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Jun 27, 2019

A good friend of mine, a senior Talent Acquisition Leader, hired two great sourcers to work on hard-to-fill reqs. The sourcers were doing a proper job delivering qualified and interested passive candidates, and one or two candidates always made the very final stage. But at the end of the year, when reviewing the results, my friend had to realize that they had only hired just a handful of those candidates, five or six max. He’s concerned now what to do, so I dedicate this post to him.

Nothing has value in itself.

Money is just a piece of printed paper unless you can buy something from that.

Gold is just a shiny stone until you know you can sell it to others.

Love is just a sweet fantasy as long as the one and only is around you that you can fall in love with.

The value of things is only understandable within a greater context. Without a context, things are just things, impactless, lonely phenomenons.

So, what about the sourcing phenomenon? What is the actual context of sourcing?

Many try to approach the value of sourcing from the deliverable perspective. They focus on the outcome that sourcing brings to the table. It is, most of the time, qualified, interested, and available so-called passive candidates (QIAs). The deliverable of service, however, is not necessarily equal with its value, and we need to differentiate these two from each other. Why?

Having a handful of passive candidates in the shortlist makes no guaranteed impact on the business. Why would that be any better to approach and engage with passive candidates rather than investing the same effort and money, for instance, in recruitment marketing and make more and higher quality active candidates? A shortlist is often not yet seen as a value. Therefore, leaders tend to pick the hire as the actual sourcing value differentiator.

The Source-of-Hire metric plays a significant role in this thinking, but there is a small problem with that. Within most organizations, the number of hires that comes from genuinely passive candidates is incredibly low. Usually, it hits a very maximum of 5-15% of all hires (source). If direct sourcing, however, brings too few hires into the actual hiring mix, it can be challenging to define and defend the value of sourcing.

Why do we need a sourcing function if the hiring ROI is so minimal?

What the world must understand (and we appreciate this reasoning will be new for some) is that making hires is not the value of sourcing, but of recruiting. Sourcing only contributes to hiring making with its very own value categories. The context of sourcing is located where the value is created, and that is just the very first part of the recruiting process. Even more precisely: that’s the stage of the candidate slate. The values of sourcing have an ultimate role there (and only there) and not at the end of the process where hires are secured.

So if not the hires, what can sourcing do for our business?

There are seven Sourcing Value Categories that sourcing can create and bring to an organization:

  1. A steady and a more diverse slate: the only case when we talk about an actual sourcing challenge is when there are not enough shortlisted candidates in the selection process. Not having at least three to five QIAs in the process may make hiring decisions very difficult, and hiring managers may feel pretty uncomfortable being responsible for making that decision. If the slate is not there, that’s a severe and real sourcing issue. Everything else though (aging reqs, declined offers, managers being unable to choose from the slate, etc.) is usually not a sourcing challenge. Therefore, the very first sourcing value category is the increased, steady shortlist or having those shortlisted candidates, too, in the slate who would not consider applying to the job. Easy.
  2. Access to rare, critical talents: every company can quickly identify those VIP candidates that they must talk to. In this term, it is a little similar to the first value category. However, we want to underline the proactive approach here. Nothing is impossible. Or with other words: if sourcing cannot find a candidate, that candidate does not yet exist. A reliable sourcing function (sort of a sourcing SWAT team) will be able to talk to every VIP candidate. Now, this may not end up with securing a hire but having a conversation with every critical talent is a significant value that many organizations appreciate.
  3. Accelerated hiring procedures: if sourcing can find the right candidates quicker than any other channel or build talent segments (pools, pipelines) and engage them in advance, before any open req, these activities can shorten the hiring cycle time. If, however, the time-to-submit (time-to-shortlist) is not a real issue and there is no budget to implement a proper talent pooling (talent network) solution – sourcing will not cut off time and be unable to make any significant difference.
  4. Reduced agency spend: sourcing can build traditional headhunting capabilities within an organization replacing third-party agencies and thus, achieve enormous cost savings. At least, at the beginning of the journey. What we need to note, though, is that cost reduction is not an ever-growing value. Sourcing, too, costs money and there will be a maximum limit of all savings. You can read more about this topic in this Sourcing ROI Calculator post but for now, remember that cost savings will end after a while, and you’ll still face cost in the system. And that’s the cost of your sourcing function that will stay with you, happily ever after.
  5. Increased brand awareness and perception: as sourcing usually works with passive candidates, they also simultaneously promote the brand and make a significant influence on brand perception. This can be pretty helpful as sourcing reaches those candidates who would not necessarily consider the company as a choice of employer. Some time ago, as an example, a giant fashion company was setting up an IT hub in a “middle of nowhere,” and while marketing or sales candidates recognized the employer brand, it was not any appreciated by tech professionals. Tech candidates want to join the Googles and the Apples, right? And not a fashion giant. Direct sourcing was a key solution here to reach out and convince these talents and made them consider this company as a potential choice of employer.
  6. Market and competitive intelligence: this must be a distinct value; however, with most organizations, being large or small, it is not yet apparent, unfortunately. Sourcing must be used as a channel for gathering market and competitive intelligence. The search methods sourcing uses can easily be applied for finding info about competitors and other relevant markets: when are those companies planning to launch a new product or a service? Who are their most significant clients? Alerts about layoffs? New expansions? How are they hiring their employees? From where? Gathering salary and benefits data – do we have a competitive offering? And you go on. Once a regional TA Director told me: “you know, Balazs, this is absurd… We spend tens (if not hundreds) of thousands of dollar for 3rd party companies to provide salary benchmark data for us, instead of having a look within our very own ATS and CRM and read all those notes on a current salary that millions of candidates have already shared with us.” Yes, this is the power of market intelligence – use your sourcing function; the ROI must be pretty obvious!
  7. Better experience, higher satisfaction: happier customers – this makes it all, right? Sourcing with a more personalized approach will make a difference in candidate experience, boost brand awareness and perception, and make things more remarkable. Also, with reliable sourcing function, our recruiting teams will feel more confident in their “competition for talent.” There are multiple areas where sourcing can directly create value to the end-business, too (either generating cost savings or gathering competitive intel, for instance) so all in all: sourcing does have an impact on the experience and can increase satisfaction. Satisfaction with increased trust in the entire Talent Acquisition function, that’s the stake! Now whether this value is worth with some dollar signs on your payroll sheet, or not, that’s another discussion that you may want to have before you set up a sourcing function.

This is it. Seven Sourcing Value Categories that can help your organization recruit and grow better. If, however, you cannot find the value that you are also happy to fund, if none of these above is worth the investment for your leaders you should be looking at investing into other solutions. Not every company has to build a direct sourcing function nowadays, but only those who must have access to these value categories.

Direct sourcing always comes with a cost, with complexity and is a proper business function with all the great benefits and challenges. We must stop expecting this function to change the whole recruiting game. It’s not magic, it’s not a secret service, and it’s not rocket science, not anymore.

The seven Sourcing Value Categories answer what sourcing is capable of achieving. Use it wisely; use it well!

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