During fast business growth, your team may feel bogged down by internal hiring processes– advertising job postings, reviewing résumés, interviewing candidates, and negotiating salaries. This extra activity can burden your HR team and management staff charged with handling hiring. RPO recruitment teams help streamline the hiring process and eliminate headaches for busy professionals. RPO recruitment services cost only a fraction of handling everything in-house. Companies also benefit from having a specialized recruitment expert assist their team who knows how to find top-quality hires.
Throughout this FAQ guide, we answer all your questions on recruitment process outsourcing and how to know when it’s a good fit for your company.
What Is Recruitment Process Outsourcing (RPO)?
Recruitment process outsourcing (RPO) involves having a third-party handle part or all of your recruiting activities. They work with your company to understand your hiring needs, develop strategies for attracting candidates, and handle the recruitment process end-to-end. RPO professionals can take responsibility for writing job postings, evaluating résumés, overseeing the interview process, and recommending applicants.
RPO can be tremendously beneficial to a company that’s stretched thin on HR resources and needs help hiring new staff. Rather than hiring full-time employees to manage recruitment activities, RPO is flexible. Business owners can choose to work with an RPO company only when they need new candidates.
How Does RPO Recruitment Work?
RPO should be viewed as an extension of your HR department. An RPO professional can work with your company hand-in-hand to discern your hiring needs and develop a strategic plan for meeting them. Once they understand the positions your business is seeking to fill and the tasks that the roles will be responsible for, the RPO professional will begin finding candidates.
The role that RPO fills in an organization is adaptable. RPO may handle all aspects of the hiring process, or your company may choose to keep some tasks in-house. Pricing plans will also vary depending on the extent of the RPO team’s involvement and your company’s hiring needs.
What Are the Benefits of Outsourcing Recruitment?
There are numerous advantages to outsourcing recruitment. A few include:
Cost Savings. RPO saves your company money over traditional hiring agencies. Staffing agencies may charge 20-30% of the salary for each placement made. If a business hires for a role with an annual salary of $100,000, it may pay $30,000 for the hiring agency’s services. RPO typically charges 10-16% for each new hire, resulting in savings that may be greater than 50%.
Access to Knowledge. RPO professionals are highly skilled recruiting experts. RPO recruitment teams work with all types of companies in many different industries. When a business hires an RPO company, it gains access to professional knowledge that a single on-site HR professional may not have. RPO professionals typically use the latest technology available to HR experts, with analytics for tracking the hiring process and best evaluating applicants.
Better Candidate Quality. RPO recruiters are skilled at understanding the experience that a potential candidate can bring to the table. They know the right questions to ask to filter through candidates. Business owners can expect high-quality candidate recommendations from RPO professionals.
Fully Scalable. Your company may not require outsourced recruiting services year-round. An RPO company can work with your business when you require assistance and be on standby when you do not. You may use their services to find one or many candidates, depending on your needs at the time. RPO professionals can help your team develop long-term strategic hiring plans to be ready for action when the company needs to grow.
More Outreach. While handling recruiting on your own may consist of posting a job listing on the company website and calling it a day, RPO professionals know numerous avenues to find qualified employees. They’re often involved in college recruiting, community organizations, and other networking associations. This can improve the pool of applicants that a company has to choose from and increase the quality of the hire.
How Is RPO Different from Other Recruiting Models?
The traditional outsourced recruiting model uses a hiring agency to find suitable candidates to fill a role. While an RPO company does handle the recruitment process, it also acts as a long-term partner to the organization. RPO companies can help develop long-term hiring strategies customized to fit the needs of virtually any business.
Analytics is another significant difference between RPO and a hiring agency. RPO companies can provide insightful data on the recruiting process and employee retention. They can suggest ways to scale staff better and have access to multiple hiring tools.
What Are the Different RPO Engagement Models?
There are four main types of RPO engagement models that a business can choose from.
On-Demand
An on-demand model is most appropriate for companies that don’t currently have a lot of staffing needs. The company can choose to work with the RPO company on an as-needed basis.
As the business grows and more services are needed, the company can decide to form a more significant relationship with its RPO partner. A business can also choose the RPO services it needs, making this model very flexible.
Project-Based
A project-based model is an excellent option for companies with a specific one-time need. For example, if a company is opening a new location, management may need to hire several employees in a short period. RPO recruitment can help eliminate the stress on current staff and fill in where help is required.
Fully Outsourced
A fully outsourced model is best for established companies that have ongoing hiring needs. An RPO company can provide a dynamic recruiting team who works with management during every stage of business development.
When a business forms a full partnership with an RPO company, leadership can expect better quality hires, a comprehensive retention policy, and insightful contributions to its hiring strategy.
Fractional RPO
Here at Lucas James, we offer a fourth model of engagement for RPO services, we call it fractional RPO. Our fractional RPO services operate on a week-to-week, fractional time and material basis which assists in making the best use of time and resources.
What Type of Pricing Do RPO Companies Offer?
There are several pricing models offered by RPO companies. These vary depending on the services chosen and the length of time engaged.
Cost-Per-Hire
A business will pay a fixed cost for each hire made under this model.
Cost-Per-Resource
The business agrees to pay a monthly fee for the candidate hired for a certain period rather than an upfront fixed cost.
Hybrid
A hybrid structure involves paying a fixed fee for each candidate hired and a fee for analytical or supplemental services.
Transaction-Based
Under a transaction-based model, employers pay a fee for each service provided, including interviews, job postings, and candidate reviews.
When choosing RPO, consider what services are appropriate and determine the pricing structure that works for the company.
How to Know if RPO is Right for Your Company
RPO is a good fit for companies with specific needs. If a business faces a situation where it needs to grow its headcount quickly, RPO recruitment can help find talent efficiently and eliminate hiring headaches for the business. Other times when RPO is a great choice include:
- Teams with reduced budgets for hiring
- An overworked existing HR team
- Job postings gaining only a few applicants
- Companies with high employee turnover
Focused on finding the best candidates for the appropriate positions, RPO professionals have the connections and tools to make it happen. RPO can significantly benefit organizations with a range of different needs. Learn how an RPO recruitment team can help eliminate headaches for your team when you contact Lucas James.
This article was originally published on June 13, 2022 ; it has since been updated and republished on August 28, 2023.