How to Budget for Your Hiring Process

Strategies for understanding and evolving the costs of human resources.
Sep 5, 2018
Bill Gates
Bill Gates
Partner
How to Budget for Your Hiring Process

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The hiring process takes time and money. How much time and how much money are key questions businesses need to ask themselves at every phase of their growth. Answering these questions involves discussions around whether your organization is focused on time or money, as well as exploring the opportunity costs associated with the hiring process. But the process begins with having a plan and the budget to support it, and that begins with understanding what creating a plan entails. In this post we will explore the answers to the questions. We will also look at the categories you want to consider if you’re going to craft a budget for your hiring process, which works for your organization. Such categories include:

  • Marketing, which can mean job boards and advertising
  • External recruiting, for example recruiting agency fees
  • The salaries of your hiring team and understanding those costs

Let’s explore this further by starting with the end in mind.

Explore the Time, Money and Opportunity Costs

Saving time or money is not an either or proposition, but a both, and, in which you’re able to factor both time and money into your decision making. And that calls for a plan. A plan isn’t always in place, however, or current, but things happen, organizations grow, new opportunities arise, and when they do we encourage you to ask yourself, what is most important, saving money or time? If time is of the essence, don’t skimp on resources.

The argument for this resides in part on the opportunity costs for the organization. Leaving a job unfilled puts a serious strain on the rest of the team. Teams that are pulled away from their day to day responsibilities to interview dozens of candidates are not being used to their highest capabilities, much less being used efficiently. Furthermore, hiring managers spending a lot of time sifting through resumes or Linkedin isn’t the best use of their time either.

During such a period your internal commitment to HR is not only being stretched, but comprised and it is the right time to consider investing in an internal recruiting team or external search/staffing firms to efficiently manage the hiring process.

This is also the time to ensure that you have a hiring plan in place.

Craft a Plan for Your Hiring Process, Including a Budget

Crafting any type of plan begins with asking the right questions and the primary questions to ask yourself when planning for your hiring process is:

How difficult is the role to fill? Do you already have anyone in the pipeline that has come to you via employee referrals or online applicants? Is there anyone internally who can fill the role? Remember, a deep, diverse pool of candidates always ensures the highest odds of a strong hire and this calls for a conscious effort to build such a pool.

All of which is enhanced when you proactively build a plan and Recruiting budget: HR planning tips and examples, identifies a series of categories for you to consider:

Job Boards & Advertising

These are your expenses for any posting you do to fill the position. This includes all job boards and paid recruiting accounts. It also calls for identifying the number of postings and the costs for each.

Assessment

Here you’re capturing the candidate assessments that you pay for and the costs are generally totaled on a per candidate basis.

External Recruiting

This category involves any recruiting costs associated with recruitment agencies, headhunters, contract recruiters or Recruitment Process Outsourcing fees. It can also include sourcing software/tools.

Employer Branding Events

These costs are separate from marketing costs and are focused on recruiting efforts such as career fairs and recruitment events, as well as any branded items you giveaway during these events.

Careers Page

The Careers Page is related to your company’s website and costs can include development and maintenance of the page and may be allocated to an outside company or your own staff depending on who the work is assigned to.

Partnerships

The focus here is on partnering with universities and other institutions that provide access to qualified candidates. Costs may include such things as paid affiliations connected to your recruiting efforts.

Salary Costs of Your Hiring Teams

These costs reflect an assessment of the salaries for your in-house hiring team and calls for a calculation of the hours spent by the different staff members on the hiring process.

An additional consideration for making sense of these categories and calculations is seeking to understand the impact of these expenses. On the one hand, it calls for recognizing that the costs will vary from month and so you may want to calculate the average costs over the course of the year. But this also calls for comparing the actual funds expended with those in your budget to better understand how realistic it was and where you may to need to spend more, or less, money as you refine your budget planning. One way to further assess the numbers is to examine which of the categories yielded the greatest number of viable candidates and compare the percentage of these hires to percentage of funds allocated for that category in your budget.

Take Time to Assess Other Considerations

There are also steps you can take in the hiring process, which don’t involve spending money and some of these steps are captured in “How to Spend Zero on Recruiting and Still Hire the Best Candidates:”

Turn Your Employees into Recruiters

Create an employee referral program that rewards employees for referring good hires and recognize the top recruiters with incentives that are aligned with the organization’s culture.

Focus on Character and Attitude

When you have a built a solid, strong-performing team you can focus less on the short-term and hiring for skills and more for the long-term, focusing on character and attitude, recognizing that skills can be taught.

Build Your Culture and Brand

People want to work for organizations that have a positive work culture and treat employees well, they know which organizations do so and it benefits your recruiting when you focus on these things too.

Final Thoughts

How much time and how much money are you prepared to spend to ensure you’re making the best hires for your organization?

These are important questions and as you answer them, be sure to consider the:

  1. Opportunity costs for your staff when you engage them in the hiring process;

  2. Areas where you want to spend money and the impact of that spending; and

  3. Steps you can take that won’t cost you money, but will enhance the steps you budgeted for.

If you need any assistance addressing any of these considerations, please let us know.

Bill Gates
Bill Gates
Partner

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