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What is Direct Sourcing

Oct 01, 2020

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Direct sourcing happens when an organizations recruits it own workforce directly rather than engaging the services of a third party vendor like a Managed Services Provider (MSP) or a staffing agency. Direct sourcing allows the organization to establish its own talent pool and control its employer brand.

It's a wild work world in an uncertain labor market, yet hiring it happening.

In fact, a new study from StaffingHub finds that 71 per cent of staffing firms expect the industry to come back stronger than before, which intimates employers are putting strategies in place now in order to capitalize on immediate, current or future needs - and many employers are planning on moving away from traditional employment models.

As employers attempt to drive business forward by leveraging more flexible workforce models, it's critical that recruitment professionals are aware of the sourcing strategies used for these types of non-traditional worker engagements.

Moving away from the traditional workforce model

A popular sourcing strategy for many organizations is launching a Direct Sourcing program in combination with, or instead of, engaging third party staffing vendors for the acquisition of skilled workers and contingent workers.

If your organization is exploring ways in which to augment your current workforce with a more nimble approach to employment, the information below will help your organization make an informed decision as to whether a Direct Sourcing Program is right for you - and how you can get started.

What is Direct Sourcing or Direct Sourcing Recruitment?

Direct sourcing occurs when an organization identifies candidates for a position using their own resources, choosing to perform recruiting and onboarding functions internally. During the talent acquisition process, Direct Sourcing is a recruitment strategy that ensures direct communication with candidates, allowing recruiters to build relationships with top talent over time.

A Direct Sourcing strategy, however, isn't always the best approach for every business model when sourcing talent.

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?

A well-designed Direct Sourcing program can provide many cost savings benefits, but the opposite can also prove true if employers don't have the proper resources in place or a formal program to manage the process. Below are the main benefits of a program:

• 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:

Before it's time to source and screen candidates, it's important to take into consideration what steps are involved in launching an effective Direct Sourcing program.

Step 1.

Set organizational goals (and resourcing)

Great contingent workforce or blended workforce 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 within your Direct Sourcing strategy, 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 brand

• Manage risk 

Step 2.

Experience Design: The source of participation

Building a community of engaged contractors and future employees during talent acquisition isn't 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 taken the time to complete the necessary workforce planning, you may have decided direct sourcing isn’t the best strategy for this time. 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 candidates, download our free whitepaper: How to Optimize Costs with Directly Sourced Contractors:

DOWNLOAD

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