When Philips decided to restructure into a health technology company, Martin Thomas recognized that achieving that mission would require a more holistic, cost-effective talent strategy and the ability to compete for digital talent.

A veteran talent acquisition leader, Thomas was promoted to head of total workforce strategy and was given a “blank piece of paper” to integrate new channels and approaches into the company’s talent acquisition strategy.

The question was, where to start? Like so many companies, Philips’ managers had traditionally used direct hire to fill open positions and used staffing firms to cover occasional skill gaps. To align the company’s talent and business strategy, Thomas would need to help managers step out of their comfort zones and discover new ways to think about talent.

Here’s a look at the strategies he used to build an agile, optimized workforce by engaging more independent workers with cutting-edge skills and directly sourcing up to 50% of freelance staff.

Start with a Blank Slate

In order to help managers consider all sources of talent when making build, borrow or buy decisions, Thomas first needed visibility into the company’s current workforce profile and performance.

“Don’t let preconceived ideas about your current workforce and talent selection process cloud your judgment,” Thomas advises. “Use data analysis to measure how well your workforce performs.”

For example, Philips compared the historical performance of directly sourced contingent workers to those provided by staffing firms and direct hires and then benchmarked the results against external cost data to identify the best sources of talent and the best ways to reach them, Thomas explains.

His team’s quest required a talent mapping exercise and a deep dive into the database for full-time employees as well as the database for contingent workers covering eight countries.

“We had so much data we almost ‘broke’ Excel and ended up using a BI tool, but the results were worth it,” Thomas says.

The analysis concluded that Philips could benefit by transitioning to a multichannel sourcing strategy, which included directly sourcing independent contractors with in-demand technical skills.

Thomas then used data visualization to present the results to business leaders and received the green light to run a pilot program for six months.

Break the Mold

After seeing the visualized results of the analysis, Philips managers were also inspired to engage in a process he calls “right sourcing.”

Truly optimizing talent requires a new, wide-angle lens that looks for innovative ways to get work done, so everything was on the table, Thomas explains.

As part of the process, managers looked for opportunities to combine roles and source talent from different pools or locations. They also evaluated repetitive tasks and peak season staffing needs and distinguished between core and non-core work to find the optimal way and source of talent to get work done.

In short, job redesign can be a valuable tool for driving efficiencies and utilizing skills that are readily available in a challenging marketplace.

Engage in Workforce Forecasting

Proactive demand forecasting has become a defining feature of companies like Philips that have moved up the maturity curve to workforce optimization. For example, Thomas’ team uses the analytical steps of the process as well as internal and external talent intelligence powered by hard data to help managers identify the best sources of talent for a specific need or project.

“Forecasting is critical because it helps you determine the full cost of the future demand for talent and the resources needed to meet the demand,” Thomas says.

With a forecast of future demand and the workforce ecosystem at their fingertips, managers can rethink the way work is performed and become more intentional and strategic in how they engage talent. They are also less likely to encounter last-minute skill shortages that must be filled by boutique staffing firms at premium prices.

Eliminate Silos

The typical siloed approach to talent acquisition discourages the sharing of information and causes the entire organization to think of talent in silos as well.

To foster a mindset shift, talent acquisition needs to be involved much earlier in the business planning and forecasting process.

Thomas also recommends removing the divisions between groups involved in talent acquisition and realigning tasks to create a holistic view of talent and encourage everyone to work collaboratively toward workforce optimization.

For instance, Thomas says that Philips’ MSP, talent acquisition and procurement teams are now “joined at the hip.” In fact, each talent acquisition VP is assigned to a business function to keep the flow of information moving smoothly.

Provide Decision Support

While Thomas’ actions had a cumulative effect, providing managers with a robust decision support system was a key factor in progressing toward workforce optimization.

The system provides managers with the necessary information to compare internal and external sources of talent before they engage a worker. Managers also engage on a more granular level by considering the characteristics of the work, costs, availability, location and any local tax and employment laws to identify the best available talent, at the best price, to complete a specific project or task.

The Value of Workforce Optimization

While moving from reactive to proactive recruitment doesn’t happen overnight, Thomas’ efforts have been instrumental in implementing transformational change. Over time, the mix of Philips’ workforce has changed. In fact, direct sourcing now comprises 50% of freelancers in some countries.

Thomas noted that Philips has realized numerous benefits including a reduction in agency spend, which has lowered total costs and increased manager and worker satisfaction rates.

“While our right sourcing program, which is the methodology we use to deploy our workforce strategy, has produced millions in savings,” says Thomas. “Perhaps most importantly, it has helped us align our talent and business strategies in ways that helped Philips accomplish several strategic initiatives.”

To learn more about how to create a holistic and forward-thinking approach to direct sourcing and workforce optimization, we encourage you to read SIA and MBO Partners’ latest custom research report: Unleashing the Power of Direct Sourcing: A Pathway to Workforce Optimization.  If you are interested in creating and implementing comprehensive independent workforce programs, please visit the MBO Partners website to learn more.