Direct Sourcing Strategy: The Road to Cutting Costs and Enhancing Efficiency

Understanding Sourcing

For recruiters new to the talent acquisition role, like the person I spoke to this week, some guidance may help. In today’s competitive talent acquisition landscape, in-house leaders are constantly seeking methods to refine their sourcing strategies. The aim is to not only attract top talent but also to streamline the hiring process and reduce dependency on external recruitment agencies, thereby cutting significant costs. Sourcing isn’t just about filling vacancies; it’s about creating a sustainable and efficient recruitment ecosystem.

The basic rule of thumb to work by is to proactively build talent pools to handle roles that are in constant demand or easier to fill, and to leverage outside expertise when the situation demands. Let’s look a little closer.

Employee Referrals: The Ace in the Hole

One of the most efficient ways to enhance direct sourcing is through employee referrals. This isn’t just about tapping into your employees’ networks; it’s about engaging them as active participants in the company’s growth. Referral programs are not just a source; they are a strategy. They hinge on building a robust talent pool, ensuring that for high-volume roles, the company never starts from zero.

Building a Proactive Talent Pool

For roles that see high turnover or are in constant demand, the key is proactivity. Building and nurturing a talent pool means that for every new vacancy, you have a ready-made list of potential candidates. This requires a successful employee referral program that motivates current employees to recommend peers, thus continuously populating the talent pool.

It also means making it easy for all employees to contribute to the talent acquisition cause and you can read more about this in a previous article.

Direct Scouting vs. Agencies

Direct scouting, primarily on platforms like LinkedIn or through sourcing tools such as Hire-EZ, Seekout or others, should be the bread and butter of your sourcing strategy. The goal is to have a talent pool so comprehensive that candidates on LinkedIn are already part of it before external agencies are even considered. However, it’s important to recognize that some excellent candidates prefer agency representation when they commit to a move, and this can be leveraged in your favour if you have the best agencies on your preferred supplier list. 

Contingency: The Nuance of Urgent Roles

When it comes to roles that are urgent the approach shifts slightly. If proactive strategies have been effective, your talent pool should cover most of these needs. In cases where it doesn’t, having a few generalist recruitment agencies, often called “contingency” or “selection” recruitment firms, at your disposal becomes necessary. These agencies should have a track record of delivering quality candidates for your specific needs, and you should have confidence in their ability to represent you in the field.

Search Firms: For Complex, High Impact Roles

For particularly challenging roles, specialist agencies often called “search firms” can be invaluable. They not only bring a focused expertise to the table but also allow your in-house team to allocate their time more effectively. While they may command a higher fee, their service often offsets this cost through the time saved and the quality of candidates provided. Be aware that you usually get what you pay for and what you want is results, not saving pennies on the dollar.

The best search firms will likely request an engagement fee in order to commit their time and resources, which is a fair demand given the challenges of the search. The agency selected should have a strong research or market mapping capability and be able to present market data that guides decision making. They may not be as robust in presentation as a global retainer firm, but they will provide significantly more “high touch” than a contingency engagement. More importantly they will represent you well in front of the high calibre talent you seek to attract, so long as you have given them access to the key information and people behind the role. 

The Symbiosis of Strategies

In the grand scheme of things, a direct sourcing strategy should be a symbiotic system. It should intertwine proactive talent pools, direct scouting, employee referrals, and selective use of specialist agencies. By leveraging each channel’s strengths, talent acquisition leaders can build a streamlined, cost-efficient, and effective recruitment process. 

A Recap

Here are some basic rules of thumb to give a new corporate recruiter or RPO program manager direction:

  1. Be proactive about sourcing
  2. Ensure the employee referral program is effective
  3. Build your talent pools for core roles using LinkedIn and other sourcing tools
  4. If urgent, use generalist agencies for core roles (common reqs)
  5. Use specialist search firms for high impact or specialist roles

By focusing on a proactive and multi-channel sourcing strategy, in-house talent acquisition leaders can significantly reduce agency costs and improve direct sourcing for mid-career and leadership hiring. The key takeaway? Always be building—whether it’s your talent pool, your referral network, or your relationships with specialized agents. That’s the cornerstone of a successful direct sourcing strategy.

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