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When and How to Make Direct Sourcing Part of Your Contingent Talent Strategy (Guide and Checklist)

By MBO Partners | October 11, 2022

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Overview

As the use of independent consultants continues to grow, savvy organizations must find a way to directly engage this workforce in a faster, more cost-effective way.

With nearly one-quarter of full-time Independents planning on using an online consultant marketplace to find projects in the next year, organizations must offer an accessible, easy-to-use engagement platform in order to remain competitive in today’s War for Talent.

GATE

To leverage this valuable talent pool, organizations should look to implement an enterprise-grade direct sourcing solution: a technology-enabled platform that takes both compliance and engagement needs into account.

An enterprise-grade direct sourcing solution enables businesses and end users to self-source and directly engage independent consultants in a faster, more cost-effective way.

Direct sourcing enables access to and connection with top talent by leveraging marketplace-based technologies to create a more frictionless and direct relationship between provider and buyer-managers and independent talent. By shifting recruiter functions in-house, managers can search through a network of available talent, matching skillsets to available project opportunities, and talent simplify the process of working with leading companies while realizing significant savings and an improved customer experience.

Through direct sourcing, companies can quickly identify candidates for available project opportunities using their own resources. By direct sourcing from a vetted group of known independents-a Preferred Talent Network-organizations can easily find, engage, and reengage talent with minimum compliance risk.

Direct sourcing empowers businesses and end-users to leverage their own enterprise brand to engage contingent workers of all types in a faster, more costeffective way that often results in an overall better experience for placed resources and engagement managers alike.

In this guide, you will learn


    Benefits of Direct Sourcing

    A well-managed direct sourcing solution provides enterprises with many benefits. By minimizing the need to work with a third-party staffing company or consulting firm when searching for and engaging independent professionals, companies can instead focus on building a pool of on-demand talent that allows enterprise managers to access the skills they need when and where they need them most.

    ON-DEMAND ACCESS TO TOP INDEPENDENT TALENT
    Many companies today report having difficulty finding workers who have the skills they need. Independent professionals are a group of highly-educated and credentialed talent that can help fill the skills gap in a company’s workforce, providing access to in-demand skills that are hard to find in a traditional talent pool. By leveraging and sharing their network of independent talent across multiple managers or departments with a direct sourcing strategy, companies can engage talent on an as-needed basis.

    COST SAVINGS
    Cost savings can be realized through a number of benefits including: flexibility in talent acquisition, the ability to bring most recruiter functions-in house, and reducing recruiting cost and payrolling overhead. Direct sourcing also reduces the amount of time mangers have to spend reviewing candidates.

    INCREASED EFFICIENCY
    Less reliance on cumbersome processes allows organizations to engage independents on an as-needed basis, resulting in increased company output and higher satisfaction and productivity levels among independents.

    CLIENT OF CHOICE
    Independent professionals value a simple, streamlined process when working with clients. Direct sourcing technology allows independents to see a company’s available projects and offers them a defined process for engagement. These practices foster loyalty among independent talent, helping to position enterprises as a Client of Choice. As a Client of Choice, an enterprise implements a superior experience specifically designed to meet the needs of independents, realizing a competitive advantage by becoming the top choice in client partnership among top independent talent.

    MITIGATION OF MISCLASSIFICATION RISK
    Integration of technology platforms helps ensure all applicable independent professionals are directly sourced for assessment and engagement. Paired with the right technology and implementation partner, direct sourcing creates a reliable compliance process. Organizations like MBO Partners, for example, offer a trusted methodology of evaluating and engaging independent workers, which significantly mitigates misclassification risk.

    SIMPLIFIED TALENT RE-ENGAGEMENT
    Direct sourcing technology can offer an assessable system that automates onboarding, payment, and engagement documentation, creating a positive experience on both enterprises and independent professionals. By building a pool of pre-vetted talent that has already been successfully engaged, it
    becomes much easier for companies to find and deploy skilled workers when needed.

    While there are many benefits to direct sourcing, it is important to understand that implementing an effective solution takes time—building and maintaining a pool of independent talent does not happen overnight. As our workforce shifts away from traditional hiring models, more flexible solutions like direct sourcing will enable enterprises to effectively incorporate independent professionals as part of their talent strategy to take their business to the next level.

    By incorporating a direct-sourcing program, companies can more specifically meet their needs by making their own choices. By establishing a direct sourcing network, companies have the primary access to independent professionals they need and are able to establish more effective relationships.

    Access our list of direct sourcing benefits

    Requirements of Direct Sourcing

    Direct sourcing can lead to many financial benefits—helping organizations avoid unnecessary costs by providing centralized management, lower cost engagement options and visibility into contingent worker spend—but it is only a small part of the picture. Alone, many third parties and technology platforms that facilitate direct sourcing are not designed to handle the complex program requirements enterprises need and lack a sufficiently robust compliance layer to solve for misclassification risk.

    Without a centralized program or policies in place, enterprises may engage contingent workers who have not been properly vetted. This poses a significant compliance risk and can lead to potentially catastrophic misclassification or co-employment issues down the road.

    In order to compliantly engage contingent talent across an organization, it is important for enterprises to build a scalable, comprehensive program which includes mechanisms to ensure compliance. This program should address everything from finding, sourcing, and engaging independent workers in a complaint manner to managing, paying, and re-engaging them as part of a talent pool.

    There’s no one-size-fits-all formula for creating a program to support a direct sourcing strategy—each enterprise will have unique talent needs that need to be met and hurdles to overcome. There are, however, certain universal requirements that help build a strong base for a lasting and successful program.

    Company leadership must understand that the significant benefits gained from direct sourcing only can be realized with and investment of time and resources. To this end there needs to be a clear understanding of program requirements, and the costs associated with pursuing a direct sourcing strategy. A comprehensive program is needed for direct sourcing to be successful but many program sponsors try to cut corners only to find the potential benefits lacking.

    Programs need to recognize the unique needs of independent talent and should help enterprises position themselves as Clients of Choice, such as providing onboarding support to create a positive user experience, aligning payment terms to market standards, and encouraging managers to report on high-value deliverables so independent talent can see how their work is making a difference.

    Ideally, a program is supported by technology and integrated into existing systems or processes. But enterprises should not rely on technology alone. While matching algorithms can help to narrow a pool of talent for a specific role, incorporating a human element—someone who can ensure specific skills and experience are accurately matched to criteria—can take a program to the next level, ensuring more precise talent matches.
    A direct sourcing strategy helps to get top talent in the door, and a sustainable end-to-end program will help keep them coming back.

    Direct sourcing provides many benefits, but companies need to understand that it’s not a standalone approach. It is most successful when used as part of a strategic contingent workforce management program.

    Download our requirements guide

    Key Factors to Consider about Direct Sourcing

    In order to evaluate a direct sourcing solution for engaging and managing contingent talent, organizations must determine the talent type the program will be used for, decide how the program will fit into their existing contingent talent strategy, and customize suggested evaluation criteria based on organizational needs and goals.

    It is first important to begin with a centrally managed independent contractor compliance and engagement program. Enterprises must understand both the costs and benefits of implementing a program, secure a dedicated program sponsor or champion within their organization, and begin an education campaign so internal employees and hiring managers understand how and why the program exists and adhere to new policies and processes.

    Throughout this time, enterprises will need to consider what type of contingent talent they will engage independent contractors, temporary workers, SOW project-based workers, etc.—as talent type will shape program design. Enterprises should also take a close look at current policies regarding independent contractors, if applicable. Evaluate current worker classification processes and determine whether or not they are compliant
    with federal, state, and local laws. For companies that currently engage contingent workers, look to see if there are project contracts on file and what information they include. By assessing gaps and areas for improvement, enterprises can better pinpoint what needs to be changed and what needs to be created when evaluating a direct sourcing solution.

    With the factors above in mind, it is also important to be aware that building and maintaining a centralized program is a big investment of time and cross-functional resources, and it is not typically an area of expertise for most companies. Rather than trying to build their own center of excellence for contingent talent engagement, many enterprises decide to partner with a firm that has expertise in this area.

    When selecting a vendor to partner with, it is important to keep organizational needs and goals in mind. For example, many companies solely focus on process outsourcing, payrolling, or talent acquisition. Enterprises will benefit most from working with a company that can put a rigorous and consistently enforced process in place for identifying, engaging, and managing contingent talent while indemnifying the enterprise from misclassification and legal risk.

    While one size will not fit all, the right vendor should be able to build comprehensive worker classification policies, align contingent worker engagement with the needs of the business, implement a compliance framework, and institute measurable objectives that enable the enterprise to collect data on how the program is doing and evolve and adapt accordingly.

    direct sourcing

    …top independent professionals are a breed apart, and they want to go direct…Enterprises that wish to be successful in engaging this critical source of skills, expertise and services must have a technology-enabled direct sourcing solution that will be fit for this purpose and will meet the full complement of enterprise solution requirements.

    Acces our guide to evaluating a direct sourcing solution

    Direct Sourcing Checklist

    Building a comprehensive program to compliantly engage contingent talent is an ongoing process that will grow and evolve as organizations discover the optimal way to source, engage, and manage talent in a way that meets their needs and goals as a business. Use the following checklist as a guide to create a robust direct sourcing engagement solution for your organization.

    CUSTOMER EXPERIENCE

    FOR ENTERPRISE MANAGERS

    • Does the solution allow the enterprise manager to easily add new or update existing projects?
      • Requisition upload
      • Skills taxonomy to support matching
      • API for auto distribution of projects from other systems
    • Does the solution provide a matching capability based on skills and fit of the talent? If so, how well does it work?
    • Does the solution allow managers to search for potential talent beyond the suggested matches?
    • Will platform users be overwhelmed with talent responses that are seemingly not a fit?
    • Is there an additional human element to help platform users find success?

    FOR CONTINGENT TALENT

    • Does the solution allow talent to easily create a profile?
    • Can talent search for opportunities?
    • Can talent indicate their availability?
    • Does the solution automatically provide talent with matches based on skills and fit?
    • How will talent be paid?
    • What engagement services are available?

    CONTINGENT TALENT IDENTIFICATION

    • Does the system rank the fit based on skill set?

    CONTINGENT TALENT CURATION

    • Can managers search, tag, bookmark, share, and categorize the talent in their network?
    • Can managers access other talent beyond their own network?
    • Can managers determine who can see which specific opportunities?
    • Does the solution allow companies to rate talent performance to inform future engagements?
    • Does the system access and indicate how talent should be engaged?

    TECHNOLOGY

    • Does the system interface with other common procurement technologies such as an FMS, VMS, or ERP?
    • Does the system offer value-added services and benefits to increase the satisfaction of independent talent?

    IMPLEMENTATION

    • Identify associated implementation costs.
    • How long does it take to implement the solution?
    • How long should it take to see adoption?

    ENGAGEMENT

    • Is the solution accompanied by a compliance offering?
    • Does the solution indicate whether or not the talent is already compliant?
    • What are the ongoing costs associated with the solution? Is it a subscription or one-time cost?
    • Once the engagement is negotiated, does the solution accompany an engagement platform?
    • Does the solution provide analytics for managers, procurement professionals, and HR teams?

    Download our checklist


    Interested in incorporating direct sourcing into your talent strategy?

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