Smoothing Business-Cycle Surges With RPO

By Fay Hansen

Sep. 26, 2006

A sudden change in production requirements in September 2005 forced pharmaceutical giant GlaxoSmithKline to issue new goals for its global manufacturing facility in Ontario, Canada. The 250,000-square-foot plant adjacent to the company’s Canadian headquarters in Mississauga fell under a mandate to triple manufacturing volumes immediately.

    Meeting the mandate meant hiring 240 new employees, including highly skilled specialists, on short notice. In the past, Frank Newman, HR director for the GSK Ontario plant, had used an SAP system and recruiters imported from other GSK sites to handle hiring surges, but the new needs were far larger and more urgent.

    The quantity of new hires GSK required was not the only problem.

    “We have to have people with superb training,” Newman says. “This is a burning platform. We produce life-saving drugs. The quality is absolutely critical. The last thing we would ever want to see is a recall.”

    The plant produces more than 100 medicines, including drugs for HIV/AIDS, Parkinson’s, epilepsy, diabetes, cancer and cardiovascular disease.

    Based in the United Kingdom, GSK pulls in $40 billion a year from facilities in 116 countries with 110,000 employees, including $1 billion a year from its Canadian export-oriented facilities. Like most pharmaceutical firms, it increasingly faces sudden hiring surges and workforce deployment changes generated by new research findings and mercurial government regulations.

    Beyond pharmaceuticals and other high-tech sectors, steady recruiting has succumbed to the same business pressures that have redefined the time frames for all other aspects of workforce management. Not only has staffing become even more sensitive to business and budget cycles, but companies are increasingly engaged in just-in-time hiring to keep staffing lean and responsive to shifting business needs.

    Just-in-time hiring has long been a standard for low-skill positions, but the 2001 recession pushed the technique deeper into organizations. High-tech and life sciences companies burned by overstaffing turned to lean hiring for both low- and high-skill jobs. This approach entails far more careful long-term planning and developing and maintaining a candidate network–arduous tasks–and creates a perfect opening for outsourcing the recruitment process.

RPO relief
   Newman viewed RPO as a possible solution to the hiring push and an opportunity to revamp the entire recruiting process.

    “Too many companies are locked into a HR hiring process that caters to hiring managers,” he notes. “We wanted to have a robust process with less customization.”

    To meet the new demand at GSK and re-engineer the process, Newman looked for a company that could literally drop in and handle the whole piece. He turned to Hudson Talent Solutions, part of the Hudson Highland Group, a global staffing and talent management firm with more than $1.4 billion in annual revenue and 3,800 employees in 20 countries.

    Newman sat down with John Hancock, Hudson’s senior business director, to negotiate the two-year agreement.

    “I met with Frank for a detailed risk analysis,” Hancock recalls. “We identified the risks and determined who would wear them.”

    Hudson took on sourcing, screening, administration, internal recruiting, Web site management, managing the interview methodology, building tests and creating assessment centers. Its first step was to create a screening methodology that was far more detailed than GSK’s model.

    GSK retained responsibility for the starting salary negotiations, but Hudson agreed to brief candidates to ensure that they were in the right salary range and had appropriate expectations.

    “Then we took the ball back to conduct reference checks, security screening, put out the offer letters and arrange the start dates,” Hancock says.

    GSK handled the onboarding process. About 30 percent of Hudson’s full-scale RPO contracts leave induction with the client company, but Hancock notes that including the RPO provider in the onboarding process is becoming more common.

    Hudson and GSK kicked off the campaign to fill the 240 jobs with full-page ad in the Toronto Star announcing the open positions. The ad generated 18,000 online applications, which would have drowned Newman and his HR staff of three.

    Hudson harvested the applications, put them through electronic screening, followed up with phone screening, and sent the finalist applications to GSK’s hiring managers. Newman and his team conducted the interviews and set the terms of employment for the new hires.

Scale and strength
   Hudson filled the 240 positions in a matter of months, and is now filling 100 more new openings for GSK. All of the 240 new hires have completed their three-month probation, and only two–less than 1 percent–were dismissed. Annual performance reviews will track the quality of the hires brought in through the RPO arrangement; Newman and Hancock will make any refinements necessary to create optimal results.

    “Our recruiters are co-located to maintain a cultural fit with GSK,” Hancock says. “They have reworked the process so that it delivers both quantity and quality with the greatest efficiency.”

    “Moving to RPO requires change management in both the client firm and in the RPO provider,” Hancock notes. “We have to construct an integrated approach. Without the right process for RPO, it can become a project without an outcome.”

    Newman says that his HR managers are “thrilled” with RPO, but it took two to three months to coach the hiring managers through the new arrangement and help them establish a relationship with Hudson. Hudson recruiters now work directly with the GSK hiring managers.

    Hancock notes that bringing hiring managers on board is a critical part of any successful RPO arrangement.

    “One of the most important parts of the GSK job was ensuring that hiring managers were equipped with the tools and training they need to make timely and effective decisions so they don’t become a bottleneck,” he says.

    Hudson’s RPO unit can leverage both its own specialized recruiting resources and other Hudson divisions to meet large-scale projects. Hudson now has more than 20 full-service RPO arrangements and another 50 to 60 project-basis RPO deals. The company signed its first full-service RPO deal in 1996, and that arrangement is still in operation.

    Under that first contract, Hudson cut time to hire from 26 weeks down to three weeks.

    “We are completely wedded to the organization’s workforce planning, which is a difficult and complex task with no good standardized set of tools,” Hancock says. “Workforce planning hinges on expert analysis, which the RPO provider can bring to the organization. The real value in long-term, full-scale RPO is that the provider creates intellectual capital for the client and hands it over.”

    GSK did not track time to hire before the RPO arrangement, but Newman believes that recruiting speed has improved significantly. Hudson now provides GSK with a number of efficiency metrics.

    “Frank now knows exactly how many days it will take to fill any position,” Hancock says.

    Cost-reduction information is proprietary under the GSK contract.

    “But RPO costs can’t even be compared with the cost of using outside recruiters,” Hancock notes.

    Experts estimate RPO cost savings at 20 percent to 50 percent, but all agree that the largest value lies in the provider’s ability to restructure the recruiting process.

    “At this point, I consider RPO to be a best practice,” Newman says. “We’re a Six Sigma company and we take innovation very seriously. It’s part of my job to develop and evaluate best practices and communicate them to other GSK divisions.”

    GSK is now exploring RPO arrangements for two additional divisions, with a decision expected by late spring 2007.

    “The surge in RPO stems from an interesting dynamic in the overall search for talent in North America,” Hancock says. “Organizations have had to be far more diligent in how they scope talent needs over the next five years and how they decide to meet those needs.”

    Hancock believes that employers in North America will continue to see increasing competitiveness for talent. Because of the Internet, access is no longer a problem, but addressing both volume and quality is the new challenge.

    “Constructing the screening methodology, which requires expertise, is central to making the right hires,” he notes.

    “There are always people who want to work for a company like GSK or PricewaterhouseCoopers, for example, and we see plenty of mobility,” Hancock says. “There are tens of thousands of applicants, but only 2 percent are the right people because the level of specialization that organizations require and the expectations that organizations have are so high. Companies are looking for exceptional people who can fulfill longer-term growth goals.”

    Hancock reports that large-scale full-service RPO is growing more slowly than project-based arrangements.

    “There is a larger risk in full-service RPO, and some of the deals have not operated as they were supposed to,” he says.

    Some companies are testing RPO by moving from short-term project-based arrangements into long-term agreements.

    Like a growing number of HR executives, Newman is an RPO convert.

    “HR’s job here is to build great teams,” he says. “Before our RPO arrangement, recruiting was the biggest consumer of HR time. Now HR has become the sponsor of recruitment. We’ve moved from processing résumés to talent assessment and development. RPO allows us to add a whole new dimension to HR.”

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