Why Small Business Should Outsource Talent Acquisition Needs

by May 1, 2012Blog0 comments

You have done a fantastic job of building your business. You have hired some former co-workers to help you grow your business. They referred some folks from their network that you hired to expand even further. Now you are continuing to grow and your network is tapped out and the steady flow of employee referrals has slowed down to a crawl. Additional work is being sold and contracts need to be delivered on but the pipeline of quality candidates is dry. Does this sound familiar?

Small and medium sized businesses do many things well but recruiting is not one of them. Most companies that are under $50 million dollars in annual revenue do not have a sufficient number of openings to build a dedicated internal talent acquisition capability. Some of these companies rely on their in-house Human Resources person or department to meeting their hiring needs and experience predictable frustration acquiring key talent.

Recruiting talent today is an extremely costly, time-consuming, and scientific process performed by highly skilled professionals using extremely specialized tools. According to the US Department of Labor, Bureau of Labor and Statistics in 2010 the unemployment rate among Americans with a Bachelors degree was 5.4%, those with a Masters degree was 4.0%, a Professional degree was 2.4%, and a Doctoral degree was 1.9%. In a labor market this tight, competing for top talent requires much more than a business owner, department director, or human resources generalist has the capacity to do.

CareerXroads publishes an annual Source of Hire report, http://www.careerxroads.com/news/SourcesOfHire10.pdf, which analyzes the source of hire for all external full-time hires; both exempt and non-exempt employees are included in the report and all contingent hires are excluded. Of the many data points in the report there are two which make an undisputable case that small and medium companies should outsource their talent acquisition needs.

The first point is how dramatically sourcing talent has changed. In 1998, 28.7% of all new hires were sourced using print advertising. In 2010, only 2.5% of hired candidates were sourced using print advertising. One can safely assume that the percentage of exempt hires sourced from print advertising is much lower than 2.5%. This change is dramatic and is the single biggest trend affecting the small company’s ability to attract talent. Surprising, business owners and HR generalists still strongly rely on print advertising to attract talent. Strong, educated candidates rarely look for jobs and when they do they generally never would turn to their Sunday paper.

The next telling data point is the fact that hired candidates originated from twelve different sources; many of which involve web-based tools like job-boards, career sites and social media. These tools require a dedicated commitment for predictable success, a commitment that a business owner or HR generalist is unlikely to undertake usually because of time constraints.

These are just some of the reasons that a Recruitment Process Outsourcing (RPO) partner may be the answer for you. RPO providers give you a best-in-class approach to talent acquisition that is on-demand and scalable. And when your hiring needs go away, most of your costs go away as well.

A good RPO provider will develop a recruiting brand for you, have access to all of the relevant on-line tools, they will assign a skilled staff to fill your positions, they will apply a scientific process to your needs, they will manage the relationship with you, and they will give you constant updates and feedback.

Perhaps the biggest benefit of partnering with an RPO provider is the paradigm shift from reactive recruiting to proactive recruiting. You know what types of people that you hire you just can not always predict when you will need to hire. Usually, you will recruit only when a position has opened. A good RPO provider will help you identify what your recurring needs are and help you develop a recruiting brand to take to the market. They will then create a presence for your company on the major job boards and on social media which will develop into connections with passive candidates that you will be able to build a relationship with so when the time comes to hire, you will have a meaningful pipeline of qualified candidates to begin your search with.

As a business owner, you are conscious of all expenditures so you are certainly wondering what this service costs. An RPO provider will customize a plan for your specific talent acquisition needs. The plan they present to you should contain timelines, service level agreements, and specific costs. You should expect the total costs to be roughly 8-12% of first year annual compensation depending on the type of positions, location of the positions and volume of positions.

If you just have just a few or even one key opening you may think that RPO is not a viable option however that is not necessarily the case. Some RPO providers will customize a solution for you no matter how few needs you have. So whether you anticipate hiring one key individual in the next year or several hundred, consider outsourcing; it will save you time, money and lost opportunity.

Blogger: John Laporta

Mark Lukens, MBA

Mark Lukens, MBA

Founding Partner at Capatus
Mark Lukens is a founding partner at Capatus and located in the New York office. He leads the Capatus’ Global Talent and Advisory practice. He is also an expert in the firm’s research and nonprofit practice. Lukens has more than 20 years of c-level executive and consulting experience delivering strategies and transformational programs to firms ranging from start-up to Fortune 50. He has worked with clients in Europe, North America, South America, and Asia. Lukens worked extensively in various product and service categories including health care, life sciences, government, nonprofit, technology, and professional services. He also advises clients in other industries including commercial and industrial, retail, logistics and transportation, media and more. Lukens serves on several Nonprofit Boards and is a professor at the State University of New York where he teaches in the School of Business and Economics with a focus on marketing, international management, entrepreneurship, HR, and organizational behavior to name a few. Lukens has a technical background as a MCSE and earned an MBA from Eastern University.
Mark Lukens, MBA


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