Direct Sourcing: Don’t forget the Process!

As previously highlighted, Japan ranks as the world’s most difficult country to hire in according to ManpowerGroup’s annual talent shortage survey with the last survey showing 89% of companies having difficulty compared to the global average of 45%. An inability to hire impedes the ability to grow and with the race on, companies are paying higher and higher fees to employees for referrals or to recruitment agencies to find that talent. 

Competition is fierce but despite this situation, many companies simply maintain their “status quo” approaches to recruitment and remain stuck in their old ways. In short we see many clients under pressure to hire but not giving their talent acquisition the required investment to be effective. They expect to get better results just by adding more people to the team without any significant change to the model they have used to date.

They talk about direct sourcing as a goal and may have dedicated recruiters within the team, but those recruiters are heavily dependent on agencies for sourcing; once the floodgates open with contingency agents, the avalanche of resumes coming in makes it hard to do any direct sourcing beyond a few employee referrals. The recruiters often feel unable to change the status quo – and agencies are happy to keep it that way.

Some companies invest into talent acquisition by hiring additional people to drive employee referrals while the incumbent team focus on new graduate hiring or other projects. Others hire additional recruiters to drive direct sourcing such as scouting through recruiting media such as LinkedIn, with the aim to reduce the dependency on agencies. Some get it right and boost their ability to hire quality people quickly, as well as reduce overall cost of recruitment, but many get it wrong – or at least not as right as they could. In all too many cases the budget only allows for a quick fix – hire an extra recruiter – without any real strategic change in the way recruitment processes work. 

This is where using a professional recruitment firm to deliver their services onsite can work as an excellent “try before you buy” step; effectively they can help prove how a model works, and save you money before any further investment is made. In many cases our own clients have seen significant boosts in productivity, with massive cost reduction through the implementation of direct sourcing models where the main focus is to reach potential candidates before third party agencies do. Some applicants may prefer to come through their trusted agent, and the best agents should be retained, but any agents that cannot deliver beyond the “easy to find” prospects are clearly not proving their value.

Let’s not be mistaken by thinking any talent is really “easy to find” in a market where 89% of companies cite “difficulty”, but there are “active” candidates on job portal sites such as BizReach, Nikkei Careers, En and so forth, as well as on LinkedIn in some cases, who are looking for new jobs right now and are relatively easily accessed.

In reality, “active” candidates only represent 8% of the total talent pool in Japan, compared to over 31% in South Korea or over 22% in the US, for comparison. This 8% is targeted by everyone in an extremely competitive market so if a talent acquisition team has the resources in house or through a partner to find this talent then they can get their message across better and control the interaction; if they can attract the candidate to apply then they will also significantly reduce their overall cost of recruitment.

With direct sourcing employers can also develop relationships with or at least share information with “passive” candidates who may be looking to change jobs in the next 12-18 months so that the candidate pool never really dries up. As shown in other posts over 15% of the market will become “active” over the coming 1-3 years, and while 3 years is too far off it does makes sense to start mapping out as much of that talent pool as you can for the time when those people start making the switch from “passive” to “active”. If they don’t know you, your chances of competing for them drop significantly. 

Reaching both the active 8% and the passive candidate pool are some of the aims of direct sourcing. Certainly for our own recruiters outsourced to clients our expectation is that any of this low hanging fruit should be targeted and screened through direct sourcing rather than inefficiently left for the agents to introduce. This is the essence of direct sourcing and it can go hand in hand with contracting the best agents to produce a highly effective recruitment model; a model that takes some of the power off the agents and gives it back to the client.

For this to happen however there is a significant strategic shift that needs to be made by HR leadership with regards to how they value talent acquisition. In my view, talent is the sole differentiator of a company as it impacts culture, retention, innovation, and ultimately the ability of a company to compete and succeed. Talent acquisition should be the most strategically important part of any business and in this extremely competitive environment, but it needs to be about the “process” improvement and strategy as much as it is about simply adding more resources.

Talk to us if you would like to learn more about how direct sourcing can help your business.

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