Becoming more strategic about your recruitment budget can save you thousands a year when it comes to hiring, not to mention an improved process for your hiring team and ultimately, a happier more engaged workforce.
This does not just relate to the job channels you use or where you’re apportioning your budget. The creation of a strategic recruitment budget should involve forward planning and metrics to discover what works best for you, where are you sourcing the best candidates and where you can make improvements to your processes.
Cost-per-hire is the average cost of hiring an employee and indicator of the budget required to meet your hiring quota. For example, if you plan to hire 25 people for the year and your average cost to hire is £2,000, your budget for recruitment will be £50,000.
Cost-per-hire is calculated by looking at all the factors that went into hiring individuals over a certain period of time. The formula is as follows:
CPH = (External Recruitment Costs + Internal Recruitment Costs) / (No. of Hires in Time frame)
External recruitment costs may include, but are not limited to:
Internal recruitment costs may include, but are not limited to:
Don’t forget to factor in potential hidden or miscellaneous costs such as the inclusion or exclusion of hiring contract workers and the cost implications of employer brand/branding on recruitment.
It is important to remember that the cost of hiring certain employees differs depending on seniority and position needed to be filled i.e. an entry-level role may only cost £500 but an executive role may cost £10,000 so recruitment planning for the year is crucial. These industry benchmarks give a good picture of the average cost of hiring:
$14,936: executive-level cost-per-hire
$4,425: average cost-per-hire
Work with your departments to map out growth plans and required hires to meet goals. Look back on your previous year’s hiring and break down the cost-per-hire by department and position as this will give you a more accurate insight into how much each department is spending. Don’t forget to include all internal and external costs involved in hiring.
Make sure you are taking into account staff turnover and replacement costs to fill roles, use benchmarks and previous data to ensure you have enough budget to cover these costs.
N.B. Ensure your projected budget takes into consideration the costs for improving the recruitment process i.e. new systems, new recruitment channels and training required for the HR team.
In modern recruitment, hiring metrics are a vital component for process improvement, time efficiency and budget savings. Using valuable metrics will not only highlight areas that require attention and improvement, but they’ll also highlight what processes are working, allowing you to allocate your time and budget effectively.
Recruitment metrics track measurements on the entire hiring process. There is a huge depth of data now available to HR teams to help them make more informed hiring decisions. The following metrics are the key metrics to measure and should be available in real-time on your candidate management platform:
Some additional metrics that are useful to measure include:
Knowing these metrics will give you an excellent indication of where you are getting the best results and will allow you to apportion your budget accordingly into these more successful channels.
It is important to note that just tracking the hiring of an individual isn’t enough. Companies should also be tracking the employee experience and retention rates, monitoring the source of where your best employees came from, taking that into account when considering the budget for certain channels. Some ways to measure this are as follows:
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Becoming more strategic about your recruitment budget can save you thousands a year when it comes to hiring, not to mention an improved process for your hiring team and ultimately, a happier more engaged workforce. Here are our top tips: