“Direct sourcing” seems to be the rage du jour, with the advent of new talent pool management tools and maturing talent sourcing strategies that enable contingent workforce program managers to create long-term relationships with “known good” talent.
Of course, direct sourcing has been around for quite some time, when EDS and other firms sourced their CW talent directly for projects on their own websites back in the 1980s and CW program managers kept tabs on vetted CW talent in a simple manila folder system. But those systems were slow and onerous. Another barrier that slowed direct sourcing activity was unnecessarily stringent risk mitigation strategies that barred organizations from maintaining long-term relationships with vetted CW talent.
Today, buyers are formulating and executing strategies to leverage great talent in their midst by developing direct relationships with CW talent that have proven their value in past engagements. Some of these direct-sourcing strategies also reach into “silver medalists ” populations that flow through the firm’s full-time hiring process. Original, significant talent sourcing investments, whether that be for perm or CW engagements, create a compelling pool of energized talent interested in working for one’s organization.
Be that as it may, some mature CW programs have big plans for direct sourcing with a goal of enhancing the CW talent engaged and creating some savings in the sourcing element of engaging CW talent. But what does this mean for a program’s relationships with its current staffing partners? Is this type of sourcing strategy incompatible with them?
One channel of many. Direct sourcing activity in a typical CW program will be opportunistic over the next couple of years, amounting to a small percentage of organizations’ staffing spend volume. Programs have multiple policies, regulations, processes and systems to sort through before a direct sourcing strategy becomes a significant channel of the CW spend volume of a firm. But even then, such programs would not displace productive staffing providers.
Consider referral programs in the full-time hiring process, which offer employees significant fees for successful referral hires. These programs have been around forever and they have not consumed the majority of the recruiting channel for the full-time hiring process. Agency hiring services and recruitment process outsourcing solutions seem to compete very well with internal, direct recruiting of full-time hires. Likewise, effective, CW direct sourcing strategies will not put staffing partners out of business anytime soon, if ever — but they will usher in some changes for which CW program managers need to plan.
Then there are CW-to-perm conversion policies. Most firms leverage this to a limited extent, while others convert a significant portion of their CW talent to full-time positions. Similar to a direct sourcing strategy, a conversion strategy should incorporate the interest of one’s staffing provider with a conversion fee policy that protects the partners value proposition/investment by fully, reimbursing sourcing costs incurred. Maintaining a realistic value proposition for relationships with productive staffing partners is the key change management action when altering elements of one’s sourcing model framework.
Managing change. In a mature, well-run CW program, managing change in the staffing partner portfolio should be a natural occurrence. Every year or two, the portfolio should be “pruned,” with low-performing partners replaced by new partners brought in to reinvigorate performance. Each slot in a CW program’s staffing partner portfolio should represent a value proposition for a provider, that if executed well, should provide a reasonable return for their investment and contribution efforts to the CW program.
If a reasonable return is not available, then the balance between cost and quality needs to be addressed. One key element of that balance is having the correct number of partners in the portfolio — not too many and not few — so participating staffing partners can maximize their return for their quality service and support.
Ongoing calibration. Third, with proper staffing partner portfolio management in mind, executing a direct-sourcing strategy can be viewed as simply adding a new, competitive staffing channel. Depending on one’s situation, as the direct sourcing strategy consumes a percentage of the staffing spend volume, CW program management needs to adjust its staffing partner portfolio and protect the value proposition for its remaining staffing providers.
This is exactly what CW programs with evolved direct-sourcing strategies are doing today. Staffing partners that are not experiencing a reasonable return for their investment and efforts will eventually lose interest in the program and produce limited service quality and talent. Many will leave a noncompetitive program because breaking even or losing money is simply not sustainable.
Change is never easy, but executed as a natural development of one’s sourcing channel portfolio, a direct-sourcing strategy should only be a threat to low-performing staffing providers. The key is making sure the value proposition of high-performing staffing providers is maintained and enhanced through partner portfolio management and close monitoring of the balance between cost-effectiveness and quality service delivery. Sustaining the correct balance will define the competitiveness and ultimate success of a CW program.