Why a Managed Service, Managed Project or RPO is the future of recruitment
RPO’s and big managed service deals are normally out of the reach of mainstream recruiters but they are in demand from clients across the SME sector and right through various industries. There is also a big demand from within the bigger companies for “divisional” managed services where they are struggling to find the right people. There is an apparent fear both from the recruiter and client side in doing these types of deals, in fact 98% of recruitment companies just don’t even try. Having managed service clients either whole or on a departmental level increases the value of your business whilst giving you the stability to grow so there are huge benefits to promoting these and they are actually quite simple to implement.
Firstly, we are not talking about huge RPO’s deals, we are talking about offering a highly valued and inexpensive way for SME’s to reap the benefits of an RPO or Managed Service without having to plough huge sums of money into setting up a managed service or RPO. In fact most companies are actually aware of the benefits but they are afraid of putting “all their eggs in one basket” because of the perception that the very large RPO’s give off in not being overly successful. What we have tried to do here is focus on the PLUS side for the clients and remove the scary part of the process. Whilst this is a higher level overview you will hopefully get enough to give it a try.
RIGHT PEOPLE, RIGHT TIME, RIGHT PLACE – 3’Rs – Like being back at School.
Recruiter Buy Side – Benefits to your company
By even offering a Managed Service or RPO proposition you are elevating your company to a much higher level that your competition. It is a perception that you must be a better recruitment company because you can do this type of stuff.
In any meeting with a new client, discussing this type of service means that your client’s view of you has already changed. The reality is if you are meeting a brand new client then there will obviously be reservations. This is actually good because your play here is simple, take an exclusive role with the client or a couple of retained roles with a view to sitting down in 3-6 months to discuss again, it also allows you to get to know them and your client to get to know you. It is the most effective Business Development tool for any recruitment company to use in order to get exclusive work from your clients. This is very much a play for executive search firms as the same principles apply, managed service first, retainers second. We find that when executive search firms use this approach their success rates for gaining retainers increase between 150% to 600%
Having a Managed Service means you have “exclusivity”. It also means you have a clear window to focus your efforts on exclusive roles which means a very higher success rate because of the lack of competition against other recruiters and ultimately higher billings.
The value of your business is far greater on exit with a managed service / RPO proposition. We see some businesses achieve multipliers or 9 – 12 times
Ancillary talent can be channelled into other industry clients when the fall out of process or of no interest to your managed service client. You also have the ability to create a great “Story” for other clients and ultimately have a strong “Industry” or Skill base to leverage for the future.
The ability to leverage fees from other recruitment companies for nothing more than promoting a few CV’s.
The Most Important point to address with your client
Your RPO or Managed Service is not going to cost them anything to run – You charge One Rate and that’s it. It will increase your win rate from around 1 in 20 to around 1 in 2.
Your overlay rate may be a few more % that they pay now but that is a later discussion.
Recruiter Buy Side - Meetings
Any Managed service meetings need a clear and concise agenda based on the “Client Buy Side” section. You need to try and ascertain as much knowledge of the client, pain points, frustrations, history, future projects etc before any meeting. Also understanding their existing supply chain is useful in order to correctly position what you do. If you have an existing relationship with the client then this is your opportunity to take the Managed Service. It is also imperative to get as many of the key sponsors within your client at the table at the same time. If this is difficult to do face to face then I would suggest an online conference.
It is critically important that you have a heritage in a particular skill or industry to be able to talk coherently with a client.
What you are looking for from this meeting is one of 2 things:
New Client – Exclusive Roles with a view to sitting down again in the future.
Existing Client – Nail the managed service in one visit
Key reasons for Recruiters to Adopt:
Ultimately running a managed service deal sounds less scary than trying to convince a client to run an RPO with yourself. Whilst far more effective with clients you already have a history with it is still a much needed service for clients. Pitching a managed service will always be a scary proposition for a client so the main point of this is to highlight in the next section all the salient points for the client to consider and ultimately help you to secure the deal.
One of the first questions I used to ask the client (and I have secured over 80) is do you know what a Managed Service is and how it could help your business?
It is paramount to understand new laws, regulations on compliance issues facing your client. The more knowledge you have prior to the meeting the more successful you will be.
Create a Big Deals expert within your organisation who will grow and understand the Managed Service approach.
Client Buy Side – Example of why it is key critical.
Whilst most recruiters have a basic understanding of industry your knowledge may not be that deep of your client. Don’t be afraid to ask questions directly and never be afraid to say no.
Ask how their recruitment is going currently?
Any Frustrations, Headaches, Skills Gaps?
In the back of your mind I will detail what might be going on with your clients business:
They have a particular focus, lets say it is a Consultancy with a Microsoft CRM Practice
They have 5 clients but are struggling to staff all of them
This means that they do not have the ability to take on new work
It also means that they might be facing heavy penalties with their clients
It then means that the profit is lower and they have people sat around because they cannot staff existing work properly and cannot take on new clients
They are throwing money at different things through desperation or taking underskilled people in the hope they work and overpaying for them.
They are spending huge amounts on management time hiring substandard staff.
The business is treading water
Client Buy Side – Understanding the Truth
Never fall into the trap of starting a meeting by telling your client how great you are, who you know, what you do in their industry, they hear that 20 times a week and your client will simple switch off.
This section is designed to help you take a client through a Managed Service journey. Whilst concise all the salient points are enclosed. It is broken down into 4 simple sections and it is very important to go through each one.
Remember 96% of Industry people have no idea what a Managed Service / RPO is or how it could benefit their business. Your role is to educate the people in front of you. The only thing that they think is that if they use one then they have to put all their eggs into one basket (and if it went wrong they could lose their job)
Taking your client through the Managed Service
Understand the Recruitment Industry
Main Stream Contingent Recruitment Companies = 90% of the market
Typical Recruitment Companies chase the biggest fees paid by clients and align their candidates to where the biggest fees are (For the Good Ones). If you underpay on fees you underpay on quality.
10% of the industry are RPO / MS Aligned with less than 1% an Industry Expert in a sector- generalist as opposed to specialist RPO. Very few, if not no experts, able to offer a Managed Service.
Recruitment for mainstream recruiters normally constitutes a job board search, an advert and a sweep of their database – that’s it. This type of sourcing typically constitutes the 3U’s – Unemployed, Unsuccessful & Unhappy Candidates
Playing with Active / Job Board Candidates – Good ones are artificially expensive, multiple offers etc – more time wasted. They are typically registered with 4/5 other agencies so even before you interview your chance of a successful hire is around 20/25% whilst having to pay artificially high salaries.
Generally mainstream recruitment is bad for businesses across most sectors due to its reactive nature. They tell you they headhunt and they don’t?. They tell you they can take on the world, do anything, find anyone, they are the “YES MEN”
Business Issues facing traditional recruitment methods:
Management Time: Up to 40% of Management time in organisations is being wasted by interviewing and not hiring.
HR/Talent time dealing with multiple agencies is draining and proving unfruitful but necessary.
Hires are made out of necessity instead of hiring the very best in the market. Reactive instead of Proactive and traditionally lower quality of candidates.
Your view of the market is traditionally less than 20% of the available talent – Non Headhunt Focused.
Recruiters lose interest if they don’t have anyone “here and now” and normally lose interest within 5-7 days.
Time to Hire is massively extended – 6-9 months is becoming more standardised.
Lack of feedback from the market and the recruiters.
Lack of ability to take on new projects when current ones aren’t staffed properly.
Penalised on current contracts for lack of the right talent.
Generally mainstream recruitment is bad for businesses across most sectors due to its reactive nature. They tell you they headhunt and they don’t?
Why an RPO/Managed Service/ Project Service Contract
Firstly it all sounds a little scary and it isn’t, just making your hiring process better, quicker,
Combines the best of breed – Headhunting, Talent Mapping, Pipelining, Aggregation (Job Boards etc) into one concise package with Zero upfront costs. Also done the right way it will still allow you to work with all the other agencies you feel add value, just in a better way.
RPO – Full on company wide investment with your partner
Departmental Managed Service – As it says on the Tin. Looks after a key business area/function as an RPO
Project Managed Service – This is allowing you to run specific one off hiring projects that may run for 3 months or several years depending on the size and scale.
No more 50 recruitment calls every day!
Create assessment centres / University hiring etc
Real Commitment from both sides to put “skin in the game”
Not a full scale RPO – More Skills or Departmental aligned therefore doesn’t need huge investment
Used right they will work tirelessly to headhunt passive candidates for you and position you as the Market Leader with the entire market.
Exclusivity of those candidates is just for you – better quality hires, quicker hires, exclusive hires, more successful hires. No More Dutch Auctions for Job Board candidates or fighting over ownership of a candidate.
Passive candidates can be as much as 30% cheaper on Salaries. Better Qualified, More Successful, More Stable.
On Tap Headhunt and Talent Mapping/Pipelining Resource. This is hugely expensive – Can run into £100,000’s for relatively small services but is provided literally on tap. 100% focused on your business.
The real value of recruitment process outsourcing services is in their scalability and deep integration with businesses they serve. RPO firms can integrate their services with client websites, staffing teams, and management infrastructure to provide recruiting value and advantage. Recruitment process outsourcing can provide the candidates, services, and recruiting expertise that allows employers to compete on a wider playing field to hire top talent.
Allows you to Talent Pool candidates for the future – Draw down talent faster.
Central Hub that uses “One Terms fit all” and allows the business to engage with just “One” contact who will manage all your other agencies for you. Cost Saving and more importantly less of a drain on time for your management. Clear and defined process.
Not having to put all your eggs in one basket – allows you to use existing suppliers.
Calculate the real Talent Deficit – Strategy for the future.
Ditch the recruitment handbook – Blank sheet of paper to start over
Allows you to grow with the recruiter and they become embedded and understand your business. Onsite or Remote they can discuss business issues, concerns, concepts, ideas honestly, openly and transparently
Honest Market Feedback from candidates. Transparent all the way through.
As they build market intelligence around your industry – smart play is for you to engage with that “talent Pool” with whitepapers, webinars etc. Builds the brand. Becomes your market Ambassador.
Invest together in key areas. Constant Innovation – looking for ways to improve candidate experience
Key business investments can be future proofed (New wins, New Deployments etc can be looked at in advance)
H - Headhunting
I - Insight
T – Talent Mapping
P - Pipelining
A – Aggregation
Key Considerations when choosing the right recruitment partner
IBM vs XYZ Computers. £1m to spend. Fired or Promoted – Chicken & Egg
Do they have a history in your market? Absolutely Paramount
Do the recruitment company you are talking to have the ability to say NO. Avoid the “Yes Men”
Do you have current business issues that need to be addressed – time to hire, contracts can take 30 days etc etc. Get them on the table so that it is clear from the outset.
Are they telling you what you need? Big Red Flag!!!
Do they really try and focus on understanding your business issues as opposed to just focusing on talent?
Are you prepared to pay a few % more to get better candidates (salary/skills, save huge amount of internal HR & management time, quicker hires.
It is a 2 way street. You have to be prepared to be open, honest, frank and deliver exactly what you need. Flaky hiring!! leads to complete frustration on both sides. Clear, Defined and Focused from both sides.
Set out a clear SLA for both your partner and also for your company.
Are there huge Egos involved?
How flexible are they in understanding your needs?
Are they prepared to put skin in the game?
Track Record, Case Studies
Clear demonstrable steps that can be scaled up
Are they asking you the difficult questions in order to understand your business better?
Sometimes it is scary to think all your eggs are in one basket, they aren’t – centralised, managed and improved.
Take it one Department at a time. Allow the Service to work across a key area then sit down and discuss growing after 6mths, 12months etc etc depending on track record.
Case Studies: Short and to the point – build your own
Mining Operator from Eastern Europe was looking to build the initial EPC phase of the project in Australia. They had used 3 Headhunters, 12 Contingent Firms and 12 Onsite Recruiters to find 20 key staff for this brand new project. After 16 months they had only 5 of those hires secured. Engaged with a Managed Service and within 3 months they had secured 14 of the 15 hires after every avenue was apparently exhausted. Why?. Simply identified very quickly that the key skills they needed were not to be found in Australia (working at -40oc for example is pretty hard to find in Australia) so engaged at a global level with around 6000 people to identify and attract the right talent. Led to a full scale RPO for the business with the client. Great example of a Project Managed Service.
Global Outsourcing company was struggling through a global RPO to identify and attract a key “Technology Resource”. Basically they faced having to close a key area of the business as their staffing levels were at around 20% of what was needed (No Full Time Staff – All Contract). Whilst the contracts were winning were hugely profitable they faced 2 issues (couldn’t take on any more deals and they were facing huge penalties from their existing contracts which meant the profitability was virtually down to Zero) Their Brand was suffering. Decided to work with a MS/RPO under a “Service Provider” arrangement. Build 87% market knowledge inside 12 months, staffing running at 84%, started looking for more business and winning new business again. They were able to warm the market well in advance of deals coming through. Allowed them to invest in the area instead of withdrawing which was a key industry (Microsoft CRM) Great Example of a Departmental Managed Service.
An Engineering Services company had won a £500m Contract from an incumbent. Their issue was that the current incumbent didn’t know they had lost the deal and they had to quietly build a “transition team” to make sure the deal went smoothly as they had no internal talent to draw upon. It couldn’t let any potential candidates know anything about the deal but they also had to have the resource to literally drop onto the deal within 7 days notice. Secured a Managed Service team to transition the deal correctly securing 42 of the 45 key personnel in advance of the project launch. Great example of a Project Managed Service.