Sourcing’s Tipping Point: a Race to the Bottom or to Strategic Business Partner?

There are many debates on the role of the individuals and the sourcing function. To see some of the conversations that have taken place on the topic see Glen Cathey’s great piece on Sourcing vs. Recruiting – What’s the Difference? and  Balazs Paroczay’s rebuttal to Glen’s article.

The Wikipedia definition of Sourcing states that it “is a talent acquisition discipline which is focused on the identification, assessment, and engagement of skilled worker candidates through proactive recruiting techniques.

My Perspective on the function

The sourcing function within internal corporate recruiting teams has been steadily evolving over the last 5 years. At the beginning, many saw this as a fantastic opportunity to drive direct recruitment and reduce agency reliance. This is still the case in many organizations. However, my concern is that as this has matured and we’ve moved forward in the recruiting lifecycle rather than taking sourcing as a foundational part of the recruiting process to give the function stability and credibility. This foundation can them allow departments to springboard the function into more strategic and impactful areas.

Recently, we’ve seen a drive for efficiency and a focus on cost instead of value which has resulted in a function that is fast being seen as a transactional and low value to the business.

For me, the sourcing function can and should be so much more than it is. “identification, assessment and engagement of skilled worker[s]” should be the bread and butter of the function. Yes, we should be reducing things like cost per hire, time to hire, helping to improve candidate satisfaction scores, improve the quality of hire, improve the hiring manager satisfaction, etc., but the real strategic value-add can come in many different facets. All of which can and should be driven from the sourcing function.

Here are a few examples of the type of work I think we should be doing:

Strategic Insight – This reaches far beyond top level competitor intelligence. This is the granular level information that can directly impact the financials of your organization. A good example of this would be working with sales teams. They will generally know the strengths and weaknesses of key competitors and their products. They may even know recent wins/losses of the key competitors. However, when you can work with them and let them know which individuals have recently left or are looking to leave the competitor and how this could impact the competitors delivery, this could have a genuine impact on the business. For example, if a Program Director has recently left a competitor, what was their succession plan? How will this impact the competitor’s delivery on future programs?

Equally, if you know that there is a rare skill set that can set you apart from competitors (or in extreme cases even prohibit you from bidding for work if you don’t have the skill set), then what is the business case for taking up the entire market. Turn the single headcount approval into an entire team and give your organisation market dominance when it comes to bidding for work.

These type of activities can fundamentally and positively improve your organisations competitiveness and sales.

Organizational Design – This is multi-faceted. You have the structure and the shape. From a structural perspective, what organisational structures are competitors running? Are they carrying more weight in account managers or business development leaders? What are the internal reporting lines and how is this affecting the business outcomes? Are they doing a strategic re-organization, and if so, what will the new structure look like and how will this impact the business?

From a shape perspective, I think it’s the bigger picture piece. If you’re struggling to recruit in a given geography then what is the business case for relocating the entire team. Is it the case that the workforce should be remote workers, is it the case that the workload should be moved to a different geography where the skill set is more prevalent? Or should the workload be outsourced.

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Benchmarking – Many firms will reply of very general salary benchmarking data that is often out of date by the time it is used (12months to collate then sold for the next 12months so likely 24months out of date). This can be a big issue in a candidate driven market where salaries can change and the market can shift dramatically. It is the sourcing functions responsibility to not only challenge this business if salaries are not market rate but provide real market data with the granular information needed to give your “gut feel” and thoughts credibility.

Organizational Strategy – In a similar vein to the broader organisational design work I think that sourcing teams have a unique ability to impact the strategy of the organisation. If your firm is looking to aggressively break into the BRIC market in the next 5years and will need a large physical presence with a given skill set to do this then what is the feasibility of this? If your organisation if growing in given markets but cannot find the calibre / type of graduates that they need then should you be looking at providing the supporting documentation for your firm to look to partner with universities to set up bespoke courses to give you the pipeline of individuals you need (cyber or engineering for example)?

These are just a few example instances, I do not think that the sourcing function should be the decision makers in these but I think they are uniquely placed to give proactive strategic input and give us a voice at the table that everyone in the industry has been craving. I just hope that we can transcend the pure cost conversation and hit the value conversation. To do this we (sourcing / TA / Resourcing) need to be aligning better to the bottom line and showing the business the true impact the function can achieve.

The real question is what do you want from the future of sourcing?

What other areas of the business do you feel sourcing can work with and influence? 

How do you think we can shift the focus from a cost center to a value centre?

This post originally appeared on LinkedIn.

Toby is currently leading Global Talent Intelligence at Philips.  His responsibilities include all research, talent Intelligence and labour risk and feasibility intelligence, across the breadth of the Philips organisation globally.  He has worked in a number of guises; external search, internal, RPO and ran his own research firm.  The key for Toby throughout has been and using the insight and intelligence gathered through research / search activities to have a true business impact.

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2 Comments on “Sourcing’s Tipping Point: a Race to the Bottom or to Strategic Business Partner?

  1. Thank you for sharing your thoughts here Toby. If I may, I’d like to dig a little deeper into some of the ideas you’ve begun here…

    Firstly, I’m not convinced that we as sourcers should be “reducing” all of the things you outlined – some of the things described are for recruiting, like time to hire and hiring manager satisfaction, for example. Things like hiring manager satisfaction, as far as sourcing is concerned, is measured by how many prospects they say “yes” to whereas from an overall hiring perspective, a recruiter’s achievement of HM satisfaction will include a number of things like process, overall talent pool quality, and of course if a hire-able individual was uncovered. Frankly – these things are a manager’s job though an astute sourcer will be keeping tabs on their value to the business on their own.

    Secondly, while I fully agree with your observation of strategic insight being a cornerstone of sourcing, I believe it alone is the feeder activity by which the business needs to own the rest of the items you’ve outlined. In my team, our sole responsibility is going after non-applicant, non-referral prospects which requires us to have eyes and ears in our functional communities. The things we have the opportunity to learn and piece together are invaluable to our businesses, and… can help feed the remainder of the items you’ve listed that we should be doing (benchmarking, organizational design, and organizational design). I fear having sourcers’ responsibilities dive too deeply into these areas, and the reason for this is that internal recruiters are supposed to be the business’ consultants, not sourcers.

    I would argue that a recruiter (along with a hands-on HRBP) should be the one driving conversation around benchmarking salaries and making recommendations on organizational design and overall strategy. Should sourcers be part of the conversation? Absolutely – sourcers are in the market every day gathering the data with which the businesses should be making decisions for their hiring activities. But I think putting that responsibility on a sourcer’s plate as a KPI is incorrect and will take them away from the activities for which they were hired.

    At the end of the day, I fully believe that the best way to allow sourcing to change its internal perception from cost center to value center is to make each TA function’s KPI complementary to one another. I feel the best way to do this is to measure sourcing based upon quality of presentation/submittal (are you giving the business what it is asking for [in our case via non-applicant/non-referral funnel expansion]); measuring recruiting based upon filling its business’ hiring needs in a timely manner (are you successful in eliminating lost opportunity cost for your business), and holding the business accountable for a lower ratio of interview-to-offer (do you truly know what you need to hire for and are you able to articulate that to your TA partners). Each group is accountable to a portion of the hiring process and thus must find a way to partner with each other in order to meet the collective goals.

    1. Hey There, sorry I’ve only just seen this, I wasn’t aware this post had gone up.

      I agree some aspects are recruiting focussed (I also think they are largely poor KPIs but this is what the majority work with), but I hold true that “we should be reducing things like cost per hire, time to hire, helping to improve candidate satisfaction scores, improve the quality of hire, improve the hiring manager satisfaction, etc”. CPH, TTH are absolutely within our sphere of control and we absolutely should be helping to improve the rest. Can we influence the HM satisfaction as much as other elements, possibly not but I absolutely this we can help to influence.

      Also I complete agree that the business owns all the decisions above but I think 99% of teams simply aren’t geared up to support any of these types of activity at all.

      I don’t disagree that sourcing’s core function should be “going after non-applicant, non-referral prospects”, personally I also think sourcing should own the broader advertising / EB / agency relationships… as well as the bigger picture piece above.

      I agree re the KPIs your suggesting but think there is a context. The fact is that the senior leadership don’t have the time (or largely the inclination) to get into the detail of why something isn’t working, they will simply look at top level sources of hire. If a sourcing team isn’t hitting the numbers then they are deemed unsuccessful (even if they are presenting exactly what was asked for but the TA/Business have moved the goalposts). We could hold up the figures and show we presented what was asked for but the business simply won’t care.

      I think the key thing for me is that as long as we’re focussed on purely transactional / operational KPIs then the functional will always be driven in that manner. Transactional and cost focussed. I am yet to see a function (be it sourcing or TA) really have a strategic business relationship where they can influence and help direct their own fate rather than being purely reactionary and transactional.

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