SMEs and Recruitment Process Outsourcing: Is RPO only for big business?
I have noticed a widespread belief that Recruitment Process Outsourcing is only for big business. People aren’t thinking and talking about the benefits that it can deliver to SMEs, especially SMEs that are growing rapidly. Frankly, this is a very one dimensional view of what RPO can do for a company. In fact, smaller businesses are often better placed to benefit from RPO services than the large multinationals.
The perception seems to be that RPO is just a ‘big machine’, a large scale beast that thrives solely on economies of scale and is wholly concerned with driving down costs. Now, these are typical characteristics of many examples of RPO that can be found in the wild, but that doesn’t mean that this is all that RPO is or can (should) be.
In some ways this thinking is a result of the commoditisation of RPO, and of how RPO is both bought and sold. The primary buyers of RPO have been big businesses and their focus has generally been seen to be on hard, topline costs. Consequently, this shapes the way that RPO providers tend to talk about RPO as a service, and often also shapes how they are able to think about the service. This is a very narrow view of Outsourced Recruitment.
Outsourcing can be about getting the same quality of service, but at a reduced cost. However, it can equally be about getting access to capacity or expertise that you otherwise don’t have yourself. For example, a company might well outsource manufacturing to reduce cost, but it might equally be because they don’t have room at their site for the production line. Or maybe they don’t have the specialised skills or machinery needed to make that product. Or perhaps they are only going to be making the product for half of the year, so don’t need the line all year round. All good reasons, and similar considerations apply to Recruitment Process Outsourcing.
This combination of expertise and capacity is where SMEs really stand to benefit from Recruitment Process Outsourcing. SMEs often don’t have a HR team, so the task of running the recruitment process remains in the hands of the line managers. It is always going to be the responsibility of the line manager to make the decision about who to hire, and that is right and proper, after all, it’s part of the job of management. But doing all of the process management that gets you to the point of hire? Sourcing candidates? Dealing with agency suppliers? Writing job adverts? All of that is time consuming and takes the line manager away from their day job of delivering the end product or service to your clients.
Even if you’ve got a HR team to support your managers, the fact is that recruitment is a skill. It takes time, effort and expertise to do a good job, and a small team rarely has the required expertise, and almost never has the time, to develop that skill. The reality tends to be that even with a HR team, the bulk of the work ends up back with line managers, but with the added impact of them resenting a ‘lack of support’ from HR. This isn’t really anyone’s fault, just an inevitable consequence of resource limitations.
This brings me back to RPO and why it should be of particular interest to SMEs. Recruitment takes time and effort to do, and that means people dedicated to doing it. Very few SMEs can afford the overhead of a full-time recruitment specialist, less still a team of specialists. The time needed to do the recruitment has to come from somewhere, and for an SME the cost of it coming from a line manager’s day can be highly disruptive. Many, if not most, SMEs will tend to run very lean in terms of headcount. Staff are often very adaptable and used to multitasking and taking responsibility, to getting things done without a big support network around them. Recruitment is a time-consuming activity, so throwing that into the mix as well can create real problems as people get increasingly thinly spread.
Outsourcing means that you are buying in the time from elsewhere to deliver your recruitment, but effectively on a ‘pay per use’ model. Thus you avoid the overhead costs of hiring and retaining your own recruitment team, and at the same time avoid undue pressure on the valuable time of your operational management. You can even flex the usage based on actual need, so if you’re hiring like mad for 6 months and then doing nothing for the next year, your provider can and will manage their capability to match that.
Once you’ve managed the capacity issue, you have to address the question of expertise. Recruitment is a skilled activity, from identifying candidates, through attracting them, selecting them and on to managing the process of keeping them interested in your business long enough to join you. Line managers are often skilled at the key part that impacts their team, selecting the right person at interview, but are much less experienced at most of the other aspects of hiring. This is all important stuff, because it is what determines how good the people you hire are, and how good they are is what drives your company performance at the end of the day. Outsourcing means you are bringing in experts, people who work in recruitment all day every day and very likely have done so for years. That means your recruitment is going to get done better than you are able to with limited internal resources whose primary skill and focus is not recruitment. As a result, you will be hiring people better, and probably better people as well, and who doesn’t want to do that?
So, what can Recruitment Process Outsourcing do for the smaller business? It lets you do a better job of recruitment than you can do today, and with less impact on the day-to-day work of your business. Oh, and you’ll hire better people as a result. As I said at the start of this piece, SMEs have a lot to get out of RPO. Larger businesses can sometimes miss out on these benefits due to bureaucracy, inertia or the politics inherent in bigger organisations. SMEs really only have gains to make, and very little to lose.