Creating an annual budget for recruitment is hardly the most glamorous part of the hiring process, but it’s an essential step to increase retention rates and maximize quality hires. It’s also an opportunity to allocate resources to try out new, innovative solutions that could ultimately change the way your company recruits.
In today’s highly competitive market, recruiters should always be taking note of which strategies are the most effective, and which need to go. This way, budget planning doesn’t just focus on efficiency, it becomes a tool for fueling growth. Keep reading to find out Drive My Way’s tips to create a budget that will keep you ahead of the curve in this evolving industry.
Where’s Your Money Going?
A great rule of thumb to remember when creating a budget is that if it can’t be measured, get rid of it. You can’t improve a process if you aren’t able to set tangible goals or measure results. This means that the first step in creating a budget with room for exploratory innovation is to understand your total costs.
Creating a graph, like a pie chart, is a great way to evaluate your expenditures and estimate your cost per hire. You should always be sure to include historic or fixed costs, so there aren’t any surprises later that you didn’t count on. Taking a holistic approach allows you to see which costs are paying off, and which costs might not be worth the investment.
The hiring process is extensive, and you have to consider all the costs along the way when creating your budget. These are some of the categories you might include when analyzing your expenditures:
- Cost per hire
- Jobboard advertising costs (niche and general job boards))
- Professional social network hiring costs (LinkedIn)
- Recruitment software costs
- Recruitment events and networking (such as job fairs)
- Branding (promotional company videos, logos, advertisements)
- Background checks on potential hires
- External recruitment agency fees (if your company uses them)
- Interview or onboarding costs (such as recruiter salaries and background check fees)
- Training costs (during onboarding and annual development training)
- You need to be clear about what is and is not included in all of your costs and be sure to account for the hidden costs in screening through all of the leads and applicants you receive that are simply not a fit. While that volume may bring your cost per lead down, there are large hidden costs in processing that volume.
Double Down on What Works
After evaluating your overall costs, it’s important to determine and optimize the return you make on your investments. Key performance indicators (KPIs), such as total offers accepted, net new candidates, and time-to-hire, are all important metrics that highlight the success of recruitment strategies.
Although budget season should be all about planning for growth, it’s important to reinforce the recruiting tools that are working best for your company currently. While reviewing previous budgets, evaluating sources that have been successful in the past based on highest ROI allows you to understand and make predictions about the channels most beneficial to your company.
Analyzing ROI will also reveal the recruiting strategies that are no longer generating success. These should not be viewed as failed solutions, but as opportunities to implement new or experimental recruiting tactics.
Leave Room for Innovation
It’s always smart to allocate funds for the most successful recruiting solutions, but if you continue to budget the same way each quarter, you’ll get the same results. Carving out 5-10% of your budget for experimentation with new strategies ensures that your recruiting practices stay aligned with market trends. Keep in mind, experimentation means you need to be open to something new and it may include challenges along the way and some failures. It’s all an important part of the learning and experimentation process.
With an industry wide 90% turnover rate for large carriers, it’s more important than ever that your recruitment solutions are evolving and innovative. This means trying out new channels, marketing strategies, branding, hiring events, or even introducing new staff. Providing incentives for recruiters and maximizing digital presence are also tools that many companies use today to stay ahead of the curve.
In today’s market, there are countless recruiting strategies that all claim to be the most effective. The truth is that every company is different and requires a unique solution. Creating a budget for recruitment is the ideal time to evaluate which strategies are most successful for your company, and which should be replaced by something new. If you don’t leave room to try new things, you’ll continue to get the same old results.
Here at Drive My Way, we believe that experimentation and innovation are key to growth. How does your company budget for recruiting? Do you have tips for scaling your recruiting strategies while remaining true to what’s already working best? Be sure to reach out to us on our social media so we can continue learning!