RPO Models and the 50:50 Rule

We meet a lot of companies – both domestic and global – that struggle with their  dependence on expensive external agencies for hiring. Using agencies is just how things have always been in Japan and it is still surprising to me when I meet clients using agencies for near 100% of their hires. The stakeholders in these companies feel trapped and are searching for options to source candidates directly either by investing into their own sourcing team, or by outsourcing with an RPO provider – potentially as a “try before you buy” alternative.

Here are some basic scenarios that clients face in the market when turning to RPO as a solution. Generally speaking we are talking about challenges related to meeting volume, filling requisitions on time, and keeping overall recruitment costs within budget.

VOLUME – If hiring volumes are extremely high and your team cannot cope then a Source & Screen RPO may be the best option simply to boost the number of applicant introductions. With the sourcing team focused on meeting volume KPI’s your own recruiting team can focus on quality by picking up the applicants and leading the interview and hiring process. The Source & Screen model is all about volume and should be used on-demand or on a project basis. 

TIME-TO-FILL – Japan is the world’s most difficult talent market and one of the most common and most painful problems is in filling requisitions on time. This usually has a direct impact on the business and causes significant stress for all. In cases where the existing talent acquisition team is perhaps understaffed or inexperienced, agency management may get out of control and something has to be done to improve delivery. This is where an Operational RPO model can work well. In this fixed cost model the focus is on improving agency effectiveness by analyzing which ones work well, by standardizing agreements, as well as communications so that your best agents can be more effective. 

“the 50-50 Rule: if a client has more than 50 open headcount and are using agencies for 50% or more hires, then they probably have a cost issue.”

COST REDUCTION – Once requisitions are under control clients tend to look at how to bring costs under control and to do that let’s take a look at the 360 degree “end to end” RPO. Generally for this model we look at what we call the 50-50 Rule: if a client has more than 50 open headcount and are using agencies for 50% or more hires, then they probably have a cost issue. If you consider that 50% of the 50 headcount are hired through agents operating on 30% fees or greater, and with an average salary of say 8 million yen then we are looking at a cost estimate of 200 million yen or nearly US$2 million. An End to End RPO with experienced outbound recruiters should demonstrate significant return on investment by driving up direct sourcing channels and employee referrals, and reducing that agency dependence. 

The important point here is that RPO is not a one-size-fits-all business – the program and model must meet the needs and goals of the client and evolve as the needs evolve.

If you are interested to learn more, feel free to contact us: info@experis-executive.jp

Experis Executive works in close partnership with ManpowerGroup Solutions – the #1 RPO provider globally and in Asia Pacific – to deliver RPO solutions to clients in Japan. Talk to us if you have challenges in the Japan market.

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