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How much do companies spend on recruiting? I found very few examples of a detailed recruiting budget template on the webosphere. So, I pinged my smart recruiting friends to help guide me. Below is what I found.

3 Recruiting Budget Template Approaches

Let’s start with a recruiting goal in mind. How about 500 hires a year? That’s as good a number as any for an enterprise company.

If your hiring volume is different, I link off to this Recruiting Budget Template spreadsheet, where you can input your own hiring volume and find some other goodies.

Ok, let’s start first with 3 recruiting budget templates to use.

1. Simple Recruiting Budget (# of Hires * Cost-per-Hire)

A good place to start your recruiting budget is to establish your hiring volume over a specific period. This can be as simple as 500 hires over the next 12 months.

The hiring # number multiplied by the average cost of hire can give you a rough estimate of how much you’ll spend on recruiting. You’re just using a simple formula:

{# of Hires * Cost-per-Hire}

An average cost-per-hire is easy to find. Resources like SHRM and Bersin peg the average cost-per-hire at around $4,000 to $4,500.

So, let’s use the midpoint of that range: $4,250. Then, you simply multiply your $4,250 assumed cost-per-hire by the hires you need in a year (500 in our example). See below:

Example of Simple Recruiting Budget

How many people do you need to hire this year? 500
Average cost per hire $4,250
Total Recruiting Spend $2,125,000

 

If your hiring mix is fairly even and you’re not using external recruiters, the simple {# of Hires * Cost-per-Hire} formula gives you a solid ballpark for what you might spend on recruiting.

But, to fine-tune your recruiting spend, it’s worth trying the next 2 approaches below:

 

2. Recruiting Budget by Source & Type (Internal Recruiter/Headhunter Blend)

Recruiting is rarely that simple (especially for mid-market or enterprise company (500+ employees).

There are 2 other key data points:

A) Job Type Distribution — You’ll want to break down how many roles you need by job type (this could be by seniority or by department). To keep it simple, I’m going to take a hypothetical enterprise company that has the following hiring needs for a 12-month period:

Type of Hire # of Hires
High-Volume/Entry-Level/Support Roles 150
Sales/Mid-Level Roles 250
Technology Roles 85
Leadership/C-Suite 15
Total 500

 

B) Cost-per-Hire Varies by Job Type — Your cost-per-hire will vary depending on the job type. A good rule of thumb is that:

  • Entry-level/High-Volume jobs are usually the lowest cost-per-hire — Depending on your industry, you may only need to spend $500 to $2,000 per entry job hire (let’s use $2,000 per). You’d need to talk to experts in your area to get this assumed cost-per-hire (if in doubt, just use the $4,250 per hire which will be conservative).
  • Mid-level jobs are average cost-per-hire (let’s use the $4,250 SHRM/Bersin average for this)
  • C-Suite & Leadership jobs are the highest cost-per-hire (these roles are so hard to fill that there are often outsourced to an executive search firm (headhunter) who charges you 15% to 30% first-year’s salary.

Check out the below sample budget for a new scenario in which you’re still trying to hire 500 people. You now add more details on the volume by types of jobs and their different cost-per-hire.

Recruiting Budget by Source & Type

# of Hires Source Avg. Cost-per-Hire Total Recruiting Spend
High-Volume/Support Roles 150 Internal Recruiters $2,000 $300,000
Sales/Mid-Level Roles 250 Internal Recruiters $4,250 $1,062,500
Technology Roles 85 Internal Recruiters $5,000 $425,000
Leadership/C-Suite 15 Headhunter $50,000 $750,000
Total 500 $5,075 $2,537,500

 

In this case, your total recruiting budget is noticeably higher ($2.5M versus the $2.1M calculated using the simple {# of Hires * Cost-per-Hire} formula). The big difference, of course, is the Leadership/C-Suite jobs — those tally up to $750K USD ($50K*15 hires).

Your cost-per-hire is 19% higher ($5,075 versus $4,250) than the simple formula from section 1.

 

3. Recruiting Budget Using an RPO

Another way to estimate recruiting spend is to consider outsourcing all recruiting to an RPO (Recruitment Process Outsourcing) company.

The beauty of an RPO is that they recommend the recruiter resources, so you know what your costs are going to be. One top RPO is WilsonHCG. Their CEO John Wilson explains it this way:

“Recruiting is what we do…that’s our business. Whether it’s Workday, Cisco or Apple, recruiting is not their business.”

A good RPO company will outline your recruiter needs by the job type/volume For example, if you feed your hiring needs to an RPO like WilsonHCG, they might work up a proposal like the following (again, using the 500 hires per year example):

Recruiting Budget Using an RPO

# of Hires RPO Hires this Many Recruiters Cost per Recruiter Total RPO Recruiting Spend
High-Volume/Support Roles 85 1 $120,000 $120,000
Sales/Mid-Level Roles 225 3 $144,000 $432,000
Technology Roles 175 4 $162,000 $648,000
Leadership/C-Suite 15 2.5 $200,000 $500,000
Total 500 $1,700,000
Cost-per-Hire $3,400

 

You’ll notice that the total recruiting spend ($1.7 million) and cost-per-hire ($3,400) are the lowest of the 3 recruiting budget approaches.

Some estimates are that the cost-per-hire using an RPO can be 5% to 10% of the first-year salary (source: Hirevelocity Cost Per Hire). So another way to estimate your recruiting budget (using an RPO) is to multiple your average salary of the hires needed by 7.5%.

Next, let’s look at a couple of sample recruiting budgets from friends of mine kind enough to share what they know:

A Sample Recruiting Budget for a 500-Person Enterprise (hiring 100 per year)

My good friend Philip Ziman, an Adjunct Professor from the University of California, Santa Cruz, gives us the below sample recruiting budget for a 500-employee enterprise.  In this scenario, the Recruiting Manager reports to the VP of HR. It assumes hiring 100 people per year because the company requires a 5% headcount growth rate but has a 15% turnover rate. All #s are $USD.

Fixed Costs

  • Recruiting Manager (fully loaded) – $200K
  • Scheduling Assistant  (fully loaded) – $80K
  • ATS Software (annual subscription/maintenance) – $50K
  • LinkedIn core subscription – $75K
  • Glassdoor subscription – $10K
  • Recruiting web page maintenance – $5K
  • University relations contributions – $10K

Variable Costs

  • Contract recruiter per position – $5K
  • Linkedin advertisements – $2KAgency fees per hire – $40K
  • Specialized advertisement per position – $2K
  • Candidate travel/expense per interview – $1K
  • Employee referral per hire – $1K

Indirect/Soft Costs

  • Management/Employee time per interview & onsite hosting – $.5k
  • Replacement lost productivity and training per position $100k

 

A Sample Recruiting Budget of a 600-Person Tech Company (hiring 80 people per year)

Another friend of mine (anonymous) gave me this example of how much a fast-growing tech company spends on recruiting. They hire about 80 people per year:

Recruiting Spend % of Total
Recruiting Headcount $1,400,000 70.0%
Recruiting tools $331,000 16.6%
Referral bonus $130,000 6.5%
Other Software (ATS) $68,000 3.4%
Employer branding $37,000 1.9%
Localization (moving costs) $34,000 1.7%
Total $2,000,000 100%

 

Need more recruiting budget line items? Here are some other thoughts:

Recruiting Budget Line Items

Elaine Davidson, CEO of Beacon Lane Consulting, a global (but boutique) talent consulting firm, has clients with budgets ranging from $1 million to over $10 million USD.

Elaine says the exact list of recruiting budget items depends on what the employer’s focus is at the moment  (e.g., implementing a new ATS, adding on a sourcing tool, Candidate experience tool, etc.).

She finds the following are the main items her clients spend on recruiting:

  • Fully Loaded Personnel Costs
  • ATS Annual Licenses
  • LinkedIn Licenses
  • Online Presence: Employer Brand, Social Media, Glassdoor, etc.
  • AI Scheduling
  • Digital Interviewing
  • Digital Job Analyzer/Text Analyer
  • Career SiteBuilder
  • Executive Search
  • Other Job Boards
  • Background Check Vendor

Brad Cook, the Vice President of Talent Acquisition at Intuitive, tends to break recruiting budget down into these 8 categories:

  • People costs (FTE and contingent)
  • Recruiting Tools (must have)
  • Recruiting Tools (nice to have)
  • Travel
  • Search fees (if used)
  • College
  • Employee Referral Programs
  • Programmatic Media Buying

Tim Sackett, President of HRU Technical Resources, breaks recruiting costs (beyond personnel) into these 4 groups with examples for each:

  • Recruiting Tools (Sourcing – Loxo, texting – Canvas, etc.)
  • Recruitment Marketing (Indeed, LinkedIn, Zip, career site, etc.)
  • Recruiting Expenses (background checks, assessments, etc.)
  • Recruiting Travel (recruitment events, interview travel expenses, etc.)

 

A Longer List of Recruiting Budget Programs

Need a longer list of recruiting budget ideas?

SHRM’s 2017 Customized Talent Acquisition Benchmarking Report offers this up:

SHRM_Talent_Acquisition_Report

Diversity Recruiting: A New Budget Line Item

More and more employers are adding “Diversity Recruiting” to their recruiting budget.

Fintech startup Petal (97 employees) told BuiltIn:

“With our Series C [funding], we knew we’d be doubling the Petal team size within 12 months and viewed it as an opportunity to continue diversifying our employee base. So the people team made a detailed DEI strategy, which included a six-month budget of $50,000, and a 12-month plan of up to $70,000 more. Budgets included paid services like partnerships with DEI-focused recruiting agencies, sponsorships for organizations and conferences that support Black and Brown tech communities, workshops led by DEI and leadership experts and employer branding that targeted underrepresented groups.

But interestingly, we found that our biggest impact to date has come from internal efforts. We appointed our first diversity officer. There’s now a bonus of up to $3,000 when employees refer an underrepresented candidate to an open job at Petal.”

 

Recruiting Budget Bonus Tips

Here are some extra stats/tips that might be helpful to calculate how much you’ll spend on recruiting:

Reqs per Recruiter

  • A dedicated internal recruiter can handle an average of  29 to 54 requisitions per year. Organizations without a dedicated recruiter should expect people who spend part of their time recruiting to handle about 20 reqs per year—source: SHRM.
  • “Internal recruiters (recruiters who are employed by the company that is also hiring the candidates being recruited) probably hire, on average, about 100 people a year.”  — Joel Winter, Director of Talent Acquisition GCG Financial (What’s the average number of hires for an internal recruiter per year?)
  • “>10 to 15 technical/engineering hires per year could be considered outstanding compared to >60-70 non-technical hires per year.” — This will, of course, depend on the types of hires you’re making. — Nick Livingston, Co-Founder of Honeit Software, says (in the same article)

 

Recruiting Budget Worksheet Template 

With the help of some recruiting experts and a recruiting budget template from Glassdoor, we have created a sample recruiting budget worksheet you can download.

 

WHY I WROTE THIS

(Editor’s note — We are grateful that many of the top employers in the world (including 12 Fortune 1,000 companies) have added Ongig’s Text Analyzer and Career Site Builder to their recruiting budgets. Thank you! Check out Ongig.com if you’d like to learn why. 

 

Shout-outs

    1. Philip Ziman University of California, Santa Cruz
    2. Tim Sackett HRU Technical Resources
    3. How to Create a Recruiting Budget (Template Included!) (by Glassdoor)
    4. Downloadable Budget Template Form (by Glassdoor)
    5. Recruiting costs FAQ: Budget and cost per hire (by Nikoletta Bika)
    6. Lisa Youngdahl (HR Extraordinaire)
    7. Talent Acquisition VP Brad Cook
    8. SHRM’s 2017 Customized Talent Acquisition Benchmarking Report
    9. John Wilson, CEO of WilsonHCG
    10. SHRM’s Cost Per Hire American National Standard
    11. Bersin by Deloitte: U.S. Spending on Recruitment Rises, Driven by Increased Competition for Critical Talent (by PR Newswire)

by in Recruiting Strategies