Recruitment Outsourcing - RPO vs Recruitment Agencies

People ask me all the time why I started RPO Group when I already had such a successful recruitment agency (hey, I've asked myself that question too!).  In essence, why I set it up and what makes it different from ‘other recruitment agencies’.

Well I got back a transcript of an interview I did recently for HC Magazine where I was asked that very question, and I think my response there sums it up pretty well.

I think it also stimulates some thought on some of the things a company should consider when it comes to how they attract, select and integrate talent into their organisation.

So here goes:

"To answer this question I have to tell you a little bit about my background. As you might know I have been working in the industry for well over a decade and was one of the founding Directors of a ‘traditional’ recruitment agency – GOW - in 2000.

Although this was – and still is – a very successful company I made a conscious decision in 2005 to do something different.

Let’s face it.

These days everyone has a really tough time finding people quickly and cost effectively and many companies don’t want to, or simply can’t, build the necessary internal infrastructure to tackle the problem.

This means up to now they were forced to rely more and more on traditional recruitment agencies which – although they are an important part of the recruitment puzzle - simply can’t be the answer to solving the growing people problems businesses are facing today.

This made me think. I knew companies were looking for alternatives and I felt that there must be a third way to attraction and retention – and that’s how RPO Group was born.

So the best way to describe what we really do is tell you what we used to do, why we changed it, and how we do it today.

Everyone knows that traditional recruitment agencies are only paid when you hire one of their candidates. They are experts at sourcing and selling.

This transactional approach unfortunately brings a couple of inherent problems with it.

The market dictates the rules and under current conditions agencies simply have no incentive to run a thorough search and screening process on a contingency basis but rather have every incentive to "sell" a candidate to their clients, regardless of their qualifications.

Being brutal about it, a traditional agency that checks references on the candidate could lose a $20,000 placement fee for reporting to you that a reference was less than stellar.

Or it could simply "give up" and stop working on one of your openings if they feel it is too hard to fill and they won't easily earn a placement fee.

These are just commercial decisions that an agency needs to make for its own sake and so are inherent problems which, deep down, the client knows are present.

So I felt a more holistic approach to optimising the talent within a business that still made commercial sense would be a winner.

I settled on a performance-related, but non-transactional commercial model. Being remunerated for the quality of the process and the whole outcome, and not only for getting a candidate offered and signed.  There is no real commercial reason for an agency to change their business model to deliver that, which is why I needed to make the big decision to sell my agency business and start from scratch if I really believed in this concept.

A pure recruitment outsourcing company with no agency legacy has no financial incentive to hire candidates from a particular source and therefore can guarantee full, fair and complete disclosure on all candidates. They are free to bring their considerable sourcing abilities to the advantage of the client by maximising the number of "direct" applicants who make it onto shortlists and ultimately are hired.

By definition, they work on a position until it is filled.  They can be 100% focused on meeting the client’s long term staffing goals. They sit in their client's office and feel their pain.

All of RPO Group's clients has a team of consultants embedded within their business, living and breathing their culture everyday.

And unlike a traditional agency placing a person onsite, eg. master vendor, our involvement does not create conflicts of interest. For example, we don’t own a central, proprietary candidate database that services other clients – every talent pool we build is owned exclusively by the particular client we build it for.

Being independent, we have no incentive to give work to any particular agency.  This means that agencies see us as a fair business partner to work with and know we don't have a hidden agenda.

Finally, we only ever partner with one client per sector. This allows us to proactively source from competitors without fear or favour."

Well there you have it.  That's been my personal journey and a big part of my philosophy on how companies should choose which 3rd parties to partner with to deliver their recruitment outcomes.

Comments

[Chotey]

Liam

Love your concept. I wonder how many companies are as committed to it as you would like. I get the impression that your thinking is ahead of where a lot of the market thinking is? Many seem to think that doing it themselves or relying on tradional sources and preferred suppliers is enough.