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Why direct sourcing recruitment will play a key role in 2022

Throughout 2021, we wrote extensively about the acute skills shortages that are impacting almost every sector of the global labour market – and how employers can overcome these challenges.

For many organisations, the default solution when talent is thin on the ground is to bring on board a recruitment firm in order to meet staffing challenges. However, we are living and working in unprecedented times – and this option may not be the failsafe fix it once was.

Recent research by the UK’s Association of Professional Staffing Companies (APSCo), in conjunction with Saffery Champness, found that the biggest challenge facing recruitment agencies in 2021 was a shortage of jobseekers – with nearly 50% of surveyed firms reporting this as their largest issue.

Against this backdrop, as we enter 2022, and with the talent landscape more uncertain than ever before, direct sourcing recruitment may be the answer to helping employers overcome some of the resourcing challenges of the Covid era.

Here’s all you need to know to get started with direct sourcing. 

What is direct sourcing recruitment?

Direct sourcing recruitment refers to the practice of identifying, engaging, and hiring workers without the use of staffing agencies. This can be achieved through building and nurturing your organisation’s own talent pools - comprising former employees, freelancers, and ‘silver medallists’ - or by advertising roles independently.    

Direct sourcing recruitment is typically carried out with the support of a managed service provider (MSP), which is well placed to advise on the intricacies of today’s talent acquisition landscape. In this scenario, the specialist MSP engages with potential hires and independent talent without going through a supply chain or third-party recruiters. In such an arrangement, successful candidates are usually sourced, managed, and paid by the MSP.

The power of employer brand

The success of direct sourcing recruitment relies on your company’s ability to build and communicate a strong and authentic employer brand. At a time when open vacancies across the UK have remained above one million for some months, jobseekers are spoilt for choice when it comes to picking their next role or assignment. Only those businesses that can successfully differentiate themselves from the competition will be successful in the war for talent.

Hiring managers must ensure their brand is in the best position possible to compete for top resources – and building and communicating a strong employer value proposition (EVP) is crucial.  

According to research by Gartner, organisations that effectively deliver on their EVP can reduce the compensation premium by 50%, and reach 50% deeper into the labour market when candidates view an EVP as attractive. What’s more, 50% of candidates say they simply wouldn’t work for a company with a bad reputation – even if the salary was attractive.

Understanding and articulating your company culture

For firms just beginning their EVP journey, understanding the experiences of existing employees is an important first step. Engaging with current workers to gauge sentiment across the organisation will paint a realistic picture of:

  • where you are now
  • where there is room for improvement, and (crucially)
  • where there are great stories to be shared.

Your MSP will be well placed to support or lead on this process.

Once these foundations have been set, you can begin to build a solid employer brand – and reap the associated benefits. Real value comes from sharing authentic stories of your people, which are accessible to audiences both inside the recruitment process and beyond. Celebrate your corporate culture across every potential touchpoint by giving a voice to those within your teams. 

According to the Chartered Institute of Personnel and Development (CIPD), a strong employer brand should connect an organisation’s values, people strategy and policies, and be linked to the company’s corporate brand. Through taking this approach, you will be able to build a reputation as a ‘client of choice’ among your talent pools, making hiring successes much easier - and quicker - to achieve.

The rise of the contingent worker

The era when a business’s talent amounted to a list of permanent, full-time employees is now well and truly behind us. Today, contingent workers are a vital element of the workforce mix. In order to ensure access to the right skills at the right time and at the right price, strategic workforce plans often call on the expertise of an army of agency workers, contractors and other specialists engaged through statement of work contracts.

Needless to say, your direct sourcing recruitment strategies should reflect this new landscape if you are to maximise your chances of bagging the skills you need to thrive. Since the beginning of the pandemic, a greater number of professionals are choosing to work outside of traditional pay-as-you-earn (PAYE) payrolls, as changes that were already evident in 2019 have accelerated.

Recent figures indicate that around 14% of UK workers are now self-employed, while November 2021 statistics from the US Bureau of Labor Statistics show that there were around 10 million self-employed people in the US that month - the third highest number on record.

Contingent worker spend looks set for further growth

Little wonder, then, that some large companies estimate 30% of their procurement spend goes towards contingent workers. What’s more, this trend shows no sign of abating, with over 60% of firms expecting to hire more freelancers within the next three years.

In the coming months and years, non-permanent workers are likely to become more critical to your talent strategy, particularly when talent is scarce or when you need specialist skills or flexibility. In line with this evolution, the need for an efficient contingent workforce management (CWM) programme has become more critical than ever before.

With the gig economy growing, and reliance on contingent workers increasing, businesses that don’t invest in engaging – and talent pooling – non-permanent workers will soon find their competitive talent pools shrinking.

Making the most of talent pooling

Access to a pool of engaged contingent talent is vital in times of acute talent scarcity. Non-permanent workers can provide specialist skills for short-term projects, help businesses to flex in response to fluctuations in demand, and quickly plug gaps in the permanent workforce. Amid a global pandemic, the need for these individuals has never been greater.

Direct sourcing recruitment, via a carefully curated talent pool, enables almost instant access to workers when you need them most. Without these talent pools, a direct sourcing strategy would struggle to secure scarce talent in much the same way that a supply chain of agencies might. By building lasting relationships with different talent pools that have already been exposed to your brand, you are better placed to hire at volume and speed.

While the principles of direct sourcing recruitment are similar regardless of whether you are seeking to attract permanent or contingent talent, when designing communications for the latter, it is essential that engagement is consistent and ongoing.

Keeping contingent talent engaged with your employer brand

By building and nurturing long-term relationships with former temporary workers, and other potential recruits, you can ensure ongoing availability of skills so that your workforces can adapt as demand dictates.

By creating robust talent pools, businesses can maximise the chance of bringing back great candidates at short notice – candidates who already feel an affinity with your brand’s culture and values and who are likely to be able to hit the ground running when they land.

Ex-contingent workers, former permanent employees, freelancers, retirees, and even previously unsuccessful applicants can all be included in talent pools - which are usually managed in a cloud-based applicant tracking system (ATS) as part of a managed service programme

A strong communications strategy is crucial to ensuring past, present, and future candidates are - and remain - excited by the offering you have. Rich and immersive content can be shared via email newsletters, social media updates, written content, video, or imagery on good news stories associated with your organisation, or to highlight successful employees within the business.

At a time when employers and recruiters alike are struggling to source skills, the power of a ready-to-deploy talent pool should not be underestimated. Pre-engaged talent pools make it more time efficient to scale resources up and down as demand dictates. This fast pace of hiring also creates additional cost-savings, with a reduction in time to hire leading to optimised recruitment spend.

Making efficiencies through direct sourcing recruitment

Make no mistake, having a direct sourcing recruitment strategy - that’s part of your managed service programme and uses tools such as online marketplaces, recruitment marketing, and EVP development - can significantly reduce both recruitment fees and time to hire.

Even in times when skills are plentiful, this strategy saves cash compared to a more traditional supply chain driven sourcing model. Today, when talent is scarce, the benefits are even greater.

How direct sourcing saves employers time and money

The cost markup of using an external recruiter can vary widely, with factors such as difficulty-to-fill and the scarcity of particular skills affecting an agency’s rate. Through direct sourcing, we estimate that organisations can enjoy somewhere between 5% and 30% savings on these costs.

Direct sourcing recruitment also brings flexibility to talent acquisition, giving hiring managers the means to source and self-select the right contingent talent for specific projects. Take a look at the success we achieved with the online retailer Shop Direct to see what a targeted direct sourcing recruitment campaign can achieve.

Choosing the right direct sourcing partner

By taking full ownership of candidate identification and management, direct sourcing recruitment takes a highly personalised approach to talent acquisition. And in 2022, when Covid-19 continues to impact the talent landscape, the benefits of direct sourcing recruitment have never been more compelling. 

Long-term, a direct sourcing strategy can have a huge impact on your hiring capability - particularly when skills shortages and competition for top talent are rife - and, perhaps most importantly, to your business’s bottom line.

What are your MSP’s direct sourcing capabilities?

Often, direct sourcing recruitment is best done in partnership with an MSP, as part of a strategic CWM programme. By working in partnership with a specialist MSP, employers can maximise the success of recruitment campaigns, for example, by focusing on specific departments or labour segments such as high-volume low-skilled or low-volume high-skilled roles. 

In most cases, direct sourcing comes into play as a managed service solution matures. But that doesn’t mean you shouldn’t be considering it now. If you’re unsure of your MSP’s capabilities in this area, now is the time to ask. Contact us to discuss your direct sourcing needs.

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