Recruitment Process Outsourcing Risks
The RPO is a modern way for the increase of efficiency of Human Resources. The modern HR Management does not focus operationally; it purely focuses on the strategic initiatives. It focuses on building the advantage and robust internal systems, which contributes to the increases of the performance and efficiency of the entire organization. The recruitment outsourcing is presented as the option for the one-time and significant performance improvement. However, many risks are connected with the outsourcing.
The key risks of recruitment outsourcing are:
- Stability of the Outsourcing Vendor
- Poor control of the outsourced process
- High and un-managed costs of the service
- Weak Terms and Conditions in the outsourcing contract
- Different corporate values and corporate culture
- High fluctuation in the recruitment team
- No changes and improvements introduced
The RPO is a business relationship, and the organization passes the operational recruitment processes to the external vendor. The organization needs to choose the stable and reliable partner as it secures the operation of recruitment in the organization. HR should always prepare the contingency plan used in the moment of crisis. The wrong selection of the outsourcing partner is the most common RPO risk.
The exact and complex outsourcing contract is a key for the successful outsourcing relationship with the provider. The quality and working relationship is always a basis for the success. The outsourcing contract has to be made by legal professionals and without any rush. Most issues in the recruitment outsourcing arise from the unclear underlying contract. HR cannot rush to meet the strict deadline; drafting, reviewing and approving the outsourcing contract takes time. Nothing should be left to agree and approve later. The contract defines the payment conditions, and they should be clear to both parties of the relationship.
The costs of the outsourcing relationship have to be clearly identified and described in the contract. The organization needs certainty and the payment conditions have to define all potential conflicts. The standard flat fee needs to be defined, and the outsourcing provider has to deduct fees for not meeting basic agreed KPIs. Moreover, the outsourcing vendor needs the security, as well. The poorly defined recruitment outsourcing can lead to enormous unplanned costs on both sides. The financial severity of the project can lead to its cancellation. The unclear payment conditions are another key recruitment outsourcing risk.
The Terms and Conditions of the relationship have to be clear to both parties. The key recruitment KPIs have to be included. The vendor has to adapt the recruitment process to meet the basic required KPIs or the relationship can be changed or cancelled. The Terms and Conditions have to include conditions for complaints and the appeal procedure. The relationship should be smooth, and both parties should be clear about their obligations. The contract needs to be detailed as the general contract does not cover any real life examples of the organization. It is a enormous risk for the smooth cooperation between the service provider and the organization.
The outsourcing provider has to develop the dedicated team of recruiters and administrators as they are fully aligned with the corporate culture and values of the organization. The team of recruiters needs to be as stable as possible. The provider has to offer training sessions and the challenging career path as the fluctuation is under a control. Managers in the organization do not want to be introduced to the new recruiter often. They prefer stability of the team. This is a serious risk for the recruitment outsourcing relationship.
The outsourcing provider should be encouraged to introduce useful changes. The vendor has the daily traffic data and can analyze trends. The vendor should be encouraged to introduce cost savings, which should be reasonably split between the organization and the vendor. The rigidity of the recruitment process and sticking to the defined process is a enormous risk. The organization can lose its valuable position on the job market.