The End of Sourcing 1.0 is Near, Sourcing 2.0 Just Beginning..

Posted: February 26, 2013 in Uncategorized

In case you haven’t read Dr. John Sullivan’s recent article entitled, “The end of sourcing is near…the remaining recruiting challenge is selling“, I highly recommend that you do so.

While I agree with some of the points that Dr. Sullivan raises, I disagree with others as I believe he has an oversimplified view of sourcing.

I argue that some basic and common sourcing functions and tactics will be coming to an end soon, and in fact, they have already ended in companies that are on the leading edge of sourcing.

However, as with many corporate functions, there will never be an end to sourcing itself – there will only be an evolution.

What follows is my sourcing manifesto.

Read further to explore:

  • Why sourcing exists in the first place

  • The underlying flaws of the “everyone is easy to find” argument

  • The limits of matching technology

  • Why big data requires people to make sense of it

  • My definition of sourcing

  • Strategic vs. tactical sourcing

  • The true value of sourcing

  • What can (and should!) be automated in sourcing

  • Sourcing 1.0 vs. 2.0

You should be advised that this is a lengthy article – if you’re looking for a quick read, you won’t find it here.

Why Does Sourcing Exist?

Before we can claim that sourcing is coming to an end, I think it’s important to examine why sourcing exists in the first place. If the underlying need for sourcing isn’t coming to an end, then the sourcing function itself isn’t likely to come to an end.

Quite simply, sourcing exists because  companies increasingly recognized that not enough of the right and/or qualified people were applying to job vacancies.

Whether or not companies performed a root cause analysis of the inefficiency and in many cases ineffectiveness of posting jobs and formally recognized the intrinsic limitations job posting could be a matter of interesting debate (for the record, I don’t think many did/do).

Whether recognized or not, the reality is that posting jobs is a passive and reactive method of talent attraction that affords very little predictive control over 3 out of 5 critical candidate matching variables (0% for two of them), and this latter point cannot be overlooked or minimized. The ability to exert a high degree of predictive control over the SOLAR variables affords a company with a corresponding ability to increase the probability that they people they are finding and attempting to recruit are well qualified and matched to any specific job and the company, whether the people are “active” or “passive.”

Furthermore, posting jobs only offers a company access to those people who proactively take action to change their current employment situation (aka – “active” candidates). The U.S. Bureau of Labor and Statistics and work performed by Lou Adler and LinkedIn both confirm that at any point in time, people who interested in and willing to take action to change their current employment situation are the clear minority – approximately 20 – 30% of the total talent pool at best.

Relying solely upon the posting of vacancies ultimately yields a company the best of the active talent pool– not the best people that could have been recruited.

Doesn’t sound like a good way to develop a talent-based competitive advantage, does it?

Because the majority of the total talent pool simply won’t take any action to find and take action to apply to job openings (aka – “passive” candidates), the only way to tap into the deeper end of the talent supply is to take proactive measures to find and engage them (aka- sourcing). The probability that the best person for any given position is proactively taking efforts to find and apply to job openings at the time any given company needs them is intrinsically low.

Many companies recognize the fact that some of the best people are likely working somewhere, doing a great job, and being appropriately valued and taken care of to the point where they would never take any action to explore job opportunities. However, if these companies don’t have recruiters who have the time to focus heavily on sourcing or have split sourcing out into a separate role and function, they will likely never be able to acquire truly top talent beyond the best of who’s in a position to find and apply to their jobs.

Now, let’s recognize that sourcing has always existed – it’s the one of the earliest phases of the recruiting life cycle. Sourcing has always been a part of executive search, as well as a large part of agency recruiting.

The decision to split sourcing out of the recruiting life cycle into a separate role and function likely came as a result of realizing that in many corporate talent acquisition teams, the recruiters are often inundated with (largely unqualified) applicants for the jobs that have been posted, leaving them little time to proactively find and engage the larger portion of the talent supply that will never find and apply to their jobs.

At a high level, taking any role that is responsible for many things and splitting responsibilities and activities across multiple roles to increase efficiency and efficacy is a generally accepted best practice in economics and business, and it has been happening for thousands of years (some would credit Plato’s Republic as one of the earliest documented arguments) – it’s called division of labor.http://en.wikipedia.org/wiki/Division_of_labour

A highly applicable example lies in the fact that some sales organizations have evolved to split their sales teams into “hunters” and “farmers.” This has happened because companies have recognized that some sales people are great at maintaining and growing relationships with existing clients but are not very good at prospecting and landing new clients. Conversely, some sales people are great at finding and signing new clients but are not very good at maintaining them after the deal has been closed.

In many respects, I believe that splitting the recruiting process into sourcing and recruiting is performing very much the same thing – sourcers are the “hunters” and recruiters are the “farmers.”

For those companies that recognize the intrinsic limitations of job posting (both the inability to exert predictive control over critical candidate qualification and matching variables and the fact that the majority of the talent supply simply cannot be reached via job distribution) and the benefits of division of labor, sourcing will never “come  to an end” or die.

How can it? Will the need for companies to hire top talent ever abate? Will talent supply and demand issues ever magically solve themselves?

Finding People is Easy, Right?

Like many before him, Sullivan makes the claim that “finding talent is easy because everyone is now ‘visible,’” and as such, “that nearly everyone is easy to find.”

I find the “people are so easy to find who needs sourcing?” argument especially bothersome because on the surface, it actually appears to make sense. However, the logic is flawed in that it oversimplifies a complex issue, and it’s actually not true that you can find almost anyone online (hat tip to phone sourcers).

However, let’s assume that you can find almost anyone online for a moment.

As I have explained many times, the proliferation of human capital data certainly makes finding people easier than ever before. I like to illustrate this point by using the “needle in a haystack” analogy.

As the stack of hay grows larger, finding hay becomes easier. However, as the haystack grows larger, intelligently sorting through the hay to find the needles within becomes correspondingly more difficult.

In this analogy, the needles represent people with specific skills and experience (including amount and type – team, scale, industry, company, environment, etc.), who live in specific locations, whose desired compensation closely matches what the company is willing to pay, who represent an appropriate cultural match, and those people for whom the company’s opportunity represents a logical or the desired next step in their career.

I do believe this qualifies the use of the “needle in a haystack” comparison. Companies are not looking for more hay – they are looking to identify and recruit the needles, and this will never become easy because as the haystack grows larger, the more difficult it becomes to find the needles (or to separate the signal from the noise – choose your own analogy) – but ultimately, people are not widgets.

Ten people can have nearly identical resumes, but each person can be vastly different than the others in consideration of the many critical matching variables that ultimately determine who is and who is not a good fit for any given position, team or company.

In case you do not like my “needle in a haystack” analogy, perhaps you will better appreciate my home improvement store analogy.

You would think that large home improvement stores such as Loews and the Home Depot would make it easier to find tools and other home improvement items, simply because the grant you easy access to hundreds of thousands of related items. However, if you’re like me, when you enter one of those stores, you’re never just looking for tools, hardware, appliances, lumber, light bulbs, fertilizer, etc. – you’re looking for a very specific tool, piece of hardware, appliance, lumber, light bulb, fertilizer etc.

Using Dr. John Sullivan’s logic, finding a hammer or a light bulb should be easy because the Home Depot has many of them within easy access.

However, I never find this to be the case – and I am sure am not alone. Just yesterday, I entered the Home Depot looking for a light bulb for the light fixture in my master bath. I needed a frosted, globe shaped 60 watt bulb with a standard (non-candelabra) base. Finding the light bulb should have been easy given that the Home Depot has thousands of light bulbs for sale.

However, after walking up and down the light bulb while several times, while I could find many varieties of bulbs that somewhat closely matched my need (right shape but clear, right bulb but wrong wattage, right bulb and wattage but candelabra base, etc.), it turns out that the Home Depot didn’t have the exact bulb I needed.

Furthermore, as I’ve tried to make clear many times in the past, having access to data and information does not provide anyone with a competitive advantage. Access is simply “table stakes“ – everyone has access to the Internet, LinkedIn, Facebook, Twitter, Google+ and many other massive sources of human capital data.

Back in 2009 I read this excellent post on the Google blog written by Jonathan Rosenberg, former SVP, Product Management at Google, which is just as poignant and relevant today “When every business has free and ubiquitous data, the ability to understand it and extract value from it becomes the complimentary scarce factor. It leads to intelligence, and the intelligent business is the successful business, regardless of its size. Data is the sword of the 21st century, those who wield it well, the Samurai.”

Ultimately, the access/availability argument against sourcing is fundamentally flawed.

Just to put the final nail in the coffin, has having easy access to large quantities of data reduced the need for or eliminated the roles of financial analysts, data analysts, marketing analysts, business intelligence analysts, or data scientists?

The obvious answer is no.

What is Sourcing Anyway?

It’s problematic to debate on the future of sourcing when there isn’t a commonly understood and agreed upon definition of sourcing.

However, before I define what sourcing is, I’d like to first recognize that regardless of definition, sourcing isn’t necessary for all positions.

Sourcing really only becomes necessary when employer branding, job posting, and all other passive methods of talent attraction fails to produce a consistent and sufficient quantity of well qualified potential candidates. If you can produce a good supply of highly qualified, interested and available candidates from your talent attraction strategies and efforts, proactive sourcing of additional candidates is unnecessary to facilitate hiring for roles that are currently open.

Second, I’d like to establish that talent attraction tactics and strategies are primarily focused on and effective for people who are actively exploring career opportunities, whereas sourcing is an activity primarily focused on people regardless of their job seeking status.

The fact is that the majority of any given talent pool is comprised of people who are either not looking for a new job or those people who most would classify as passive job seekers – those people who are not taking any action to discover or pursue job opportunities, but who would be interested in learning of opportunities that would better their current situation and/or advance their career. Depending on your reference source, passive and non-job seekers represent at least 70% of the total talent pool.

Now that we’ve established that sourcing isn’t always necessary to facilitate today’s hiring efforts and that sourcing is primarily focused on identifying and engaging talent that simply cannot be acquired through job distribution , I am going to take a shot at shot at defining what sourcing is.

Sourcing is any activity and effort undertaken to proactively facilitate hiring today and/or in the future.

Simple, right?

Although some people would argue that employer branding and job posting could be considered sourcing (I’ve even taken this stance in the past), job distribution and employer branding is:

  1. a passive strategy (requires the talent pool to take action)

  2. reactive (involves the engagement of people only once they have responded and taken action)

  3. effective only on the portion of the talent pool that is in a position to take action to discover and pursue employment opportunities (<30%)

Sourcing is the compliment to employer branding and job distribution because sourcing is:

  1. an active strategy (involves active pursuit of talent)

  2. proactive (involves proactive engagement and requires no action of the talent pool)

  3. required to find and engage the majority of the total talent pool (>70%) that will not take action to discover and pursue employment opportunities

In many organizations that have separated the sourcing function out from the recruiting life cycle, the sourcers are responsible for proactively seeking out and engaging people who are highly unlikely to be taking any action to make a change from their current employer, whereas the recruiters are responsible for handling the inbound flow of candidates that have applied to published vacancies.

This is a clean division of labor. The sourcers focus on proactive outbound activity while the recruiters focus on reactive inbound activity.

Tactical vs. Strategic Sourcing

It is important to recognize that sourcing can tactical, strategic, or both.

Purely tactical sourcing involves those sourcing efforts whose sole goal is to find candidates for positions that are currently open. As such, tactical sourcing efforts are not necessarily aligned with mid and long term company goals.

Strategic sourcing involves those sourcing efforts whose primary goal is to ensure long-term talent supply stability and the minimization of talent supply risk. Examples of strategic sourcing include talent mapping, competitive intelligence and analysis, and talent pool/pipeline development. As you can imagine, strategic sourcing should be closely aligned with mid and long term company goals.

Sourcing efforts can be simultaneously tactical and strategic if and when sourcing efforts focused on finding candidates for positions that are currently open are combined with efforts to collect competitive and market intelligence, as well as ensuring that anyone identified and/or engaged that is not currently available or that is under/over qualified is entered into a talent pool (or pipeline) that can be leveraged in the future when they might be recruitable, appropriately qualified, or match another hiring need.

While there are probably some types of sourcing that will come to an end soon (if they haven’t already in some leading organizations), there are many different levels of sourcing activities.

Here are six:

  1. Name generation – identifying people without the benefit of a resume or data-rich social media profile as potential candidates and passing this information to a recruiter to engage (Internet and phone sourcing)

  2. Resume and social profile discovery – identifying people as potential candidates and passing their information to a recruiter to engage

  3. Finding (via #1 and/or #2) and engaging talent – determining their availability and interest and passing this information and the candidate to a recruiter to assess qualifications

  4. Finding (via #1 and/or #2), engaging, and assessing talent: determining qualifications, interest and availability and passing this information and the candidate to a recruiter for a quality check and further processing (inviting to apply, submission to hiring manager, etc.)

  5. Finding, engaging, assessing, and selling prospective candidates: determining qualifications, availability, interest and selling the opportunity (current and future), to both compel passive and non-job-seekers to take action and apply or to enter the company’s talent pool, as well as to more effectively elicit referrals

  6. Same as #5, with an additional focus on discovering and documenting market and competitive intelligence

These six levels can be used to assess and gauge a talent acquisition organization’s level of maturity with regard to how they leverage sourcing.

Any and all of the above can be either tactical, strategic, or both depending on the primary goals of the efforts (filling current openings and/or ensuring the availability of appropriately qualified talent at the right time and quality in the future).

If you were paying close attention to the progression in the different levels of sourcing activities, you should have noticed a few things.

For example, #’s 1 -4 all involve passing names and/or candidates on to recruiters for further action. You may have also noticed that the only difference between #4 and #5 is that in #5, the sourcer is consultatively selling current and future opportunities.

#5 and #6 should have struck you as pretty much what many organizations would assume a full life cycle recruiter should be doing, but if we’re being brutally honest, many recruiters don’t really sell – they simply tell prospective candidates about the jobs they are currently working to fill (more on telling vs. selling later).

Another issue that I’ve already called to light is that many corporate recruiters are often too bogged down with screening applicants to proactively find, engage, and sell passive candidates on their current openings, let alone strategically pipeline talent for future opportunities or gather and document competitive intelligence.

As I mentioned before, it’s this very issue that likely served as the genesis of sourcing as a separate role and function.

Companies realized that they had jobs that their full life cycle recruiters simply could not fill in timeframes anywhere close to their time-to-hire targets or in time to meet critical business deadlines simply because some jobs require a significant amount of proactive sourcing in order to identify the right talent.

In less evolved talent acquisition organizations, sourcers are added to an existing team of recruiters to supply the recruiters with names and candidates that the recruiters don’t have the time or ability to find and engage, and with qualified and interested candidates for positions where none of the applicants are qualified.

With each year, more talent acquisition organizations are evolving the sourcing model beyond using sourcers as recruiter assistants and are leveraging sourcers to perform the majority of their proactive recruiting.

Yes, I said recruiting.

If someone is proactively finding, engaging, assessing, and selling prospective candidates on current and future opportunities, are they not “recruiting?”

If a sourcer finds and engages a passive candidate, sells them on and fully qualifies them for the opportunity they are working to fill, what’s left for a “recruiter” to do with the candidate? Aside from negotiating offers – largely administrative tasks.

If you are of the opinion that recruiters should “close down” candidates, I’d argue that in world-class talent acquisition organizations, 90% of the closing of passive candidates should be performed by the sourcer (otherwise known as pre-closing).

Sourcing Involves Selling

In organizations that use sourcers for name and resume generation only or perhaps initial candidate contact, Sullivan is correct in that there is little to no selling involved.

However, in organizations that effectively leverage the full power of division of labor where recruiters focus on working with inbound applicants and the sourcers focus on working with proactively identified candidates, the sourcers are in fact “recruiting” just as much as the recruiters are.

Furthermore, one could easily argue that the sourcers are likely “selling” more than the recruiters are, because the sourcers are engaging people who did not already express an interest in the company because they aren’t applicants.

The people that sourcers engage are predominantly not looking for a job and likely don’t need to make a change from their current employer – this takes a different level of selling than what will be effective with most applicants, who are people who have already expressed interest in making a change from their current employer, as well as interest in the job and company they’re applying to.

Telling Isn’t Selling

I think it is important to point out that you really can’t sell something to someone  unless you first find out what the person would be interested in buying.

Most sales gurus would tell you that the most critical step in the sales process is identifying and/or creating the need. You can’t (or perhaps more importantly, shouldn’t!) sell something to someone that doesn’t meet their needs.

To be able to compellingly pitch an opportunity, you have to first gain an understanding of what the person is looking to do next in their career and discover how your opportunity might align with their needs, desires, and goals – and you can’t do this without making contact, which is why I believe that sourcers should be responsible for finding, engaging, and selling prospective candidates instead of simply flipping leads or resumes.

Additionally, selling is much more effective when you are selling benefits and not just telling the person about features and attributes/advantages. If you don’t know what I am talking about when I mention features and benefits, I’d argue you’re not really selling anything.

Regardless of role (recruiter or sourcer), Sullivan is correct in identifying the fact that effective selling is absolutely critical.

People with highly sought-after skills are stalked by sourcers and recruiters on a daily basis. People who aren’t taking any action to make a change from their employer do not respond to every email, InMail, and voice mail they get from sourcers and recruiters.

As such, the “selling” actually begins with effective messaging. You can’t sell someone on an opportunity let alone recruit them  if you can’t even get them to respond to you. Hence the need for sourcers to be consummate sales professionals!

What is the Value of Sourcing?

I would argue that the value of sourcing is directly proportional to the level of sourcing maturity of an organization.

There is little value in a list of names or a folder full of resumes or LinkedIn profiles.

There is a great deal of value in producing people who are a solid match for your organization’s needs and interested in pursuing your employment opportunity – either immediately or at some point in the future.

In this regard, I agree with Sullivan that low value sourcing activities are coming to an end.

However, high value sourcing is just beginning.

According to a white paper produced by LinkedIn, although sourcing was a critical focus in 2012, only 2 percent of organizations had a long-term approach to sourcing initiatives.

As I previously mentioned, strategic sourcing involves those sourcing efforts whose primary goal is to ensure long-term talent supply stability and the minimization of talent supply risk. Examples of strategic sourcing include talent mapping, competitive intelligence and analysis, and talent pool/pipeline development. Strategic sourcing should be closely aligned with mid and long term company goals.

Strategic sourcing can also go beyond simply ensuring long-term talent supply stability – it can (and should!) be leveraged to yield a company with the only sustainable competitive advantage, which is to consistently find, recruit, and retain great people.

What Can Be Automated…

As some people are fond of pointing out, you should not use expensive resources to collect information from the Internet and scrape resumes from databases. You can use inexpensive resources or use software to collect names and resumes at WAY less than $1/resume/profile.

However, it’s equally fair to recognize that you can use software and technology to automate nearly every step in the recruiting life cycle, including messaging (aka “blasting,” aka spamming), candidate screening, assessment and even interviewing (audio/video).

One could argue that the end of recruiting is near simply because we can use technology at every stage of the recruiting life cycle.

However, just because you can automate something (or outsource/offshore, for that matter), it doesn’t mean that you SHOULD.

Ultimately, companies should leverage their “expensive” resources for high value activities.

When it comes to sourcing, this includes using technology to quickly identify people who have a high probability of not only being the right match for, but also interested in a particular opportunity, leveraging effective messaging and engagement techniques and strategies to make contact with the people identified, and effectively selling the opportunity to people who would never have otherwise taken any action to investigate or pursue employment opportunities with their company.

Final Thoughts

Sourcing is no closer to an end than recruiting is.

As long as companies have hiring needs for which employer branding, job distribution and other talent attraction tactics and strategies fail to produce the right quantity of talent at the right quantity at the right time on a consistent basis, and as long as there are talent supply and demand challenges, sourcing will never die.

Dr. Sullivan is right when he says the end of sourcing is near – however, only if you define sourcing as collecting/scraping human capital data.  We are likely to see an end of sourcing 1.0 relatively soon.

Yes, I know – I’m not particularly fond of the whole x.0 approach either, but it does do a good job of demarcating progressive evolution.

Sourcing 1.0 can be characterized by using more expensive human resources for the scraping and collection of names, social data, and resumes, leveraging sourcing as a purely tactical function, as well as viewing sourcing as a subordinate role in the recruiting process.

Sourcing 2.0 involves using more expensive human resources to expertly wield advanced technologies to move and manage unstructured and structured human capital data to exert predictive control over critical candidate qualification variables, leveraging sourcing as a strategic function, and positioning proactive sourcing as at least, if not more valuable than the reactive recruitment of applicants.

While we are finally beginning to see the emergence of advanced sourcing technologies, including what I classify as “big data” sourcing tools (TalentBin, Entelo, Dice Open Web, Gild, etc.), they still require people to use them, make sense of the information they produce, and take action (effectively message, engage, sell, and recruit).

However, while advances are being made with sourcing technologies, the fact that many companies openly admit that they do not effectively leverage the human capital data in their own ATS indicates we have a long way to go with regard to recognizing and making use of the strategic value of human capital data.

In an organization where recruiters are responsible for screening/assessing, selling and processing candidates who have applied to job openings and sourcers are responsible for proactively identifying, engaging, selling, assessing and submitting people that would never have otherwise applied – both the recruiters and sourcers are “recruiting,” and one could easily argue that the sourcers are “selling” more than the folks who are working with people who have already expressed an interest in making a change from their current employer as well as an interest in the job they applied to.

I agree with Dr. Sullivan in that the emphasis in recruiting needs to shift to selling. However, you can’t sell to someone you haven’t found in the first place, let alone successfully engaged.

Engaging active candidates is not particularly challenging – especially those people who have already expressed an interest in your company and opportunity when they applied to a job opening.

While selling is critical, it is perhaps most critical with regard to sourcing efforts focused on people who are in high demand and low supply, who are typically highly pursued and do not need to entertain the engagement efforts of sourcers and recruiters because they are doing a good job somewhere else and relatively happy where they are. However – that doesn’t mean that they can’t be recruited.

To that end, I’d argue that there is no more critical need for selling than the selling that needs to be performed by sourcers.

While a full life cycle recruiter can and should be capable of performing proactive sourcing, there are many undeniable advantages to the division of labor between sourcers and recruiters, exactly as many sales organizations have divided “hunting” from “farming.”

Having a dedicated sourcing function ensures that the identification and recruitment of people from the deep end of the talent pool, where top talent is statistically more abundant, is more consistent and scalable, and it clearly demonstrates an appreciation for and investment in the strategic aspect of sourcing, which goes well beyond finding and submitting candidates for current job openings.

While Sourcing 1.0 is likely coming to an end soon, and it already has in leading edge talent organizations, Sourcing 2.0 is just beginning, and we will experience a continued evolution of the role and function over time.

 

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