A Comparrison of Contingency & RPO to the new kid on the block
RaaS (Recruitment as a Service)
So here’s the deal with the old contingency recruitment or RPO models that we’ve all seen for years. They were not what we wanted to buy. At least not when I was leading HR & TA (talent acquisition), and certainly not today.
So, we said, “Screw it, let’s make our own.”
Here’s a breakdown of what we’ve made compared to 2 old-school recruitment models.
Contingency Recruiting
You pay a headhunter/agency when the candidate you’ve chosen accepts your offer. You pay 20% to 30% of the annualized salary of the positon.
it’s the most expensive model.
The problem with this model is the goal of the recruiting firm is to place the body as fast as possible (sometimes at the expense of the client and the candidate) regardless of whether it is the best fit. None of them do this on purpose though, we all want to candidate to have a great experience and be in the right position. However, this business model financially incentivizes some highly commissioned recruiters to cut corners with candidates’ careers because they make more money the faster they place. I’ve seen it.
RPO
RPO – Recruitment Process Outsourcing. This model is the blend of keeping the recruiting firm on retainer as a blended resource and paying a lower performance fee on the contingency portion or bonus per placement.
These firms still hoard their secret sauce and rush placements to keep their pockets lined. Same old song and dance.
The illusion is this gets the client and the recruiting firm more on the same page.
Yeah, okay, theoretically, this makes sense. But often, recruiters assigned to an RPO account get bogged down in daily processes and administrative taks and find it difficult to have the time (let alone the expertise) to strategically source passive candidates – that is, candidates not actively looking for a new position but who may consider something new if approached the right way.
Also, an RPO firm typically requires a multi-year contract so them dedicating a recruiter or an entire recruiting team to the client makes economic sense for them. They typically charge a base rate a little over cost and then charge a fee per placement as a bonus. The pitch is that they can replace internal recruiting teams altogether/ultimately for less costs but what often happens is the cost is merely transferred, quality of service and quality of candidates decline, and the client is stuck waiting to get out of their multi-year contract and go back to in-house recruitment for more of the same.
RaaS by Field of Talent
This isn’t just another model; it’s a revolution, baby!
We’re talking long-term relationships, lower turnover, and actual alignment with company goals. It’s about quality of hire – stellar talent that helps the company grow, candidate experience under the client’s employer brand, and continual alignment with the company’s growth, always on the lookout for smarter ways to handle the recruiting budget using tech, processes, and people.
Recruiting as a service is a fundamental change in thinking about the relationship between recruiting firm and client. From the start, we align with the client’s talent plan and throughout allowing the client to flex up or down in recruiting services.
The client benefits by having a pipeline of talent, being “talent ready”, and having an opportunity where talent truly can/should be the competitive advantage. They also get a partner that complements internal HR/recruiting teams, never competes.
Data is shared transparently to collaborate with clients, continually show value, and help them manage their talent acquisition costs or cost per hire.
Ready to explore RaaS?
Let’s model what a RaaS pilot program can look like for you!
