Pinstripe recently posted an article on their blog arguing that the failure of an RPO program does not mean that RPO will never work within that company and providing five reasons why companies should give RPO another try.

While I agree wholeheartedly with their premise, I also know that there are situations where an RPO program fails to achieve its goals, not because of the provider, but because of the client.  A wise man once said “Remember, the common thread between all your failed relationships is YOU”.

Here are five things to help you, the RPO buyer, turn the mirror on yourself before assuming that simply replacing your RPO provider will fix the problem.

1) Have you faced adoption issues?  (i.e. are you struggling getting hiring managers to work with your provider).  If so, you need to consider if this is due to your provider’s failed change management efforts, or if your company simply has a cultural bias against outsourcing which may not be fixable - or may be fixable but require additional change management efforts driven by your own senior leadership.

2) Have you had problems with other outsourcing initiatives?  If your company has historically struggled to outsource successfully in the past, there is a pretty good chance that an RPO program will not find fertile ground within the organization.

3) Have you allocated enough budget for your provider?  If you bought from the low bidder, and then squeezed them down another 10% you may have not left enough margin for them to operate successfully.  Maybe a slightly higher investment will allow them to deliver at higher service levels.  If you are getting push-back from your provider because some special request is outside of the statement of work, or not covered in your service level agreement, it’s a good sign they are watching their pennies, and that  may cost you in the long run.  If you just can’t allocate more budget, maybe RPO isn’t for you.

4) Have you placed overly restrictive process requirements on your provider?  If you brought in an RPO provider to re-engineer your process, but then required them to operate within legacy technology, utilize outdated assessment systems, and copy all resumes onto stone tablets for extra redundancy (Ok, I made that one up), it’s possible you have hobbled their ability (and any other provider you bring in under those same requirements) to deliver.

5) Have you reviewed the specific hiring environment of your organization for intrinsic challenges?  From employment brand, to compensation design, to industry reputation, any number of factors outside of the control of your provider can make it especially challenging to attract candidates to a specific company.

In most cases, an open and honest conversation with your provider will unearth which (if any) of these challenges exist within your situation.  Keep in mind that providers don’t like to be seen as “complaining” about your company and the challenges they may be facing, so they may initially be reluctant to share their opinion on some of these issues.  I’ve always been a fan of the “No Career Limiting Moves” meeting in which everyone agrees to be open and honest, and all parties agree not to hold anything that is said against the other party.

If you hold such a meeting, you may identify things you can do to help your provider be more successful.  On the other hand, maybe you just picked a horrible provider, and another one would do a much better job.

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I recently listened to the cockpit audio from Flight 1549 which crash landed on the Hudson river last month.  You can find the audio with some video below.  What I find amazing about this is the absolute calmness that the pilot shows.

Given that the recruitment industry as a whole lost power in both engines in November of last year, and the forecast for RPO is pretty bleak throughout the rest of the year, I’ve heard a lot of panic in the voices of various RPO leaders I’ve spoken with.  But now is not the time for panic.  If anything, now is the time for calmness and a blank slate look at your organization.

I’d recommend that the leadership of all providers take a hard look at their business and make the decisions they need to make to ensure the survival of their company.

• Staff - don’t carry excess capacity.  It may be painful, but cut once and cut deep and get your business sized appropriately for what you have coming in right now.
• Expenses - travel, entertainment, cable TV, employee benefits, 401k matching - everything must be on the table for discussion.  Don’t be afraid of your employees.  In this market they aren’t going to quit because you stop sponsoring Beer Fridays or free dry cleaning.
• Sales and Marketing - ramp up expenses in anything that directly leads to new business.  Whether it’s pay-per-click, direct mail, or hiring additional salespeople, if you can tie a dollar spent to a few dollars of revenue, it’s a good investment.
• Vendors - talk to your vendors and see if they can help you control expenses.  Especially if you overbought and now need to ramp down, you have nothing to lose by asking to renegotiate.  Monster.com is notoriously unflexible (yet another reason so many people REALLY hate them, but that’s for another post), but a number of smaller ATS, job board and other companies may be willing to work with you.
• New revenue streams - there may be 50 ways to leave your lover, but there are probably 100 different ways to make money in the recruitment space.  A number of companies are coming into the RPO space to help create additional ways to monetize.  If you haven’t already, take a look at BountyJobs and GetListed.com

Above all, remain calm.  It’s impossible to take an analytical view of your (shrinking) business if you are panicked.

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I saw an infomercial today for a ridiculous product called the “Snuggie” which is essentially a blanket with sleeves build into it.  Seriously, I’m not making this up - check out www.freesnuggie.com

What struck me about this commercial is that they manage to communicate two separate ways in which the features of a regular blanket are inferior to a snuggie (specifically, blankets can slip, and you can’t reach for things while you have a blanket over you).  Now I don’t know about you, but I have never experienced either of these problems, nor have I felt that there was a gap in the lap blanket market which was begging to be filled.

But the lesson I took from this, and why I think the masterminds (and I use that term loosely) behind snuggie’s marketing are right on the mark is that they not only explicitly describe the benefits of their product, but they attempt to create dissatisfaction with the incumbent product.

As you market your RPO practice, think about snuggie.  Do you CLEARLY describe the benefits of your services?  Do you describe your services in such a way that you create dissatisfaction with the status quo (usually internal recruitment function or employment agency?)

A few hints:

• If you are selling RPO then Better, Faster, Cheaper are not benefits - they are features.
• We developed a list of at least eight ways in which RPO is substantively different from and better than a contingency search firm - how many can you come up with?
• We developed a list of at least six ways in which RPO is substantively different from and better than an internal HR or recruitment function - can you think of more

From my understanding of the infomercial business, if the product doesn’t sell, they will stop airing the infomercials very quickly.  Given that snuggie has been running for a while, they must be selling the things and probably making millions.  Let’s take a lesson from the snuggie playbook and maybe we will all be so lucky.

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The most important lesson in RPO (heck, probably in ANY business) is to play to your strengths.

I remember the frustration I felt in my early days because we never seemed to win any RFPs.  We’d have a GREAT meeting with the client, they loved our solution, we knew our pricing was competitive, and we wrote a GREAR RFP response.  But despite all this, time and again we would lose out to larger providers.

It finally dawned on me one day when I went back and re-read some of our old RFP responses - it was obvious from reading the RFP questions that we were weak in two areas that were critical to winning Enterprise deals - technology and financial strength.  EVERY RFP we got asked technology questions we had to dance around and asked for financial data which we were uncomfortable providing.  Meanwhile, our larger competitors had slick annual reports and teams of technodweebs to trot out in their RFP responses.  The reason we were losing these deals is that we, as a small company, were trying to compete with the big boys on their territory, and they’d beat us every time.

Once we realized this, we stopped responding to RFPs, and focused on winning deals where the relationship and the quality of our service was more critical than the depth of our financial backers.  Suddenly we started winning deals.  We were playing to our strengths and the results showed.

So in this tough economic climate, here are three tips for the small and medium RPO provider to help focus on playing to their strengths and avoiding playing to the strengths of your competition.  I’m not going to provide tips for the large providers because, heck, they’ve got the big bucks and have a lot of strengths to play to.

Small Provider

1) Don’t waste time chasing monster deals.  In this climate, buyers are very unlikely to going to go with a small provider .  If it’s a large competitive bid, walk away and focus your time elsewhere.

2) Analyze your current client base and focus your sales and marketing efforts on the two to three niches where you have the deepest and most convincing case studies.  Those niches may be geographical, industry-based, or specific position-types.  However you define it, you should only be selling into a market where you can answer the question “what success have you had doing EXACTLY like what I need?”  If you excel at filling Physician’s Assistants in Pennsylvania, then market yourself as the experts in filling PAs in PA.  Remember, if you try to be everything to everyone, you end up being nothing to no one.

3) Emphasize customization and flexibility.  You can’t beat the big boys (and girls - Hi Sue and Anne at Pinstripe) on price, you can’t beat them on resources, but you can out-flex them all day long.  Make sure your sales and marketing message emphasizes your ability to morph to meet client needs.

Medium-Sized Provider

1) Be VERY selective at picking the RFPs you respond to.  If you haven’t met a client face-to-face, remember that someone else already has and they have the inside track.  Insist on an in-person fact-finding meeting before preparing your response.  Ask the tough questions to make sure they will consider working with a mid-tier provider or if politics will force them to pick a large national firm.  Remember, they used to say “no one ever got fired for buying IBM”.  In RPO that might be “No one ever got fired for buying Adecco (or Spherion, or Manpower etc.)

2) Invest your resources in delivering a powerful first 72 hours of service to each new client and each new hiring manager.  Once you’ve won a client, they’ll decide in the first three days if they made the right choice in selecting you.  Craft a client intake and new client launch process that knocks their socks off.  The smaller providers generally don’t have the resources to craft a truly remarkable new client experience, and the kargest providers tend to be challenged in personalizing and customizing service delivery.  Use this to your advantage.

3) Give your best clients “office of the chairman” service.  If you are CEO or owner of an RPO firm, you should be talking to your best clients AT LEAST quarterly if not monthly.  Clients love this level of service and they recognize that they are getting special attention.  For smaller firms, the attention of a Senior Executive doesn’t carry the weight it does for the medium sized companies, and for the largest providers, the CEO rarely has time to dedicate to this level of granular customer relationship building and maintenance.

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Without exception, everyone I speak with in the RPO industry experienced a dramatic slowdown in their business starting in October or November of 2008. The consensus seems to be that business dropped off between 25% and 50%, with most companies experiencing a 35-40% drop. Most of these same companies are predicting an upswing starting at the end of 2009 or early 2010, with some more pessimistic companies predicting that a recovery won’t come until 3rd or 4th quarter of 2010.

Since most believe an upswing will occur in the foreseeable future, the strategy for this period has shifted from a growth or even sustaining strategy, to one of survival. I believe that those who will weather the slowdown best are the largest and the smallest providers, while the middle-sized ones will suffer the most.

Obviously the largest providers have the most financial resources and their risk is spread across a largest client base, with a larger spread both in terms of geographic spread and industry. Many of these providers (Adecco, Manpower, Kelly, Spherion) also have diversity in the types of staffing they provide and can focus on other parts of their business like temporary staffing as the RPO market cools.

At the same time, while the smallest providers don’t have the diversity or financial resources of the large ones, they have the ability to be nimble, and turn on a dime. As the market shifts, they can respond most quickly to niche opportunities in the market. Also, the smallest providers tend not to have expensive infrastructure and they can contract primarily by laying off or redeploying staff.

The middle-sized providers (100-300 employees) however, tend to have a more sophisticated (and therefore expensive) infrastructure and enough levels of management that they can no longer turn on a dime. Without the financial strength of the largest providers, they may find themselves struggling the most in this downturn.

As in any downturn, the companies that will thrive will play to their strengths and focus on the parts of their business where they have a sustainable competitive advantage.

In my next post I’ll put forth some ideas for small, medium, and large providers to implement immediately to play to their unique strengths.

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How the stock market crash is good for the recruitment industry

 The staffing industry has been buzzing for at least the last 10 years about the looming labor shortage as baby-boomers retire- in ever increasing numbers.  The worry gripping the industry is that this exodus of talent out of the workforce will leave talent gaps which incoming workers cannot fill. 

 We’ve all experienced the pain caused to a business when Chuck retires and we realize the next day that Chuck was the one who knew where the coffee filters were kept, or had the code to turn the lights on after-hours or knew how to reboot that troublesome testing computer.  Now imagine the disruption when 70 million boomers retire, except instead of unique expertise in coffee filter location, they have unique and irreplaceable knowledge in running the city’s electrical grid, or nuclear power plant management, or the logistics of running an aging legacy data center.

 According to the most recent American Staffing Association survey, one in five staffing professionals said the labor shortage is the most pressing issue facing the recruitment industry and fully half said it’s one of the top five issues.

 Well, I’ve got some good news and some bad news.  The bad news is that the stock market is in the tank and portfolios are down from 30-50%.  Of course there are exceptions – some individuals had limited exposure to the stock market and are doing ok, and others had all their money with Bernie Madoff and as soon as they come out of their daze from realizing they’ve lost everything, they’ll have to come up with “Plan B” for their retirement.

The GOOD news, at least as far as the staffing industry is concerned, is that the virtual overnight contraction in retirement portfolios may convince a number of baby-boomers to put off retirement for a few years and may cause some recent retirees to rejoin the labor force.  I have personal experience with some retired boomers who recently went back to work to earn enough money to maintain their lifestyle, now that their portfolio is struggling, and they are bringing valuable skills and experience back into the job market. 

So the smart thinkers at staffing companies and RPO firms right now should be polishing their sourcing plans and candidate marketing campaigns to target these reluctantly returning recent retirees.  Think about how to tweak your candidate marketing to appeal to that individual who is worried about their retirement funds, and just starting to think about coming back to work.  Those who successfully make this pitch should have access to an entire pool of candidates which was unavailable even six months ago, creating a competitive advantage in both client acquisition, and client service.

I’ll list some specific ideas for how to approach this market in my next post.

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