Building a Recruiting Budget in 4 Steps
A special thank you goes out to this month’s Leadership Sponsor, Zoho Recruit . Please visit their site to understand how their quality services can elevate your recruitment practices.
1. Assess
Take the time to look up specific numbers for the following categories:
How many people have been hired over the past year for the organization?
Getting an accurate count of the goals you’ve been tasked with in the past year will give you an idea of how you will perform this year. Keep in mind that if you work for a startup, this may change quite a bit from quarter to quarter, so you may have to speak with the executive or product-development team when you want to get a predictive number. Note which of these positions are executive, management, retail, front line, administrative, etc.
How large is your recruiting team?
This will hopefully be an easy question to answer, but it’s especially important when budgeting because the cost of a tool or platform can vary depending on the number of seats or users. You’ll also want to take this number into account if you have an unlimited platform, because it may end up costing less per user than a seat-based system. Another reason to note your recruiting team’s size is that many tools have features that create transparency at multiple levels, allowing talent acquisition directors to identify bottlenecks and see which recruiters are most effective. However, if you only have 1-2 recruiters, these may be features you don’t need.
How many employees does your organization currently have (if your company relies on a large contingent workforce, keep this in mind)?
Because employee referral systems and some social recruiting tools will rely on the number of employees you have or rely on a considerable push in order to be effective, having this number handy will make calculations easier and help vendors (and you) get an idea of whether a certain tool will actually work for your organization. This number and breakdown will also help you budget for certain tools that work better for one type of worker than another. For example, social sourcing engines are very effective at hiring coders, programmers, and members of the creative class, whereas recruiting agencies or executive headhunters may be necessary when hiring high-level operational or financial staff at certain stages of growth.
How long does it take your recruiting team to get a stakeholder in place?
It’s important to know how long a successful search for a moderately skilled employee takes in your organization. If your people need certain skills or personalities to be effective, or if you work within a company that demands that workers be in the office, these are important things to note, as transferable skills and flexible environments make it much easier (and faster) to hire. Since budgets are ultimately reliant on time and available resources, this is a crucial piece of information.
What tools (recruiting or otherwise) are currently working within your organization?
This question gives you an excellent view into the user abilities at your workplace. For instance, if there is a low bar of understanding big data or the barest hint of metrics around your recruiting basics now, you shouldn’t bother investing in a large, complicated system that will only create chaos around metrics.
2. Research
Go into your office(s) and start talking —
— to hiring managers, employees, marketing, and human resources. Discover what vendors these people and departments are using to avoid duplication. Today’s recruiting department finds itself increasingly pressed to move into employer branding, retention, and engagement, as well as become subject-matter experts in the fields for which they must hire. Some of these departments may have tools that can be used for dual purposes within the organization — tools which may make the researcher aware of any existing contracts that have to be pulled into the new budget or those that may not integrate with planned purchases the new budget takes into account.
Get real goals from each department.
In order to set a budget, you have to know two things: the timeline in which you’re expected to deliver and the precise goals you have to deliver. If you are in the dark about a new call center opening, a product launch in Q2, or plans to discontinue a service line, your recruiting team will be woefully under-prepared when it comes time to staff (or not) for those inevitable happenings. The best way to avoid this is to get as much information as you can from the people who are making these decisions. The COO, the CFO, and the CHRO are great places to get this information. Depending on the size of your company, there may be several layers of management in between you and these people. However, if you must create the budget, then your access to this information (if not the people themselves) should be as unfettered as possible.
Invest time in demoing products and research webinars.
In the HR- and recruiting-technology markets, there are thousands of webinars, buyers’ checklists, informative videos, and ebooks. While not every marketing piece can be used to help the consumer make a good decision, the aggregate of these can be useful when evaluating new tools. The teams behind these reports and analyses and have taken the time to determine which tools are the best for your size, industry, and specific needs. Take as many demos as you need to cover your talent acquisition cycle from sourcing to onboarding (or whenever HR takes over the hire).
3. Plan
A great budget takes a general plan into play and then has specific budgets for each line item.
For example, you may have a sourcing tools and activities line item, but a more detailed spreadsheet that specifies what you are spending on each tool or activity. When presenting a budget, you want to keep the focus on the “spend-activity-results” arc.
Create a realistic timeline to create results.
You know from your research phase what you can accomplish in 6-12 months, so extrapolate out from there. If your goals are vastly different from those you identified in your assessment stage, then make sure to allocate additional time and resources to these new goals. If none are given, then identify those numbers you are unable to meet in red. Creating a budget longer than 12 months is generally unnecessary.
Your budget may or may not take personnel into account.
It’s generally better if it does not: payroll can skew a budget wildly. Sourcing is the one place where it may land on either side of this line. Ask someone on your team, and if you get no clear answer, keep the personnel tab separate from your mainline budget.
Sort into categories for clarification — not cost cutting.
It is not a good practice to ever give any budget back at the end of the year. Push the limits of what you feel you may be allocated to reach your goals. For example, if your costs were frequently over budget in travel and you’re planning on implementing a video-interviewing platform that will drastically reduce these costs, use that spend elsewhere.
Negotiate.
Budgeting planning is best done early, so that you can continue to request better pricing and implementation timelines. Negotiate as well as you possibly can; get efficient terms that include training and implementation and negotiate your SLA in your favor. Don’t forget that you are the buyer in this situation, and the recruitment technology market continues to grow.
What are your categories?
You can’t have separate line items for little projects you want to complete throughout the year. You might want to get a budget for a recruitment video or new career-site photography, but they won’t each have their own budget line. Instead, group these activities under “recruitment marketing ” and give them deadlines and expected results (for the category overall). Some popular categories:
- Advertising or Recruitment Marketing (share with Marketing)
- Agency Costs or RPO Budget
- Travel Costs or Interviewing/Screening Budget
- Relocation Costs
- Referral Bonus or ERP Platform and Rewards
- Internal Recruiter Costs (Payroll)
- Sourcing
- CareerSite (share with IT)
- CRM
- ATS
- Sign-On Bonus (fight for this to be in your hiring managers’ individual departments unless it’s available to use on positions as recruiters see fit).
- Testing or Assessment Costs
- Continued Learning
4. Sell
The whole reason for creating a recruitment budget is to get your ideas approved by the “powers that be” so you can build your ideas into the recruitment strategy you know will make your organization into a recruitment powerhouse. In order to do this, your proposed budget needs to be approved. To get approved, you need to be able to sell your vision to the people with the checkbook. How is this done? By understanding what they want to see from you.
Justification.
Your budget should show why you cannot do an adequate job without this additional spend. If you can’t, show plainly the missed opportunity cost (the hires you might not make or lose if you don’t have Tool A). If you can still meet desired goals without this platform or extra budget, then explain why you need it. Continuing education? Improved branding opportunities? The ability to train more admin recruiters faster? Show the justification (or have it ready in an appendix) for every category.
Projected Results.
These can be tricky, because whatever results you aim for, your team will be held accountable for. Keep your goals in mind when creating these results matrices and shoot for a realistic margin (of time, money, energy expended, efficiency gained).
ROI.
If you can prove the methods you’re advocating will result in a return on your organization’s investment, you will be golden. Set you and your team up for success by showing where you’d move this spend to make the company even more money and invest further in building out the talent acquisition and development budget (again, do not talk about how to invest it in other departments; move it to another column and create an amazing employer brand, for example).
Accountability.
Create measures or key performance indicators at regular intervals on your results matrix, so your bosses will know whether or not the programs are working.
Give back.
Don’t just ask for money. Show where you are saving money as well. Did you decide to share a marketing automation seat with marketing so you could afford that referral program or pricey assessment program? If yes, then say so. Show that you’re willing to put pieces of your budget aside to achieve the goals you’ve set.
Creating a budget isn’t difficult — it’s simply time consuming. Once you’ve built a model that works, you can use it for additional, supplementary budgets. Make sure to assess, research, plan, and sell!
A special thank you goes out to this month’s Leadership Sponsor, Zoho Recruit . Please visit their site to understand how their quality services can elevate your recruitment practices.