Almost any task can be outsourced and staffing is no exception. In today’s rapidly evolving business climate, corporate managers are continually asking whether cost centers are core to the business and whether third parties can provide additional efficiencies.
How much outsourcing is actually taking place? In our first survey addressing the matter (2007), responding groups were divided roughly in thirds: those who outsourced a little, a moderate amount, or a significant amount. Very few companies outsourced the majority of their work.
Recruiting Metrics and Performance Benchmark Report 2009
Our follow-up survey, taken 15 months later during the depths of the recession across a rebalanced sample of 760 companies, sought additional clarity on the low end where most activity takes place. What stands out immediately is the number of companies not outsourcing at all, perhaps, or probably, for economic reasons.
Outsourcing Checklist
The problems we most often see in outsourcing situations are related to clarity of purpose, rigor of selection and measurement. Here is a checklist that addresses them:
- Frame the objectives and performance standards of the work that you intend to outsource. Is cost the major factor or is it something else: quality, time, variable workload, or perhaps a need to provide better customer service to a distant client? If costs are the issue, and they always are to at least some degree, be honest with your like-to-like comparisons. Don’t neglect to fully cost internal overhead, interviewing, travel and non-departmental recruiting expenses like relocation and signing bonuses. Fully allocated overhead is expensive. Think percentages rather than dollar amounts. Use Recruiting Cost Ratio rather than Cost Per Hire for more accurate comparisons.
- Identify all potential providers and send them an RFP. Vendor selection is a lot of work and the tendency is to short-cut the process by seeking referrals. If there are numerous vendors, consultants and advisory services can help create a short list, but don’t shirk the work. Vendor relationships are much like marriages—easy to enter, hell to exit. Extra diligence up front is well worth the time and effort.
- Be presentation-savvy. Often there is little correlation between a vendor’s presentation quality and their ultimate performance. They can easily have a terrific sales department and a mediocre or poor performance record.
Key questions:
- Who will do the work? During implementation? Ongoing?
- Do you have performance stats?
- What are your top improvement priorities?
- What was your biggest miss—and why?
- Check recommendations. Insist on speaking to an organization that has fired the organization in the past, in order to understand what might go wrong and the chances you might be asked to take.
- Commit and contract for continuous improvement. Outsourcing is seldom a static event. It changes as needs change, as processes improve and as two organizations become familiar with one another. If it does become static, something is wrong.
- Exploit the system. If the vendor relationship involves technology, explore its capacity. Technologies disappoint for two primary reasons: 1) it is never optimized to its full capabilities; and 2) people never become comfortable with and fully adopt it. You’re paying for the system, use it.
- Help your outsource provider succeed. An outsourcing relationship is a partnership. It is seldom perfect and trouble-free. When problems arise, one party or the other is seldom completely at fault. Strive for continuous improvement, not perfection.
- Evaluate and report at least monthly. Metrics will decide whether outsourcing arrangements improve efficiency and effectiveness. Compile them religiously and act on the story they tell.
- Think long-term. Frequently switching vendors is counterproductive. Even if your needs are periodic, think “partner” rather than “vendor” once your selection is made. Good partnerships become more efficient over time as knowledge increases and processes are refined.
Excerpted from Chapter 12 of the 2010 Corporate Recruiting Report. Look inside!
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