In the US, we have the lowest unemployment rate in the last 50 years at a little under 4%. Organizations are struggling to find the talent they need to be successful. Yet, according to Deloitte’s Global Human Capital Trends study, only 8% of respondents had established processes to manage and develop alternative workforce sources.
There is a significant opportunity for organizations to leverage the alternative or extended workforce to meet their talent needs. Who can lead the charge? Recruiting has driven talent sourcing for full-time workers, and it seems an ideal time to expand their role to help drive sourcing for the full workforce.
A Little Bit of History
Historically, Recruiting departments have focused on finding full-time (and in some cases part-time or seasonal) employees to join an organization. If an organization used a significant number of contractors or contingent workers, it was often hiring managers themselves who developed relationships with staffing agency firms to find talent. This made sense. Hiring managers knew (or a staffing firm rep could get them to articulate) their talent needs and they could get temporary roles fulfilled.
A challenge for many organizations was that they really did not have a clear understanding of how many contractors they used or what the total spend was on those alternative resources. When the Finance team started to look at the numbers (which was usually entailing some sort of special project to go through numerous vendor invoices to actually figure it out), they often were horrified by what they found: their organizations were spending far more money on contingent labor with far more firms than they ever expected.
It was precisely this problem that led to the creation of the contingent workforce management solutions (aka vendor management and services procurement systems - to reflect the vendor side of the equation) starting in the late 1990s. I know. I was kind of there. I worked for a startup that focused on providing software solutions for enterprise customers with the procure to pay process for Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems implementation services. We started as a marketplace (which was a thing during the “dot bomb” era) and then pivoted to become a buy-side procurement solution. Unfortunately, we were ahead of how customers wanted to buy, and it failed, but we ran into the startups who were focusing on contingent workforce management at some prospects (and one happened to be headquartered in Chicago like we were).
The timing of these contingent workforce management vendors was better. Finance realized that they did have a problem. So, they, not HR, took the lead because the solution, in their minds, was to control “maverick spending”. To do that, they identified preferred staffing firms to work with, negotiated better rates with those firms, and put in place a system to better automate the procure to pay process for those workers. For Finance, it was never really about the talent at all. It was about the spend.
Making the Case for Recruiting to Take the Lead
The situation is even more complicated today. We now have all kinds of different sources of talent and ways to engage with that talent. We discuss many of these in the previous blog post in the series. However, the situation for hiring managers has not changed that much in which they know they:
- Have a talent need
- Want it filled fast
- Have a certain budget to spend
I would argue that hiring managers need a multi-faceted guide that looks at resources available and cost to help them make the right choices for their department and their organization. I do not think the right advocate is through Finance or Procurement as they have rightly focused on spending.
The spend always starts with a talent that is needed. That is why I think Recruiting should lead the charge, to be the informed advocate for hiring managers. Recruiting has always had a talent focus first and good recruiting departments find the right talent quickly. However, Recruiting needs to aspire to something more and need to expand their set of skills to be a full-service guide to hiring managers.
Making the Shift from Traditional Recruiting to Strategic Talent Sourcing
So, what does that mean? I think there are three key areas that progressive organizations need to do and, if they are done well, then the Recruiting department will become a Strategic Talent Sourcing function:
- Embrace and Own Workforce Planning -- A strategic talent sourcing function will understand all of the talent demand needs of the organization - across the board, not just the need for new hires. They will have also done the work to understand the sources (supply) of talent internally and externally. External includes not only traditional sourcing channels for recruiters, but also understanding the staffing firm landscape, online marketplaces, professional firms, business process outsourcing -- anywhere that the needed talent might be found. They also need to understand the costs and the relative trade-offs for different employment relationships with talent. Finance will still care about the costs.
- Become True Partners with Hiring Managers (and Procurement!) -- We all know this is easier said than done. However, if Recruiting is to be the one-stop shop for sourcing all talent, they need to understand what the hiring managers they support truly need on a larger scale; what does the business need. Hiring managers often start with solutions like “we need to bring in a contractor from Firm X because I have worked with them in the past and I know they are good” or “we need to hire a graduate from University Y because they have the best engineering program.” Recruiting should help the Business focus on the need and goals and then provide, based on data, the right advice to managers about how to fill that need. To provide the right data and advice, they will need to partner with procurement (strategic sourcing) to make sure they understand vendor spend and landscape for services
- Be Proactive - To really be strategic, you have to anticipate the needs of hiring managers and the organization, not just respond to requests. For hiring managers, that means Recruiting understands their businesses and finds opportunities to bring in new or different talent to improve results. For the organization, Recruiting is out in front of changes that may be happening outside the four walls of the business. In the final blog post of the series, I will talk about what to do in the event of a recession; one example of an externality. However, there are many things that can happen that positively or negatively impact the talent landscape. An organization with a Strategic Talent Sourcing function will understand and plan for these changes.
Systems Have Been Holding Us Back
One of the major challenges for anyone trying to do strategic talent sourcing today is the systems in place. Few organizations have a system of record for all of its talent, their capabilities, and their costs. They have recruiting systems, contingent workforce management systems, core HR systems, talent management systems, workforce management systems, payroll systems, and more. They might also have a separate workforce planning solution where they pull data from these various places (and more) to try to do the high level people planning. However, there are still multiple systems needed to act on the plans and engage with hiring managers. We think this is starting to change. New systems are emerging that can orchestrate the processes and bring together the data needed for strategic talent sourcing.
In the last of our series of blog posts, we will take a deeper dive into system needs from a process perspective. If we move to strategic talent sourcing, then we need to rethink, from the hiring manager’s point of view, the process for how talent is requested.
About the Author
Jim Holincheck has more than 25 years of experience in the HCM technology industry and is the Vice President of Advisory Services at Leapgen. Before joining Leapgen, Jim gained experience as a vendor (Workday - Services Strategy and Product Management), an industry analyst (Gartner and Forrester/Giga), and a consultant (Accenture).
Jim has spent his entire career working with customers to strategize, select, implement, support, and optimize their usage of enterprise applications. Helping customers successfully get the most out of their enterprise software investments is something Jim is very passionate about. He launched his career in Chicago at Andersen Consulting (now Accenture) in its Software Intelligence group, where he worked on the full lifecycle of Financial and HCM application projects, including application strategy, requirements definition, software selection, implementation, and production support.
After ten years at Andersen Consulting, Jim moved to Giga Information Group (acquired by Forrester), where he was an industry analyst covering ERP applications. In 2000, he joined a startup, IQ4hire, to create a consulting marketplace around ERP and CRM applications. In 2002, Jim joined Gartner as an analyst covering the HCM market, where he also managed the research agenda for Financials, HCM, and Procurement applications. Jim graduated from Washington University with a BS in Electrical Engineering and an MBA in 1988.
Leapgen is a global digital transformation company shaping the future of work. Highly respected as a visionary partner to organizations looking to design and deliver a digital workforce experience that will produce valued outcomes to the business, Leapgen helps enterprise leaders rethink how to better design and deliver workforce services and architect HR technology solutions that meet the expectations of workers and the needs of the business.