7 Ways to Manage Your Recruitment Budget
According to one report, 40% of recruiters say that their recruitment budget increased in 2021.
Many HR departments are dealing with extra money or are just wondering how to even start the budget in the New Year. With the Great Resignation and a competitive candidate’s market, many people wonder how they can navigate this with a limited budget.
Keep reading to discover a few ways to manage and maximize your recruitment budget.
1. Determine How Many People You’ll Hire
The most significant expense for any company is the employees’ salary, but hiring them costs money. The number of people to hire will be the biggest factor in the budget, so you should figure that out early on.
Contact all hiring managers to see how many employees they’ll anticipate hiring. Will they have any retired employees? Do they plan on creating any new roles? Recruiter.com expects The Great Resignation to continue through at least the first half of 2022, so some hiring managers might find it difficult to predict how many people they’ll need to hire in their department.
You should create a spreadsheet of every department and the number of roles they’ll need to hire. Also include information like what position you’ll be hiring for. Are they going to be an intern or a director? Knowing this could help you develop an annual or quarterly expense estimate.
Consider if these specialized roles require a unique skill set. If you don’t have the resources to hire for that role, you might need some extra budget to try and partner with external recruitment agencies.
You should also use previous data to help you determine what the turnover rate is for each department and role. The data will give you an estimate of how many people will leave during that year.
For example, if your company has 3,000 employees with a 10% quit rate, you can project that you’ll need to replace 300 employees that year. This number will also factor into how many new roles you’ll be hiring for.
To get the average turnover rate, go back over the past few years, including those impacted by COVID-19. While it may not give you a perfectly accurate number, it’s a good place to start.
2. Calculate Your Cost Per Hire
Another important step is calculating how much it will cost you to hire each person. You can rely on your old budgets for data, but if your expenses changed this year, it’s best to re-do the math.
In general, you can use this formula to help you calculate how much it will cost to hire someone new. The formula is:
Internal Cost + External Cost / Total Number of the People You Want to Hire = Cost Per Hire.
Once you get the answer to that formula, take that number and multiply it by the number of hires you plan to do this year. Double-check when you get this number to ensure that your cost per hire increases at an average rate. It should increase alongside the number of hires, revenue growth, and inflation.
3. Breakdown All Your Expenses
Now that you’ve broken down your biggest expense, you’ll have to break down everything else as well. Start by figuring out how much the recruitment process costs each month. You can even break it down into different categories.
Part of the budget should focus on retaining current employees. Invest in career growth, raises, and benefits to ensure that your existing employees are happy.
In another section of your budget, average how much it costs to advertise your job descriptions. It could be posting jobs on job boards, whether generalized, niche, or both. It may even factor into how much professional social networking costs you’ll need as well.
You’ll need money for background checks, administrative expenses, and networking and recruitment events, like job fairs.
Budget for company branding as well. Employer branding is anything like social media posts, banners, print materials, videos, or articles. This type of marketing can help you attract more suitable candidates to your open roles.
4. Don’t Forget Your Technology Costs
One survey discovered that 75% of recruiters say technology will help them with their hiring process in the future. With how busy recruiters are today, technology will become even more critical in streamlining the process and saving time.
Do your research to ensure that you’re investing in the best recruiting technology for your company. One tool every company should use is an applicant tracking system.
This tool is a great way to organize your applicant pool, especially if you’ll be posting a lot of open job roles that year. Plus, some applicant tracking systems also have other administrative functions built into them, saving you money by not investing in another tool.
If you have trouble sourcing candidates, you should invest in an AI tool to deliver qualified candidates directly to your inbox. That way, you can save time and let the candidates come to you rather than spending time chasing them down.
5. Set Aside Money for Unplanned Costs
Even though you can plan for many things, set aside some money for when unplanned costs come up.
No matter how diligently you plan, something unexpected happens, and you’ll need to change your strategy. You might even have more people quit than you expected.
Regardless of what happens, it’s crucial to have a buffer to take care of any problems that come up. And with recruitment processes, things can change so quickly.
6. Find Ways to Save Money
After you’ve gone through and come up with estimates for most of your budget, take a step back and see if there is any way that you can save time or money.
Start by looking at how long and how much it costs to hire job seekers using your current recruitment process. Try and find ways to reduce the time to hire or the cost it takes to hire them. Even if you save time, you’ll be saving some money as well.
You might want to start by adding extra pre-employment screening before beginning the interview process. You might like to offer pre-recorded video interviews. Use scheduling software to avoid going back and forth with prospective candidates on what time works for them.
Consider adding an employee referral program. This way, existing employees can feel like they get a say in who they work with, improving job satisfaction and boosting employee retention.
But having a program like this can also save you money. Not only are referrals more than 4x likely to be hired, but they can also save companies $7,500 per hire. Doing this will save you money by saving you time on assessing and interviewing, and it gives you the highest quality candidate for the lowest time investment.
7. Present Your Budget to Leadership
Now that you finished your budget and it’s ready to go, you’ll need to get it approved by your leadership team, whether it’s human resource management or the company directors. You’ll need to argue your amounts and have the evidence to back them up. Show your team that you’re investing in finding the best talent out there for the company.
While investing in talent acquisition to find top talent sounds nice, explain what that means for the company and leadership. How will this help their bottom line? How will it help them grow? How will it help them achieve their strategic goals?
Explain what recruitment refers to and what it entails. Prove how it’s a valuable investment for the company.
At the end of the presentation, highlight the cost per hire versus how much profit the hires will bring in. This number is what the leadership team cares about, and if they can see a significant return on investment, they’re more likely to approve your budget.
Discover More Ways to Use Your Recruitment Budget
If you’re still working on your recruitment budget, you might be wondering how much some of the costs are for things like a candidate sourcing tool or external recruiters.
We can help you find estimates for those services.
If you’re wondering how we can fit into your budget this year, contact us at Recruiter.com today, and we’ll be able to help you with your recruiting questions.
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