Recruitment can make or break a business. A strong talent acquisition function will get you top talent when you need it and ensure sustainable success for your business.
Choosing a suitable recruitment model is crucial to the ongoing and long-term success of your business. In this article, we cover existing recruitment models and provide answers that will help you determine which one works better for your business.
What Is a Recruitment Model?
The recruitment model is a set of methods and systems to obtain hire. There are three “pure” recruitment models, including In-house, RPO, and Embedded. However, many companies, especially when it comes to tech giants, opt-in for the hybrid recruitment model, which is the mix of the mentioned “pure” models.
For instance, the hybrid model can include:
- In-house and RPO recruiters
- In-house and Embedded recruiters.
- RPO and Embedded recruiters.
- All three models at once.
We will explore the main recruitment models from different angles:
- How they work
- For which businesses are they suitable
- What are the costs
- What are the pros and cons of each model
After reading the article, you will get an idea of where to get started in choosing the right recruitment model to scale your team.
Diving into Recruitment Models: The Main Types
In-house recruitment model
The first model is in-house recruitment. This entails building an internal team that is responsible for talent acquisition. This team can consist of permanent, fixed-term employees and/or contractors on the payroll.
These recruiters work exclusively for your organization and focus on bringing the right people on board. The recruiters are part of your company, which means they can be better equipped to find the right fit for your unique company culture and hiring needs.
RPO model
In the RPO (Recruitment Process Outsourcing) model, you rely on an external organization to cover some or all hiring processes. For example, external recruiters may only work on sourcing and screening candidates. Or they can also take responsibility for workforce planning, negotiating job offers, and onboarding your new employees.
These recruiters provided by the external entity may work solely with your organization or multiple clients, depending on the agreement.
Embedded recruitment model
Embedded recruitment means embedding a recruiter and a sourcer into a company to reinforce or act as the client’s talent acquisition team for an agreed-upon amount of time.
Combining the expertise of an RPO and the rapport of an internal HR department, embedded recruiters cover the before and after of a recruitment strategy that makes it foolproof, from attracting the right talent with a well-positioned employer brand to engaging them throughout the candidate experience journey.
What to Consider When Choosing the Recruitment Model
Many things should be considered when deciding on a recruitment model, such as the scope of responsibility, cost-saving, scalability, expertise, and degree of control. Check out some of the key differences between the different models under each of these scopes.
Scope of responsibilities
The great thing about having an in-house human resource team or embedded team is that you get their undivided attention. On the other hand, RPO agencies can juggle many hats beyond recruiting.
In-house: Your in-house team has the edge over knowing your company culture, industry fit, and specific hiring needs. They have multiple areas of responsibility, including workforce planning and development, employee and labor relations, risk management, employee engagement programs, and recruitment, among others.
RPO: External service providers can offer less flexibility when managing responsibilities. As some recruiters or sources could be managing multiple clients. However, they can guide effective workforce planning, employer branding, training and development, building long-term talent pools, and more because of their experience.
Embedded model: Like internal hiring, it also meets the needs of a single company. Thus allowing for support in multiple areas with the added experience that the RPO model provides.
Cost-savings
In-house: Hiring new staff members doesn’t come cheap. Companies would face financial challenges with fixed HR expenses and even intangible costs like time to hire a full-time team. These are all on top of the compensation, benefits, training, and other overhead costs.
RPO: Working with an RPO can cut your costs significantly as opposed to hiring in-house HR employees. Finally, you wouldn’t have to bother paying a monthly fee on LinkedIn and other recruitment platforms and tools.
Embedded: One of the most prominent advantages of opting for an Embedded Talent Team is their pricing. Unlike hiring internal recruiters, you don’t have to pay salary, benefits, and equity – saving you a significant amount of time, and potential risk, over the long term. The fixed-cost pricing also results in the consolidation of many of your recruitment costs. The cost of many tools, such as access to different job boards and talent pools, are included in the price – helping you consolidate all the expenses to hit your hiring goals.
Scalability
The RPO and Embedded model is designed to conveniently scale recruitment processes and resources up or down at a cost that won’t hurt your business.
In-house: Hiring or building your own company’s in-house recruiters could come in handy when business is booming. But what happens when you realize you need to scale down after a few months? This could only leave your company with a financial dent and a surplus of resources. Additionally, scaling your business up at short notice can be a challenge for an in-house recruitment team.
RPO: Hiring the expert services of an RPO can help expand the size of your team at a comfortable rate. Working with an external service provider allows you to focus on more important business while ramping up your team.
Embedded: Working with an embedded team allows scaling your business up at short notice while maintaining the right company culture that can be lost with RPOs.
Degree of control
Control is crucial for businesses. Outsourcing will not mean relinquishing control over your recruitment process. You will, however, have more limited power over a third-party recruitment team compared to an in-house department.
In-house: You get more control over full-time employees because their sole focus is your business. You can quickly delegate tasks and easily set priorities and workplace practices they can follow.
RPO: Working with an RPO means you may be fighting for your time with other clients. When you outsource too many responsibilities outside, you might work with maintenance people who only keep the light on as long as they’re paid.
Embedded: Similar to In-house, you get full control over the team because their sole focus is your business. They also work extremely efficiently and require minimal supervision.
Expertise
In-house: Surely, you wouldn’t hire an in-house recruitment team that isn’t an expert in their field. However, some may lack expertise in certain areas, such as managing all elements of the recruitment process, which is vital to your business’s competitive edge.
RPO: A recruitment process outsourcing agency utilizes technologies that provide optimal audit trails, comprehensive management information, better analysis, forecasting, and reporting for strategic headhunting.
Embedded: Have broader knowledge and spend more time in the market to find the right talents for businesses. They can also leverage experience from different companies to improve and modify the process. An embedded recruiter is also supported by their parent company.
Client relationship
In-house: The recruiter will often report directly to a recruitment function. They’ll have regular updates and activity check-ins with a Talent Director/Manager or an HR/People Lead. Despite having the freedom of fighting for a candidate or recommending that specific hires are made, this ultimately is a choice made by the heads of the division or hiring managers who have been involved in the process.
RPO: Recruiters usually work with multiple clients at the same time; therefore, it’s much harder for them to engage in a more spontaneous communication with stakeholders at your company. They also don’t actively participate in your company’s life and don’t join your communication channels like Slack, which doesn’t give them the opportunity to get to know your team and the culture of your organization.
Embedded: There is a higher level of trust, so there is a bigger influence on certain decisions. This is part of the overall service offered as ‘specialists’ in the field. Embedded recruiters deal with only one client allowing them to nature a strong relationship and participate in all the company activities.
Employer branding
In-house: When internal, a recruiter handles marketing their company’s employer brand to attract candidates. They are an ‘ambassador’ for the company and have access to internal systems and a company email address. They will likely get access to other branding-related tools such as Glassdoor or LinkedIn Company Page.
RPO: Usually, reaching out on behalf of the client and using their company branding does reduce the quality of the candidate experience. Very often, they don’t even mention the company that they’re representing to avoid candidates from applying directly.
Embedded: Despite working in an embedded model, the responsibility of representing the client is the same as an internal employee. So this isn’t a difference, but something to make you aware of! There is an expectation that they become part of this company for the duration of your contract. In other words, to a candidate, it should appear as if the embedded recruiter is working directly for the client.
Pros and Cons of Different Recruitment Models
In-house
Pros:
- Specialists know the culture and people well
- Recruiters are experienced in internal processes
- Specialists are always there when needed
Cons:
- Slow to adapt
- Costs can spiral/limit forecasting ability
- Not flexible
- Can not be turned on and off
RPO
Pros:
- Specialists/experts
- Fixed cost (easy to estimate)
- Has vast experience in different processes and methodologies
- Can be turned on and off
Cons:
- Settle in time
- Needs buy-in from the hiring manager
- Limited knowledge of company culture
Embedded recruitment
Pros:
- Knows the company culture
- Specialists/experts
- Fixed cost
- Has vast experience in different processes and methodologies
- Can be turned on and off
- Scalability is high
- Always there when needed
Cons
- It takes 2 weeks to settle in
- Needs buy-in from a hiring manager.
Hybrid Recruitment Model: Eliminating Cons of the Standalone Models
Many companies, especially fast-growing ones, embrace several recruitment models at once. One of the scenarios is when a company already has hiring managers and recruiters, but they can’t deliver on their hiring plans. In this case, the company hires RPO agency or/and embedded recruiters.
Another option is when the company doesn’t have a recruitment team. Cooperating with embedded recruiters allows one to close gaps in hires and build up hiring processes with the help of embedded recruiters.
When it comes to cost optimization, the hybrid model may work as well. The company can compare the efficiency of different models and choose the best options for a particular growth stage.
How to Make the Right Decision: Answer these 3 Questions
1. Does the process directly relate to your business’s core value proposition?
Focusing on your core business activities and outsourcing the rest has many benefits, including:
- It helps you create a business culture where everyone is focused on achieving the same goals.
- It reduces the amount you spend on business functions that don’t directly contribute to revenue growth.
- It’s a cost-effective way to improve your team’s efficiency.
2. Do you have the time to recruit, train and manage additional employees?
Hiring and managing in-house employees requires a significant time investment. Before you hire, consider whether your leadership team has the time to effectively manage additional employees and if it’s worth their time to do so.
Here are some signs that your business doesn’t have the capacity for additional employees outside of product/sales roles:
- You don’t have a manager who has the knowledge and/or time to effectively guide employees on projects that are outside of your core business.
- Your company already struggles to keep up with your existing HR needs.
- It’s challenging for you to find affordable talent to serve in non-core areas of your business.
One of the biggest benefits of hiring a professional services firm is that they’ll take full responsibility for finding, training, and managing the people working on your account.
3. What are the complete costs of hiring in-house vs. outsourcing?
When comparing the cost of outsourcing vs. hiring in-house, hourly wages are often deceptive because they’re only one piece of the total costs. You need to consider additional expenses, including:
- Benefits
- Perks such as bonuses
- Taxes
- Materials (computer, desk, software, etc.)
- Management time
- Training
- Recruiting
Answering these three questions will help you answer which recruitment functions you should outsource and which you should keep in-house.
Still unsure about which recruitment model to prefer? Ask us, and we’ll dive into your particular situation and help you get a clear vision of how to better deliver on your hiring needs.
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