Special Report Talent Acquisition--The Culture Connection
For companies such as Herman Miller that opt to outsource recruiting, finding a partner is easy. The harder part is teaching a company’s corporate culture to an outsider so they can find candidates who will be a good fit.
Curiosity and Exploration. Design. Inclusiveness. A Better World. Relationships.
The words are part of trend-setting commercial furniture maker Herman Miller’s statement of values. Visitors to the company’s Zeeland, Michigan, headquarters see the words everywhere: in company literature, on the lanyards that employees use for ID badges, on place mats new workers receive as welcome gifts, and on the firm’s Web site.
The words sum up Herman Miller’s corporate culture, which is based on its philosophy of individuality, creativity and design, as well as simplicity, communication and teamwork.
Last year, executives at the $1.9 billion public company realized they needed to expand and diversify their 6,400-person workforce, but couldn’t do it fast enough through existing recruiting efforts. After identifying their needs and researching the options, HR managers tapped Spherion, a leading recruitment process outsourcing company, for the job. One of the most critical parts of the transition was teaching Herman Miller’s unique corporate culture to a surrogate—Spherion—so it could select the best job candidates to embody that culture.
Though they’ve only worked together four months, Herman Miller and Spherion officials say they’ve made good progress toward the goal. Early on, Spherion’s RPO implementation team traveled to a lodge in rural Michigan for a four-day immersion program that Herman Miller usually holds for new employees. Spherion recruiters have toured all of Herman Miller’s production facilities in western Michigan to soak up the workplace atmosphere. And managers from both companies dial into weekly phone conferences to see whether Spherion is meeting minimum benchmarks included in their contract.
"It’s like we were dating and now we’re engaged, and after a while we’ll be married," says Deb Exo, who heads up Herman Miller’s talent acquisition and management. "We’re where I expected us to be in the transition, and I’m looking forward to the results."
Herman Miller’s challenge mirrors that of many companies that hand off end-to-end responsibility for recruiting to an outsider: how to ensure corporate culture survives the process.
Other companies that have gone the RPO route worked with vendors who hire their former in-house recruiters or permanently place their own recruiters at clients’ facilities. They also take care to keep clients’ hiring managers in the loop, according to representatives from employers and RPO vendors.
For their part, vendors such as Spherion have to balance giving clients the custom experience they want with creating uniform processes and Web-based systems they can use for all their clients to profitably expand their business.
Whether either group has figured out how to achieve its respective goals is debatable. In the half-dozen or so years since the first end-to-end RPO deals were signed, some early partnerships haven’t fared well, according to industry sources.
In a March 2008 report on the U.S. RPO business from the Aberdeen Group, an industry market researcher, 39 percent of 200 companies surveyed said they had switched RPO vendors in the past five years. When asked why, companies said vendors didn’t meet their expectations for services, number of job candidates sourced or cost savings.
Early stumbles could be one reason the RPO market is still relatively small. IDC pegs spending by U.S. companies on end-to-end RPO contracts—deals that encompass all of a company’s recruiting functions—at $480.4 million in 2008, a number the industry market researcher expects to climb to about $1.6 billion by 2012.
"It's like we were dating and now were engaged, and after a while we'll be married. We're where I expected us to be in the transition, and I'm looking forward to the results."
—Deb Exo, head of Herman Miller's talent acquisition and management, on the company's relationship with RPO provider Spherion
RPO vendor executives such as Spherion’s Rebecca Callahan admit some early contracts didn’t always work out for a variety of reasons. In some cases, HR executives didn’t do a good job of defending to their upper management the hiccups that can come during the transition to RPO, she says.
Maintaining a company’s corporate culture is a big part of why contracts succeed, says Callahan, senior vice president of Spherion’s RPO division. "In a lot of senior executives’ minds, that could potentially make or break their decision to outsource," she says.
Fighting the War for Talent
Herman Miller earned a reputation as a trendsetter by reshaping the workplace through often avant-garde office furnishings, such as the iconic midcentury modern Eames chair, cubicle workspaces and, more recently, the ergonomic Aeron office desk chair.
About a year ago, the company’s executive management realized that to remain on the forefront of design and workplace trends, they needed to change how and where they recruited employees.
In earlier days, Herman Miller was a big draw for job candidates throughout western Michigan, where Zeeland is located. But the current war for talent has made finding candidates difficult, even in its own back yard, says Exo, the company’s head of talent management.
In addition, Herman Miller has a bubble of near-retirement-age workers that it wants to eventually replace with a more diverse employee base that could, among other things, help the company expand its growing international business, which currently accounts for 20 percent of revenue.
The company’s five-person recruiting staff and previous contract recruiters didn’t have the capacity or know-how to make such wholesale shifts. "We knew we needed to do something different," Exo says.
Enter Spherion. The RPO vendor took over internal recruiting for all professional employees up to the director level, started a diversity program and is using its existing connections in a variety of industries to begin generating leads on passive job candidates.
With Spherion taking over work previously done in-house, Herman Miller’s people services department cut two recruiting jobs and reassigned a third recruiter to a three-person team—including Exo and a project manager—that manages the Spherion contract and focuses on strategic planning.
Herman Miller’s RPO business is still too small to merit a full-time Spherion manager located at the company, but three Spherion recruiters are dedicated to the account.
In addition to the initial training they received, another way Spherion recruiters stay grounded in Herman Miller culture is by working hand in hand with hiring managers. Spherion recruiters and Herman Miller HR generalists embedded in its various divisions work with hiring managers from the day a requisition for a new hire goes out, Exo says. To make sure things stay on track, the companies also conduct weekly, quarterly and—eventually—annual reviews, by phone and in person.
Because companies’ recruiting needs evolve, Spherion continually polls hiring managers, executives and job candidates at Herman Miller and two dozen other RPO clients to find out how its recruiters did and make adjustments accordingly, says Callahan, the Spherion senior vice president.
Neither partner would discuss financial details of the contract, but Exo confirmed it covers an undisclosed minimum number of new hires a year. Industry analysts peg the value of RPO contracts to the vendor at $2,000 to $5,000 per person hired, depending on variables such as job title and total number of hires.
One thing outsourcing recruiting won’t do is trim spending. If anything, costs could go up because of the additional work Herman Miller is asking Spherion to do, Exo says. "It was about gaining a greater capacity, enhanced technology and new ways of accessing talent sources. It never was intended to be a cost savings measure," she says.
Exo expects Spherion’s RPO implementation to be "a humming machine" by summer’s end. It has to be. She’s counting on Spherion to start recruiting for production workers in the fall, and international personnel may follow. "Right now this isn’t covering our international [operations], but we’re building it with that in mind," she says.
Starting on a Project Basis
A corporate culture mismatch can undo an RPO relationship. That’s what happened when AstraZeneca, the $29.6 billion global pharmaceutical manufacturer, brought in an outsourcer in 2000 to ramp up its sales force in advance of introducing a new drug.
It was a bad fit. The vendor didn’t have enough candidates or the resources to get them, leaving the company scrambling to meet deadlines, according to Bill Warner, AstraZeneca’s U.S. sales recruitment manager.
"We've seen that once you get over
the hump, the value propositions prevail and organizations get
what they wanted.
—Rebecca Callahan, senior vice president, RPO division, Spherion
The drug maker learned from those mistakes. In 2006, before launching another major sales force hiring spree, management made sure it knew what was required and did thorough due diligence on potential partners.
They ultimately chose the RightThing, a leading RPO specialist. Both companies shared a corporate culture that emphasized collaboration, Warner says. At the onset of the contract, AstraZeneca sent close to 20 individuals to the RightThing’s headquarters for two days of intense training.
During the initial months of the contract, the partners held two weekly phone briefings, with anywhere from three to more than a dozen people listening in "so we stayed on the same page, knew where we stood on hiring and what the gaps were," Warner says.
Once systems were in place, the RightThing hired 800 new sales reps for AstraZeneca in five months. "We met all our deadlines with quality hires," Warner says. To fulfill such an ambitious quota, the RightThing screened candidates from 7 a.m. to 11 p.m., seven days a week, something an in-house recruiting team would never have been able to accomplish, he says.
The drug maker was so pleased with the outcome, it retained the RightThing to assume day-to-day hiring for its entire sales organization, as well as sourcing for non-sales positions at the director level and below. "It’s been a very positive relationship, and continues to be," Warner says.
Sometimes the best way to share corporate culture with an RPO vendor is to share people and space.
In late 2006, CA (formerly Computer Associates) signed Northgate/ Arinso and CDI Talent Management to a combination HR business process outsourcing and RPO deal to a transform its entire HR operation, part of a corporate initiative to reinvigorate its core computer business.
As part of the overhaul, the $3.9 billion company wanted to change HR processes, introduce employee self-service and bring HR to a more strategic level within its business units, according to Northgate/Arinso and CDI officials.
To maintain some sense of corporate culture during all those changes, CDI, a recruiting and RPO specialist that acted as Northgate’s subcontractor on the deal, hired five of CA’s original internal recruiting team of 18, says Chris Kilpatrick, a CDI vice president. "That’s something we like to do because they have that institutional knowledge, and they were high performers before the outsourcing," he says.
During 2007, CDI’s recruiting staff hired 2,200 IT professionals and other white-collar employees for CA throughout North America, a feat Kilpatrick calls "a baptism by fire."
Today, CDI has approximately two dozen recruiters dedicated to the CA account, including a dozen located at the company’s headquarters in Islandia, New York, on Long Island. The rest are spread out in CA offices throughout the U.S., and a few telecommute.
In the final analysis, for RPO to be successful, companies have to know what they want it to do for them, have functioning recruiting processes in place—or a good idea of how they want to change them—and thoroughly investigate potential partners, according to company representatives and analysts.
If they do their homework, they’ll get past the initial hurdles. "We’ve seen that once you get over the hump, the value propositions prevail and organizations get what they wanted," says Callahan, the Spherion RPO division senior vice president. "They don’t give up culture, they have a strong brand, they get best practices, and they decrease their time-to-fill and increase hiring manager satisfaction."
At Herman Miller, the RPO experience so far circles back to one of the company’s statement of values—relationships. "This exercise of going to the outside has forced us to use them to help us be better," says Exo, the company’s talent acquisition and management director. "You go into it with certain expectations, and as you go on the journey you learn new things. So we flex with them, and they flex with us."
Workforce Management, July 14, 2008, p. 39-47 -- Subscribe Now!