Post-Recession, Will HR Still Embrace the Lean, Agile Approach?

Article main image
Jun 17, 2014

Of all the professions put through the wringer of the Great Recession, few have emerged as different as human resources.

While HR fared well on average — the median HR staff remained steady from 2009-2012, according to the Society for Human Resource Management — some organizations witnessed the total decimation of their HR departments, and some companies even began to view HR as unnecessary in a leaner, more agile business environment that pushes everyone must do more with less.

At the same time, the challenges the typical HR department juggles, from payroll to compliance to talent acquisition, grow increasingly complex as Obamacare and other rules and regulations bear down on organizations of all sizes.

Why more organizations are rethinking recruiting

Businesses take on these new challenges in several ways, adding to the workload of their existing employees, automating tasks, or outsourcing the work.

But of all the responsibilities that fall under HR, the one most transformed by the recession is recruiting. It’s typically one of HR’s most time-consuming and expensive tasks, and the recession only made this more apparent, driving more organizations to seek new solutions that continue to change the face of HR.

While HR staffs held relatively steady through the recession, those in recruiting didn’t fare as well.

One Fortune 500 company laid off all 100 of its in-house recruiters in one fell swoop in order to address new pressures brought on during the financial crisis. While that’s an extreme example, it didn’t come as a major shock that companies might take these extreme measures given the new imperative to reach ever-higher goals for efficiency, agility, and cost savings.

Only paying for what is needed

Holding on to a fixed staff of 100 recruiters didn’t make as much sense when talent needs could change from month to month in an uncertain economy. When the number of hires was down, it would be incredibly inefficient to maintain so many recruiters on staff. When a business needed a surge of talent, however, those 100 might be overstrained completing the task.

This push for efficiency has led many organizations to recruitment process outsourcing (RPO) providers, which can handle everything from nurturing talent to recruiting, vetting, hiring, onboarding, and talent disposition.

Under this more flexible and cost-effective model, companies pay only for what they need, and work closely with the RPO provider to outline those goals and demands in advance. Through RPO, companies can cut their recruitment spend dramatically, spending as little as 60 percent of the cost of working with a recruiting agency for one-off requests, and a fraction of the cost of a full-time recruiting staff.

The company that laid off all its recruiters never hired back a recruiting staff as the economy evened out, instead directing its HR staff to cover strategic tasks like diversity, employee engagement, and benefits issues while its talent needs are handled by an RPO partner that understands and supports its business and can scale as talent needs dictate.

The future of HR

Where does HR go from here?

For many organizations, the best use of an HR budget is managing the challenges that globalization and regulations have presented to payroll and benefits, compliance, and even company culture. Recruiting, on the other hand, will increasingly be left to RPO providers, which can quickly source talent and scale to demand while leaving a lighter footprint than a full-time recruiting staff.

Many business decisions must still pass a litmus test for cost-efficiency before they earn any resources. Recruiting is a variable that has become too expensive to keep in-house, especially when a quality RPO provider can do just as good, if not better, a job for a fraction of the price.

The recession is mostly behind us and as business ramps up again, many HR functions only grow more complex. But the lean and agile approach that helped many weather the recession has left a lasting impact on HR.

More organizations now balance in-house resources with external expertise, with expanded interest in RPO driving the way.