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Insights about the Extended Workforce

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Direct sourcing: Steps to launching an effective program

Aug 19, 2019

Alex MacKenzie
Alex MacKenzie

It’s a new era of talent acquisition. As candidates continue to drive the current workforce environment, organizations are turning to a more agile approach when competing to engage contingent workers. And they have unprecedented access to do so, with a current talent pool of 42 million independent workers in the U.S. alone.

As the gig economy continues to grow, it's critical that recruitment professionals are aware of the proper sourcing and engagement strategies for this workforce. As such, many employers are moving away from traditional hiring models and turning to a direct sourcing approach in combination with, or instead of, third party staffing vendors for the acquisition of skilled workers.

Direct sourcing occurs when an organization identifies candidates for a position using their own resources, choosing to perform recruiting and onboarding functions internally.

Is direct sourcing right for you? Below is an actionable approach to identifying whether or not direct sourcing is right for your organization and how to start designing a program that works for you.

Is your organization prepared for direct sourcing?

Depending on your organization’s needs and current hiring structures, it’s important to recognize that direct sourcing isn’t always the best option in every situation. First, it's critical to assess whether your organization is prepared for a direct sourcing program. Here’s how you can identify whether you're ready:

•  Your organization already has forecasting and workforce planning in place.
•  You’re planning to recruit large numbers of contingent workers with similar skill sets.
•  You require cost-effective supplier efficiency.
•  You’re looking to control and capitalize on your employer brand.
•  You suspect you’re spending too much on recruitment costs and require visibility into where dollars are being spent.

How can your organization benefit from direct sourcing?

Direct sourcing can provide many cost savings benefits, but the opposite can also be true if employers don't have the proper resources in place or a formal program to manage the process.

However, organizations that get it right will experience:

•  Control over employer branding
•  Reduced costs and time to hire
•  Decrease in risk
•  Increased efficiency
•  Higher retention rates and worker loyalty
•  Increased ability to engage niche talent
•  Flexibility to hire on a project-by-project basis

Once you’re ready to move forward with direct sourcing, here’s how to launch an effective program:

Step 1.
Set organizational goals (and resourcing)
Great programs start with a set of clear and achievable goals, supported by a resourcing plan that provides all of the people and technology required to achieve success. When setting program goals, an organization should pick two or three of the ones below as the principal focus of their program.  Which goals are most important to you?

•  Better access to talent
•  Save money
•  Increase transparency & control
•  Improve contractor experience
•  Independence from vendors
•  Maintain control of employer branding
•  Manage risk 

Step 2.
Experience Design: The source of participation
Building a community of engaged contractors and future employees is not easy – it requires very intentional thinking from the talent’s perspective about the experience and benefits of participation. Poor experience design and inconsistent participation incentives will mean your program is unlikely to resonate with contractors, and those that do join, will tend to fall off quickly.

Employers can off-set this by leveraging a process based on experience design. This includes analyzing your organization’s current needs and environment, followed by development of participant personas and crafting relevant value propositions at each phase of the relationship lifecycle. 

Step 3.
Fundamental Program architecture
In tandem with the experience design process, every program needs to define its fundamental structure and policy decisions that will govern day to day operations. We define this as the people, process, policy and technology elements of your direct sourcing program.  Identifying and addressing these components is fundamental to its success, however; many organizations approach these decisions in an ad-hoc way, as opposed to part of a larger design and outcome driven initiative.

Step 4
A successful program will take into consideration these five major decisions:
1.  Payroll management model
2. Sourcing format
3. Rate management card
4. Onboarding requirements
5. Governance/KPIs

Once your organization has completed the necessary workforce planning, you may have decided direct sourcing isn’t the best strategy for you right now. However, insights gleaned from your research can still help improve your current program, so it’s important to reconnect with your MSP to review their objectives and metrics of success and how they align with your organization’s current and future goals.

If your organization is interested in learning more about the benefits of direct sourcing, download our free whitepaper: How to Optimize Costs with Directly Sourced Contractors:

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