Novotus 1

On February 9, 2009, in All, Industry Analysis, Job Boards, John Sumser, JohnSumser.com, by John Sumser

Novotus I

(Feb 09 2009) Mike Mayeux (MYU), CEO of Novotus may be best known for his magic feats of barbeque. In Texas, they do things big and Mayeux‘ portable kitchen is pure lone star. Happy to throw a party and happy to invite you, Mike Mayeux is the quintessential work hard-play hard entrepreneur.

At the most recent meeting of the Recruitment Process Outsourcing Association (RPOA), there were over three hundred people. Mayeux, who helped found the organization, is astonished by the growth in the industry. "We had high hopes for the association in it’s earliest days", he says, "but, I’m blown away by the growth. Something big is happening in Recruiting." (RPOA offers a diagram that tries to explain the various services in the Talent Acquisition market)

These days, major players (Heidrick and StrugglesHSII– and Korn-FerryKFY-)are rapidly turning their core businesses away from the executive search business. These icons of third party recruiting have held a tight lock on the high end of the market, commanding huge retainers and high commissions. Anymore, cost conscious HR Exectives are succeeding as they try to clamp down on the leaks in their budgets. Big time executive search and high-fee contingency placement firms are a logical place to cut costs. Reading the handwriting on the wall, big firms are moving into "development, leadership and retention".

The RPO Industry is nearly a decade old. As the great web tools started to change the face of Recruiting, the old information silos began to crumble. "RPO providers claim that economies of scale enable them to offer recruitment processes at lower cost while economies of scope allow them to operate as high-quality, specialists. Economies of scale and scope are said to arise from a larger staff of recruiters, databases of candidate resumes, and investment in recruitment tools and networks." In other words, the best marketing that RPOs have been able to muster is that they are bigger and cheaper.

Although the industry has grown and the underlying trends are sound, there are few readily available success stories. Moving your Recruiting Operation into the arms of an outsourcer is something that takes patience and resilience. The skills required to manage an outsourced process are not the same as those required to politic an in-house bureaucracy. Most RPOs require a contract for large chunks (if not all) of a company’s Recruiting processes. The learning curve (a nice way of describing trial by fire) is steep.

Mayeux has been tinkering with his model since he left Hire.com (a pioneering Recruiting software system) seven years ago. He’s watched the big players join the industry. He’s helped other entrepreneurs bootstrap their operations. (John Younger of Accolo was the other CEO who helped start the RPOA). Tinkering means that he learned a lot of lessons on his way to building the company.

He’s reached some interesting conclusions:

  1. The real differentiator is effectiveness not efficiency. RPOs will ultimately succeed because they are better and cheaper not bigger and cheaper.
  2. The biggest difference between internal and external recruiters is that internal recruiters don’t get let off the hook. While third party recruiters (TPRs) only complete a percentage of their assignments, internal players have to do it all.
  3. Simply completing all of your assignments produces a cost benefit. 100% accountability produces value and revenue.
  4. You can not build a sustainable RPO by cutting HR out of the equation. While many RPOs and TPRs go directly to the hiring manager, HR is the governing engine in the placement business.
  5. You don’t get married on the first date. Relationships that begin with 100% commitment are doomed to failure.

Tomorrow: How Mayeux converts his learnings into a revolution.


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