Developing a recruitment budget is often presented as a challenging task for HR managers and recruiters. We frequently see a deficiency in wiggle-room when it comes to creating space in the allotted budget for new ideas, surprise expenses, and so on. There are set costs that take precedence over additional expenses year after year. With this continuous process set in place, how should you be conducting cost-benefit analyses to ensure you’re optimizing efficiency in your recruitment budget?
We have identified key areas that should be included in every recruitment budget, as well as key questions to ask as you redefine particular expenses, subscriptions or technology investments.
Before You Begin
Before you start developing a new budget for the year, it is essential to look back and conduct a deep-dive review into past recruiting efforts to assess efficacy and performance. Having solid, reliable data will help to direct a strategic recruitment budget from the very beginning. What is the average number of hires you bring in per year? What were your most successful channels for attracting top talent? Were there certain methods that resulted in more qualified candidates compared to others? These questions will help guide you in uncovering the data that should be factored into your budget. In addition, be sure to note the time-to-fill length for certain positions, as this has the ability to directly impact your cost-per-hire.
It is equally important to assess your current staff and anticipate future hiring needs. Consider if certain roles have become more significant or redundant compared to others. Are there upcoming product roll-outs or service areas that could potentially require immediate staffing needs? Being as informed as possible with all company information will help you to develop a strong recruitment plan for the coming year.
Solidify Your Cost-Per-Hire
Knowing your cost-per-hire, or what you are prepared to spend per hire, is vital before developing any recruitment budget or strategy. A recent survey by SHRM found that the average cost per hire is just over $4,000. We recommend using SHRM’s formula (the sum of all recruiting costs divided by the number of hires in a specific time period) to identify your previous cost-per-hire before developing a new budget. Glassdoor additionally recommends creating a list of each job title, hiring dates, and salary impact per headcount by quarter to determine a personnel budget. It is also recommended to add 30% to each total to account for benefits, taxes, and T&E.
While last-minute or unforeseen expenses will most likely contribute to the list as the year progresses, developing a streamlined recruitment budget will keep priorities focused and costs as low as possible. It is vital to look at typical recruiting expenses and analyze their productivity in satisfying your recruitment needs. We have included essential costs typically hired with recruiting, which includes basic costs, fixed costs, technology costs, optimization costs, and other miscellaneous expenses.
1. Job Boards
Job boards have become a sort of necessary evil, with almost every company using this method for job post distribution. There are hundreds to choose from, while the most popular remain Indeed, ZipRecruiter, and LinkedIn. Compile the total cost for each platform, as well as the number of postings and those associated costs. Be sure to assess if you typically receive more quality candidates from one platform compared to another and if you are maximizing the job board experience. While most job board experiences are identical, using a service like VIZI can help to differentiate you with visual job descriptions and a significant uptick in apply-start rates.
2. Salary Costs, Recruiter Fees and Performance-Based Incentives
Calculate all expenses related to hiring for both internal and contract staff. This category is likely to be the highest expense in your recruitment budget, however, understanding how much you are spending on dedicated personnel is essential. It may reveal that outside contractors are not needed and can be a saved cost, or in contrast, reveal that more staff is needed to assist in fulfilling a high number of hires for the coming year.
3. Applicant Tracking Systems
ATS’ have become an integrated part of many HR departments and recruitment strategies. They alleviate numerous manual functions previously part of a hiring manager’s role, including sourcing passive candidates, posting job openings, collecting applicants and scheduling interviews. Fees for this software can range in price and are set up as either a monthly, per-user or annual cost.
4. Employer branding tools
Employer branding has become more important than ever when it comes to effective recruitment and can remain unchartered territory for many HR professionals. Part of an overall recruitment marketing strategy, employer branding includes any methods that positively showcase or advertise your brand. Social media marketing, digital advertising, recruitment events, and career fairs are just a few of the additional expenses associated with employer branding strategies. When planning your budget, it is crucial to look for ways you can maximize your spending and use tools that achieve multiple goals whenever possible. According to a recent survey, an employer brand alone can typically amount to a $129,000 annual investment!
VIZI is a prime example of a recruitment investment that works with social media marketing, digital advertising, employer branding, job boards, and improving the job description.
5. Careers page
Your company’s career page should be attractive, easy-to-navigate and engaging. This page is a key opportunity to showcase your employer brand with employee testimonials or videos, highlight awards or exceptional work and gives potential candidates an inside look into your company. Associated costs may include design and development and maintenance.
While these five items are the most common and important elements to include in a recruitment budget, be sure to leave room for unanticipated expenses that may incur throughout the year. If you plan on using external recruiting agencies, partnering with universities or corporations, subscribing to assessment tests and tools or employee referral programs, add those to your budget as line items.
The more planning you can do ahead of time, coupled with analytics and data that outline what works and what does not, will help to set you up with an appropriate budget for the coming year. Additionally, maximizing your spend with tools, software, and services that work to achieve multiple elements of your budget will help to spread your dollar further.
For more information about VIZI and how we can help lower your recruitment budget costs with our patented software, contact us for a custom quote.