08 December 2021 · by Huntress What to consider when preparing your recruitment budget
With 2022 fast approaching, each business will go through the budgeting process, either centrally or by team. This guide will help you form the initial structure of your recruitment budget but also what other considerations you might like to make in order to use your budget effectively.
Recruiting new staff is one of the most important investments any business can make. Whilst there is an initial cost to recruiting new hires, there are also several things you may need to factor into your recruitment budget to ensure your annual spend budget doesn’t spiral out of control.
Step 1: Review the previous 12 months spend
To create an accurate recruitment budget, you must evaluate the past years recruitment costs and strategies, to identify what has been spent and where. This ensures that you only allocate budget where it is most effectively used, and it may also enable you to assess parts of the process that may not be working as well as they could. It will become apparent that there were costs you had not initially factored into your budget including time, marketing, technology and or additional suppliers.
Step 2: Break down your agency spend
One of the easiest ways to consolidate your recruitment spend is to review the number of agencies that you use throughout the year. Often businesses try and source directly unsuccessfully and reach out to an unknown agency which duplicates time and investment. They may also use a large number of agencies which can complicate the process and means that relationships are more transactional, which can result in the process being much less personal for the candidate.
Using one, or a small number of specialist agencies, dependent on the need, can reduce not only the overall spend, but also the time and additional investment needed for things like advertising and marketing. A partner agency is also incentivised to make sure they get the hire right for you, which will help to avoid unnecessary attrition.
Step 3: Factor in the changes in the market
The number of job vacancies in July to September 2021 was a record high of 1,102,000, an increase of 318,000 from its pre-pandemic (January to March 2020) level, according to the most recent statistics released in the government Labour market reports. This was the second consecutive month that the three-month average has risen over one million. All industry sectors were above or equal to their January to March 2020 pre-pandemic levels in July to September 2021.
These statistics mean that recruitment budgets need to increase to meet demand and that employers are having to look at ways in which they can compete against their competition to offer the most attractive proposition for candidates. One of our recent blogs investigates ways that employers can remain an effective employer in the current market.
Using an agency is a great way to ensure that you are spending your budget wisely and that you are aware of any changes in the market. As the cost of using any agency may increase slightly in line with demand in the market, this will outweigh the costs of marketing, advertising, and time in order to attract them directly. Our consultants can help you to benchmark estimated salaries and packages, as well as updating you on any legislative or market changes.
Step 4: Consider the additional costs of hiring
As with many processes, internal recruitment comes with a range of often hidden costs that are easily missed when preparing your budget.
It is common for many businesses to give an estimate on both headcount and associated salaries, but it’s less common they also factor in the cost per hire. Cost per hire is a sum of the resources spent in recruiting a single employee to your organisation. This can include external recruiting costs like background checks, job boards, and marketing costs. This also includes internal hiring costs for your in-house teams and any referrals.
These hidden costs can add up quickly and can often mean that recruitment budgets are far exceeded in the first 6 months of the year.
Here are a few points that you may want to include to help you build your new 2022 budget.
- Any advertising spend, including LinkedIn, media space and job board spend
- All recruitment agency spend across the business/team
- Any temporary seasonal/last minute cover that was required
- The time and resource of current team members/HR
- The cost of any technology you may have used e.g. an ATS (Applicant tracking system)
- The cost of any background checks, references and/or compliance processes
- The cost of any associated onboarding/training of new employees
- The cost of any attrition/turnover
We know each business is different and therefore each recruitment budget may look different, however, the budgeting process should be simple and straightforward if you collect this right information initially and use this to inform your decisions.
At Huntress, we partner with clients and enable them to attract and recruit the most talented candidates in the market, across a wide range of business areas. We are also able to provide temporary hires in areas where you may need immediate resource to plug a gap or provide essential seasonal cover. This can also often avoid hastily making decisions on permanent hires that may result in having to re-hire further down the line.
If you would like more specific advice on how Huntress can help you to prepare your 2022 recruitment budget, then please contact one of our branches.