Recruiting new hires is an important investment for any size company.
So when it is time to hire, where do you begin? When the coming year approaches, each company should set out to create a recruitment budget for their whole staff.
Talent acquisition can be tricky, especially when the average cost of hiring a new employee is a little over $4,000, and the turnover rate for all businesses is about 11%.
If your hiring managers want to improve your recruiting practices, having a set budget is the right path to begin for your company’s hiring needs.
Hire a trusted recruitment firm to assist with the recruitment process.
Table of Contents
What Goes Into a Recruitment Budget?
A well-documented recruitment budget requires businesses to understand all of their business needs regarding hiring.
- Advertising: any job postings that attract the attention of potential candidates. These could be on job boards, websites, social media, or other external recruitment areas that might need payment for posting.
- Assessments: for skills-based positions, assessments might be required. Your team will need to spend time and resources crafting tests or other services to send out to potential hires.
- Internal factors: your recruitment budget will also include salaries, recruiting software, and other costs that impact internal teams.
Your business might need other resources when it comes to recruitment. Every business is different, but it is essential to follow a simple framework when starting your first round of recruitment budget.
How to Create a Budget for Recruitment Services
Building a recruitment budget begins by selecting your company’s top priorities for the year.
Businesses can build a solid recruitment budget by following these steps:
- Consult Previous Costs
- Review Last Year’s Results
- Estimate Number of Hires
- Factor in Program Fees & Unplanned Expenses
- Track the Cost of Events & Collateral
- Create an Employee Referral Program
1. Consult Previous Costs
This isn’t your first year hiring unless you're a brand-new startup.
To get started with a new recruitment budget, look at your hiring budget from the previous year.
Break down internal and external recruiting costs - internal costs are considered funds you spend on internal efforts like referral programs. In contrast, external costs cover external recruitment efforts like job ad postings.
Also, break them down into fixed costs and recurring expenses.
If you want to stick with the same external recruitment agency, then re-up that contract.
All of this information can act as a guide for the next step in crafting a recruitment budget.
2. Review Last Year’s Results
Consider the results from the previous year of hiring.
Look at what your business spent in the past, and explore the ROI (return on investment) — if your team found success with providing incentives for new applicants, then continue that strategy. If the current recruiting software doesn’t fit your needs, then browse for another one.
This information can impact how your recruitment budget is structured for the year.
3. Estimate Number of Hires
To have a recruitment budget, businesses need to know who to hire.
List out every job title needed on the team, which includes key requirements, target salary range, and hiring dates.
Recruiting teams should do this for full-time positions but also leave room to account for freelancers, part-time employees, or any contractors your business could hire during the year.
Cost-per-hire metrics can help with curating your recruitment budget.
Businesses can calculate their cost-per-hire estimate with this formula:
CPH = Internal recruiting costs + external recruiting costs divided by total number of hires
The more people you hire, the lower it will be.
It is important to remember that costs will vary depending on each hire. Some roles will be harder to fill, requiring more planning and effort.
4. Factor in Program Fees & Unplanned Expenses
Along with factoring in actual hires, the recruitment budget should include program and system fees that help facilitate the hiring process.
These can include a CRM system, posting jobs online and on social media, revamping career pages, onboarding certain partnerships, and installing tracking and analytics tools.
You should also consider unplanned expenses. For example, a business might have to invest in extra support for recruitment if something happens internally or if there is a need for a new system for video interviews. A lot of these can be unexpected, but it is better to already have them allotted in the budget.
5. Track the Cost of Events & Collateral
Recruitment events like job fairs are useful but require a lot of effort and maintenance.
Attending or hosting events will help build brand awareness, making your company attractive to candidates.
Make sure to plan them in advance to help figure out how they will factor into your overall recruitment budget.
Another way to promote your business to potential hires is to showcase your company culture, which also costs money.
Businesses can hire photographers and videographers to add photos and videos of team members.
While all of these can impact your budget, consider them an investment - they can help overall employer branding.
6. Create an Employee Referral Program
A strong recruitment strategy for businesses is creating an employee referral program.
Some companies rely on employee referrals for the bulk of their hires. Having a program in place where internal teammates receive referral bonuses based on their recommendations can motivate current teammates and ensure that the best candidates are coming in the door.
Be sure to factor these bonuses into your budget since many teammates will see this as an appealing opportunity.
Recruitment Budget Template
Now that your team knows where to focus on, start planning out your recruitment budget.
Download this recruitment budget template for your business.
Factors for Recruitment Costs
Numerous factors go into recruitment costs, including:
- Number of total hires
- Types of open positions
- Recruiter salaries
- Job boards and other areas for posting
- Recruitment technology (applicant tracking systems)
- Background check services
- Employer branding
- Event expenses
The cost of recruitment can vary depending on how the process evolves. Teams should be flexible when it comes to recruiting expenses.
Steps for the Hiring Process
With your budget in place, it is now time to start hiring.
Here are a few key steps for the hiring process that can translate to any company or industry:
- Review application and resume
- Hold a screening call
- Send an assessment test if applicable
- Hold an interview
- Do any background checks or reference checks
- Send job offer once the decision has been made
Just like putting your recruitment budget in place, the hiring process isn’t cut and dry. Having a hiring plan will help your team streamline the process while keeping organized.
Structure Your Recruitment Process for Business Success
Recruitment is an essential part of business growth.
Creating an expansive recruitment budget involves insight from key stakeholders and internal teams. Their thought processes will provide great value to recruitment plans.
Start your recruitment budget today using our template to help your company grow.