Half of HR Execs Disappointed with RPO Providers’ Metrics

By Roy Maurer Nov 3, 2015
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Only slightly more than half (52 percent) of surveyed HR executives are satisfied with the data they receive from their recruitment process outsourcing (RPO) provider, according to recent research from HRO Today magazine and Futurestep, a Korn Ferry company specializing in RPO.

The survey was fielded among 265 employers that use an RPO service provider.

More respondents are satisfied with their RPO overall (69 percent), but only a third (35 percent) of surveyed employers that registered dissatisfaction with the metrics they receive said they were satisfied with their RPO overall. On the other hand, all respondents that were satisfied with the data they receive were also satisfied with their provider, underscoring the correlation between overall satisfaction with an RPO and satisfaction with performance metrics in particular.

Many HR leaders aren’t sure what data they need to be collecting, said Ben Eubanks, an HR analyst for research and advisory services firm Brandon Hall Group, based in Huntsville, Ala. “If that’s the case, then it is difficult to judge how satisfying a data set is. On the other hand, this is a great opportunity for the RPO firm to offer some coaching along with the data to ensure it meets the needs of the organization. It might be that the other half of companies that are less satisfied are just not sure how the data can help.”

The key to good reporting is understanding the values of the client, said Andy Roane, vice president of RPO at Yoh, a staffing and recruiting company headquartered in Philadelphia. Roane said that the most important metrics measure what’s important to the client, “typically quality and efficiency,” and should go beyond what the client can do itself. “What the client values not only dictates the metrics, but the frequency and the level of detail. However, the ultimate analysis is the link between talent acquisition results and the overall business results,” he said.

The great RPO organizations “will not only provide metrics and data, but also help the talent acquisition function as a partner,” said Eubanks. “In other words, the recruiting doesn’t just get accomplished, but the organization’s needs are met at a higher level.”

Problem areas highlighted in the research include:

  • Less than half of respondents (49 percent) are satisfied with the amount of data they receive. A lack of information can be a serious issue but an overabundance of data can also be problematic, said Nikki Kay, Futurestep’s general manager and vice president of client services, North America. “More data doesn’t necessarily mean better data. Much of the data currently kept is not being used. I’ve seen organizations measure everything, which serves to dilute the key messages and doesn’t necessarily talk to the business issues at hand.”
  • Nearly one-third (30 percent) weren’t sure if their metrics were accurate or not. “This is a real lack of confidence that can have serious implications for your HR departments because they’re unlikely to share or make use of data they don’t believe in,” said Colleen Fullen, vice president of global talent for Futurestep.
  • Only 41 percent are satisfied with the alignment of metrics with business strategy. “There needs to be a clear understanding of how HR aligns with the business objectives,” Kay said. “Talent acquisition leaders must have visibility of the overall business goals, an understanding of the impact their function can make and the ability to make decisions armed with the relevant metrics.”
  • Just 39 percent are satisfied with the specificity of performance data.
  • Almost half (45 percent) feel the data they receive is not actionable or they aren’t sure if it is. Eubanks said that offering a solid use case in which the client can make use of the data to reach its goals is a great way for outsourcing organizations to move beyond “putting bodies in seats” and truly help HR executives to achieve the results they want.

“The key is to enable HR to drill down into meaningful segments and to provide actionable information that can be communicated to C-level execs,” Kay said. She recommended employers be involved in the early stages of designing which metrics will be measured. This process can be made even more effective if employers develop a competency for data analytics within their HR departments.

Which Metrics Are Used

Employers are faced with opposing levers of time, cost and quality when hiring. Time-to-hire is an almost universal key performance indicator (KPI), with 87 percent of respondents choosing it from a list of 13 metrics as the most used, followed by cost-per-hire (67 percent), quality-of-candidate pool (57 percent) and number of hires (56 percent).

The least used metrics were number of applications (20 percent), employee-referral-to-hire ratio (17 percent), job views (4 percent) and cost-per-click (4 percent).

More needs to be understood about the RPOs referenced in the survey to better understand the findings on metrics usage, said Elaine Orler, CEO and founder of talent acquisition consultancy Talent Function, based in San Diego. “It’s important to know how many of the respondents are using full life cycle RPO versus just sourcing. They’re completely different metrics for both models in order to drive success.” That information was not available, according to Futurestep.

For example, time-to-hire is the worst metric to use if your RPO only provides sourcing, Orler said. “For sourcing, you want to measure the quality of the candidates. How long employers take to push candidates through their hiring process is not on the RPO. Time to present is the key metric for sourcing RPOs. How long did it take your sourcing RPO to give you candidates to present to the business?”

The most important metrics for full life cycle RPOs which provide an end-to-end recruiting function are quality-of-hire and time-to-fill, Orler added. “And more importantly, it should be quality-of-hire. But time-to-fill has been around forever, and we tend to think the faster the better, but that’s not true.”

Two metrics Kay thought should’ve scored higher in use are retention and source-of-hire. Both were cited by 41 percent of respondents. “Retention data can be an excellent measure of quality-of-hire,” she said. Retention data ultimately needs to come from the employer and depends on the integration of HR information systems, applicant tracking systems and RPO applications.

Internal data on retention, performance improvement plans, promotions and internal mobility plans give RPO partners insight on where to target pipeline talent, improve quality of talent, reduce time to offer and improve hiring manager satisfaction scores, said Roane.

Source-of-hire data shows where new hires originate, which can help target future candidates more successfully. “Crucially, it can also help you to calculate and understand costs, assuming that different sources require different levels of investment,” Kay said.

Three-quarters of survey respondents considered source-of-hire to be the most useful metric for evaluating RPO effectiveness, followed closely by time-to-hire (73 percent) and offer-to-acceptance ratio (73 percent). Different metrics will apply to different clients and typically this will evolve over time as the goals of the company change, Roane said.

Retention ranked last (57 percent) among respondents for evaluating RPO effectiveness. An RPO’s impact on retention is often considered to be indirect despite the fact that there is significant evidence for correlation between RPO-led initiatives and the retention of employees, Kay said.

On a scale of 1 to 10—from 1 “does not meet needs” to 10 “completely meet needs”—over half (54 percent) rated their current KPIs as 6 or below, and just 16 percent rated theirs a 9 or 10.

“In my opinion, the level of satisfaction is often directly linked with having a seat at the table, when talent acquisition has a direct influence on the organizational strategy,” Kay said.

A key step to driving higher satisfaction is to ensure the results of your metrics are actionable, Fullen added. “The best way to do this, for C-level decision-making, is to tie KPIs to revenue, or at least to quantify them as a way to reduce expenses. For example, you could highlight the link between hiring delays and lost revenue, or between above-average staff retention and increasing customer satisfaction levels.”

Recommendations

The report gave recommendations for how employers can get the most out of RPO metrics:

  • Clearly understand how HR aligns with business objectives so decisions can be made using the relevant metrics.
  • Clarify why KPIs are measured, what value they provide and how much emphasis to place on the results. The talent acquisition team must create a systematic approach, Fullen said. “They do that by defining the metrics that best support the strategy [and then] clearly define how metrics will be measured, determine the frequency that report will be created, and develop a dashboard to deliver that information to HR.”
  • Create a single, integrated information system. The complexity of the systems employers use for talent acquisition have increased over time, with companies using candidate relationship management systems, applicant tracking systems, video interviewing systems, background check systems and more, all with varying formats, making the information difficult to analyze.
  • Establish trust with your provider. “The quality of the relationship between client and provider and the extent to which sensitive data is shared and examined, will determine a true partnership,” Fullen said.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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