Corporations have turned to recruitment process outsourcing services to streamline internal functions and costs

The Internet’s promise of providing streamlined and cost-effective online business functions is beginning to show up in many employers’ human resources departments, or even replacing them. As the global economic crisis rolls on, multinational corporations are seeking ways to reduce expenses and increase efficiency. Traditional human resources functions, employee recruitment, screening, retention and benefits, are all under scrutiny by cost-conscious managers and boards of directors.

For all companies, it is important to retain top talent, as good people will always have opportunities to move up the ladder with competitors, even in the economic crisis. However, the costs of recruitment and retention can be onerous and usually business managers are not trained or equipped to do a good job of it. But there are alternatives and the Internet is playing a larger role in HR functions.

Managing Director, Asia Pacific James Mendes, for Alexander Mann Solutions (AMS), a recruitment process outsourcing company, which started in Europe in 1996 and is active in 60-plus countries, explained, “In Hong Kong, it is important to coach and guard business leaders, but now companies have to do it with less budget and less people. HR teams are struggling as businesses re-evaluate their functions and costs.”

Mendes said, “Human resources used to be called the ‘personnel department’ and was engaged in transactional services, hiring, payroll and firing. Now HR has a role at the top table, not far below board level. Managers in Hong Kong and across Asia now have to reshape their companies because of legal considerations, new labour laws, government regulations, potential lawsuits and the like, so HR is even more important in an economic downturn to protect the company. When looked at as an investment, the HR function is heavily scrutinised in tough economic times, with every expenditure needing justification to make a substantial business case.”

AMS provides an alternative: Outsource the entire HR function to a company that can utilise technology correctly. Mendes advises companies to buy the services rather than owning them.

AMS forms partnerships with multinational and local companies and takes over securing the best talent through diverse sourcing channels, cutting recruitment costs, removing the administrative burden, mitigating operational risks, and keeping good employees engaged so they perform well.

The AMS team answers the phone with the name of the client company. They perform all the regular HR tasks including the overall employee strategy, both locally and worldwide. AMS also manages contract and contingent workforce management, as well as next-generation leader recruitment. Job seekers never know they are talking to an outside team.

Mendes, referring to the current economic climate, said, “Most organisations have seen a significant downturn in hiring volumes but continue to hire for specialist skill sets and revenue generators. We are helping companies explore lower cost and non-traditional alternatives to employee attraction, employee mobility, contingent workforce management and employee retention, thus allowing them to retain the capability to respond to a future market rebound whilst not being burdened by fixed costs.

“On the whole organisations remain cautious when hiring. We expect this will continue for some time with revenue-generating hires likely to be one of the first areas to pick up.”

Thomson Online Benefits (TOB) began as a benefits broker, providing services such as insurance, administration and harmonisation of benefits. It later moved into building the services companies need to formulate, evaluate and develop reward strategies and flexible benefit packages for employees. The company operates in 20 countries from offices in the UK, Singapore and Hong Kong.

Although the economic crisis has made governments and taxpayers look long and hard at bonuses, benefits and perks, many multinational companies still need to retain their best employees and attract new ones. And they can use the current crisis to attract candidates that otherwise would be out of reach.

Asia Pacific Regional Manager Bryan Lockyer said that bankers may be suffering next year but the financial sector is only one segment of the market. “Investment banks and hedge funds have a high profile, or had, but they do not have a huge number of employees,” he said. “Retail banks have much larger workforces, and they are not laying off many tellers yet.”

“We have seen the interest in benefits increasing since November 2008. I believe this is due to the tight economic times and the fact that employers are looking to provide more value to employees from benefits, as opposed to the large cash bonus focus that is so prevalent in Hong Kong.

There is a general shortage of talent in IT, audit, accounting, and general commercial services, so staff reward systems are still very important to retain good staff and attract new people. “China still has a need for trained managers as well,” adds Lockyer.

The TOB “intelligent rewards” concept is clear. For every dollar spent on benefits, the company must be sure the employees perceive the benefit is worth that dollar. In addition, the Thomson plan allows employees to manage their benefits to suit their own circumstances, and do it online through the Internet. Health care, dental care, insurance, memberships in clubs, buying and selling annual leave, and lifestyle benefits such as coupons, shopping, or tour and hotel package rewards can all be managed and changed by the employee. The company profits by buying these benefits in bulk, and the employee perceives the full benefit’s value.

“By working with us, companies can calculate the true cost of each employee,” said Lockyer. “We put employees reports in a quick ‘dashboard’ form to save directors’ time, and we can help when employees leave, working out final pay and bonuses, removing them from the insurance plan and send reports about staff turnover to management.”

SHL is a company that started 25 years ago designing and packaging objective assessment tools to help companies choose the right candidates, measure the performance of employees in the workplace and figure out the level of employees’ engagement with the company. Now many of the 250 scientific objective assessment tools have migrated to the Internet, making the entire hiring process more streamlined, efficient and successful. The company now operates in 40 countries and in 30 languages, with over 5,500 clients worldwide.

Many companies do not possess the expertise to conduct these psychological and skills tests that measure ability, personality, competencies, motivation, performance and engagement, so SHL Group performs these tasks for them. In Hong Kong, SHL serves the MTR Corporation, and one of its biggest clients is Coca-Cola worldwide, who has turned to the assessment method to ensure hiring the right marketing people.

John Bateson, chief executive of SHL Group, said, “The objective assessment process provided by psychometrics allows managers to re-assess skills needed for specific roles and test candidates for these skills. Understanding individual employee capability is essential to identifying where current skill sets lie and whether there is in-house talent readily available to plug any gaps that may already exist or arise in the rapidly changing business landscape."         

By helping companies predict the probable success of individuals, whether candidates or existing employees, companies can make better business decisions in hiring, promotions and succession planning to align with business priorities and build brand equity through employee success and loyalty.

Helen Fung, senior consultant in the Hong Kong SHL office, says that SHL’s advantage over other assessment companies is science. The company has over 250 psychologists available for research and development of the tools and tests. “Just looking at a resume and an academic record is not all that helpful. Key abilities, such as communications and numeracy, are easier to test for than psychological metrics to measure personalities and motivation. We use Occupational Personnel Questions (OPQ) that not only measure numerical and verbal skills, but also abstract reasoning. The OPQ are now online which is especially good for new graduates. We also use business simulations to test for individual motivation, lateral and creative thinking, and engagement. Many people want jobs, but we can help companies find the right people for those jobs, from new graduates to the CEO level.”

SHL has also developed the SHLDirect.com Web site that allows candidates to read up on useful hints and tips on recruitment processes and view a range of sample question for ability and personality assessments. Young job seekers can also take sample tests and receive instant feedback.

Fung said, “Think about the millions of college graduates in China. There is no way to perform suitable human assessments of that number of candidates, so companies must use our online tools to save time and money and get quality candidates.”