Organisations thinking of outsourcing their recruitment need to consider exactly what they will be handing over, writes Diana Bentley. If their existing recruiting systems are “broken, they should be repaired first — otherwise your RO will be inheriting a mess, your transitional costs will be higher and you can’t test the process intelligently later”, says Martin Reddington, a human resources consultant and research fellow at the University of Glasgow and Roffey Park.

Businesses should also be clear about what they want from an outsourcing firm. “If you don’t have a very specific tender process and just ask specialists what they can do for you, you’re likely to get more questions than answers,” says Gill Stewart, managing director of Carlisle Managed Solutions, an RO company.

Charges must be transparent and other expenses factored into calculations of the real cost of services. “Once the RO takes ownership of recruitment, there are ongoing costs of managing the contract but these are often forgotten,” says Reddington. “A client’s business case for RO is also often based on predicted recruitment volumes. If volumes rise, the cost savings can be better than expected, but if they decrease the cost savings can be reduced or disappear altogether. So in some contracts ROs will insist that they get minimum fees irrespective of recruitment volumes.”

Another potential area of conflict that should be addressed early is the handling of recruitment agencies. “It’s fair to ask what will be lost if the RO is appointed and how the relationship with the agencies will be managed,” says Nicholas Lakeland, an employment law partner at London law firm Silverman Sherliker.

One of the most fraught areas in the use of ROs is the implementation process. The temptation, says Stewart, is to try to hand over recruitment quickly but if the transition phase is not well managed, it can cause disruption. “The change management process is critical to success as line managers are having part of their function and their choice of suppliers taken away,” says Roger Tweedy, director of research at the Recruitment and Employment Confederation. Detailed plans and a sound methodology are needed before the transition begins and staff at all levels must understand how the new processes will work. The clearer you make your expectations of how the new system will work, the better you can measure a company’s performance against them.

Centralised information management systems are one of the most attractive aspects of taking on the RO process. Clients may use their own automated system or that of the RO or a third party. If the data management system doesn’t belong to the client, they should ask who it will belong to, who can modify it and who will own the data — both on a day-to-day basis and at the end of the contract.

Another consideration for organisations who go down the RO route is how long the agreement should last. “Ask what the notice period will be,” says Lakeland. “Often the termination clauses can be quite onerous for clients.”

Bernard Buckley, director of human resources for Europe, Asia and America at Cable & Wireless, says of appointing RO organisations: “You need to agree on the terms of engagement. It’s a bit like going to war really.” Having the nuts and bolts of the relationship set at the outset is vital, as is having somebody in-house who manages it on a daily basis. For the past three years Alexander Mann Solutions (AMS) has managed all Cable & Wireless permanent, temporary and contract positions in the UK with a salary cap of about £80,000. Buckley says: “Take time before the agreement is signed, work out what your internal requirements are and your overall business strategy, and ensure the RO understands them.”

Service and performance levels were set with AMS at the outset, he emphasises. “AMS is paid on a per-hire basis. We know the exact cost of each recruitment and how long it takes to hire and we have a preferred supplier list for agencies.”

The business case for adopting outsourcing:

• Reduction of suppliers
• One consolidated invoice
• Better management of risk and performance
• Improved quality of supply
• Cost reductions
• Administrative cost reductions
• Control over internal spend
• Accurate management information
• Partnership relationship with RO
• Improved management of regulatory compliance

Transition management issues:

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