring volume because of fixed overheads and headcounts.
The result ‚Äì the talent acquisition teams in these organizations fall into a constant cycle of being over-resourced and wasteful, or simply resource constrained, leading to a lack of execution and larger external agency spends. The truth is that RPO models can leverage scale, not only for today‚Äôs recruiting technology but also for resources that can provide a cost-effective (and in many cases cost-saving) approach to many companies that struggle with recruiting top talent. Ultimately, these companies effectively reduce fixed and variable costs associated with recruiting, as well as reducing, if not eliminating, external agency spend.
RPO can roll with the tide ‚Äì It‚Äôs flexible, effective, and efficient. RPO can move in concert with the changes of its clients, and the best ones can actually stay a step ahead. The biggest reason that I can see behind more companies not moving in this direction just yet is a simple reluctance to change, coupled with the fear of losing control of a vital internal function to an external partner that will greatly contribute to the organizational successes or failures.
As our tagline says, At Kinetix ‚Äúwe can hire faster than you can grow,‚Äù and you know what ‚Äì it‚Äôs true. Take it from someone that has spent time on both sides of the tide.