Over the past five years, the concept of direct sourcing has gained popularity, with buyer organizations hoping to find cost savings and better leverage their talent brand. Some organizations have found success through this approach; in fact, more than 80% of sourcing is done through direct sourcing. However, others face underwhelming results and need to replan their sourcing strategies. This article explores areas where contingent workforce programs can learn from others’ failures and missed opportunities.
Weak value proposition. Cost savings cannot be the only driver for direct sourcing. When enterprise buyer organizations use cost savings as the driver for direct sourcing, engagement managers are often disappointed with the experience, as the lack of focus on talent can cost them valuable candidates for open positions. While there can be elements of cost savings when direct sourcing is executed well, buyer organizations should consider other value drivers, such as efficiency gains, improved quality of talent and a better talent experience, which will improve satisfaction among business leaders and engagement managers.
Organizations often decide to implement direct sourcing solutions just because they have heard others in the industry are executing the strategy. Indeed, direct sourcing has been a top topic of conversation at industry events and webinars; it has been integrated into service providers’ (managed service providers, vendor management systems, payroll) offerings and has been sold as a solution for all an organization’s talent challenges. But for a company that is considering implementing direct sourcing, it is critical to first ask the question, “What problem am I trying to solve?”
Another misconception is that direct sourcing must be equipped to fill all positions. Rather than trying to boil the ocean, companies should instead have a narrow focus on a smaller subset of positions that could account for their top five to 10 repeatable requirements. Once success is achieved with a smaller subset of positions, success can be easier for positions with less volume. In some instances, buyers may decide to forego anything outside of their high-volume positions because the value proposition is not strong enough.
Lack of adoption. It is important to consider all the stakeholders that play a part in a business’s talent process. Programs often think short sightedly about their needs and plan their direct sourcing solutions solely around the contingent workforce program’s requirements. This can create conflicting processes, strategies and objectives between talent acquisition teams, contingent workforce programs and the business engagement managers, ultimately leading to lack of adoption. That friction may also be felt by the talent, who can easily be confused by varying messages.
Another consideration is disconnected processes that aren’t user friendly — a common issue without automation. When creating a direct sourcing strategy, it is imperative that an organization understands the complexity of the solution and makes direct sourcing easy for its business units or managers to use; otherwise, the process may become unnecessarily complex and frustrating for the user. Another important consideration is how to best align a service to this solution to help manage the more complex components and ensure the program’s success.
Some of this process complexity comes from a misaligned tech stack strategy. Without collaboration across sourcing channels when implementing technology, organizations can end up with multiple systems doing similar tasks without consistency or a common objective.
Similarly, lack of efficiency gain or a slow speed to solution can also hinder adoption of a direct sourcing strategy. As mentioned before, managers generally do not value cost savings as a key program driver as much as the quality of the talent and the speed in which they find the best talent. And mandating the adoption of a direct sourcing solution with a weak value proposition can hamper buy-in; it is crucial that the value proposition is strong enough to gain adoption naturally and without resistance.
Lack of adequate talent source. Even with the best positioning, a direct sourcing program can fall short if it is not ready to deliver talent when the business needs it. An inadequate pipeline of the right type of talent can be one of the biggest direct sourcing pitfalls. Companies need a strategy based on which types and sources of talent are most viable. This varies between companies and requires some exploration to identify the talent that can produce the right results.
And having the talent isn’t enough — organizations also need to keep them engaged and interested until the right opportunity is presented. Letting the talent pool get stagnant can diminish the business’s direct sourcing brand. While one strategy may be sourcing for active talent, there also needs to be a balance of ongoing engagement for the brand-attracted passive candidates.
Ineffective leveraging of the company’s talent brand. Most enterprise buyer organizations have a highly represented brand in the hiring marketplace, and many of these organizations can have thousands of applicants applying for full-time positions. However, this can lead to complacency when organizations create a direct sourcing strategy, as many take the approach that winning candidates will magically show up just because the program exists. The marketing opportunities for enterprise buyers’ direct sourcing solutions can be immense, but they require companies to have a strong marketing strategy and commitment to leverage their brands in the most advantageous ways.
Lack of business alignment. One challenge of direct sourcing programs is the need for alignment to the business areas the program is supporting. Success requires an understanding of the types of skills and resources that the business requires and accurate projections of when that talent is needed. There is also a need for real-time feedback on the talent’s satisfaction of the business to ensure expectations are aligned and the program is able to deliver the right kind of value. Gaining the confidence of the business can play a key role in having strategic conversations about their talent needs in the future.
Regardless of why direct sourcing programs have failed, it is important to learn from these experiences and rebuild with better processes and strategies. In next week’s CWS 3.0, we will examine how programs can build their next-generation direct sourcing programs to be successful.