RPO Contract Checklist

Once you’ve made the strategic decision to outsource your core recruitment process to an RPO agency, you should take the following two significant steps:

  • Run a well-governed, strategic sourcing process to identify, negotiate and define an RPO contract with the right supplier/partner for your business
  • Ensure that the post-contracting performance delivers/exceeds the expectations of the business

According to procurement professional Mike Lander, you need a consistent, repeatable method of validating that both parties are delivering on their commitments. The following is a starting point for the kinds of reviews required throughout the life of the contract:

  • KPI and SLA dashboard design and reporting
  • Process compliance checks, i.e., is the RPO doing what it said it would do in the way it’s described in the MSA/SoW
  • Continuous process improvement reviews
  • Quarterly Business Reviews (QBRs), more on these below
  • Candidate experience reporting and deep dives
  • Data management, compliance reporting and deep dives
  • Change order reviews
  • “Follow the Job/Candidate audits”, i.e., follow the process end-to-end from acquisition through candidate screening and offer
  • SoW in/out of scope compliance
  • Customer and Supplier obligations review
  • Invoice/billing compliance audit, including sampling
  • Candidate DE&I reviews

Lander, CEO of Piscari, helps people negotiate better commercial deals with their clients, having been a procurement director and negotiated hundreds of vendor contracts with a total value of over £450m

“One thing I always recommend, as soon as the contract starts, is scheduling the first Quarterly Business Review (QBR). It’s one of the key components of managing a recruitment process outsourcing service contract effectively, and it gets everyone focused,” says Lander. A QBR is an opportunity to assess performance against expectations, determine whether any operational changes are necessary and decide how the next quarter should look. A QBR should involve senior representatives from both the customer and RPO organisations and should include, as a minimum, the following:

1. A review of the last quarter’s supplier performance against the agreed objectives, KPIs and SLAs

- A review of what’s working well and not so well (continuous improvement)

- A review of any outstanding material issues that need addressing

2. A discussion of the customer’s current business situation and future needs

3. Targets and plans for the next quarter

- Confirmation of the next QBR date and attendees

A positive sign in an RPO provider is their ability to run high-quality QBRs and successfully manage the complex stakeholder environment. This complex environment includes different levels of managers/directors with budgets, who can occasionaly go outside the RPO agreement and use recruitment agencies. The RPO provider has to find a way to satisfy the needs of these internal business partners and deliver what they need in a high-quality and cost-efficient manner. These are the foundations for a long-term, solid relationship.

Lander recommends sitting with your lead RPO counterpart and confirming that the SLAs (service-level agreements) are consistently understood and delivered. “We have to check in to validate the assumptions we’ve made at the contracting stage are still correct,” says Lander “for example, what if the hiring volume and mix in the contract varied dramatically from what is being delivered because of the market conditions and business needs having changed.”

Olly Harris, the Global Managing Director of Page Outsourcing, has reservations about what he deems to be an “up-tightness” about SLAs and certain contractual clauses. “The worst thing is, we have to price it into the deal, which means a higher overall price. So, when I sign off a deal on my side, I sign off what I expect to make with no SLA failures. But then, if I sign off on an Armageddon scenario, there are too many fees at risk.” 

Lander agrees, “I’ve seen contracts with 20+ SLAs. That's ludicrous; it's never going to get managed. I'd expect five to seven core SLAs and a broadly equivalent number of KPIs.”

Lander leaves us with what he believes are some of the signs of a successful RPO arrangement. “They managed the stakeholder environment well, adopted strong governance and delivered against all expectations/targets so that the client stakeholders aren’t plugging leaks by spending additional money with recruitment agencies."

By evaluating these factors, you can get a good idea of whether or not the RPO contract is working for your organisation.

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