Recruiting new people is exciting. But, the additional costs that come along with it? Not so exciting.

In fact, these costs can be dreadful if you have not planned a recruiting budget to keep a bull’s eye on your overall costs.

Recruitment Budget Template

That’s what we have:

• put a detailed guide on the 6-step process to create detailed recruiting budget sheet
• created a free recruiting budget template downloadable for you to get started

What is a recruitment budget?

A recruiting budget is the financial plan adopted by businesses and human resources teams to manage all the expenses related to hiring processes. This includes:

• posting jobs
• investing in tools and services like ATS, assessments, video meeting software
• using external recruitment agencies
• doling out bonuses for referral programs.

For example, if your organization invests in job posting platforms, and recruitment tools like skills assessment and video interview software, and conducts employer branding events, then you need to calculate the overall costs for these activities.

These activities are handles by the HR department. A specific amount of money is allocated to each HR manager for these activities. They need to inform the HR department before making these investments so they can approve them and keep in the records.

Essential components of a recruiting budget

Drafting a recruitment budget goes beyond just looking at how much you want to spend on job ads. Consider the following critical components:

Job advertising: Allocate funds for platforms like LinkedIn, job boards, and niche industry sites.

Recruitment technology: Include costs for Applicant Tracking Systems (ATS), AI recruiting tools, and other software that streamlines the process.

Talent sourcing: Set aside funds for strategies such as headhunting, talent pools, and referral programs.

Candidate experience: This encompasses costs related to improving the interviewing experience, like travel reimbursements, meals, or gifts for candidates.

Training and onboarding: Consider the resources needed for onboarding new hires, including training programs, workshops, and materials.

Background checks: Budget for third-party services that conduct background verifications, drug tests, etc.

Recruitment events: Whether it’s hosting job fairs, attending university recruitment drives, or setting up booths at industry conferences, there are associated costs.

Agency fees: If you’re using a recruitment agency or external consultants, their fees need to be accounted for.

Internal costs: Think of HR salaries, office supplies specific to recruitment, and other overheads.

Miscellaneous and contingency: Always set aside a portion of your budget for unforeseen costs or opportunities that might arise.

How to create a recruitment budget

Step #1: Calculate the number of hires

The primary expense for any organization: its employees. Before starting with the math, get on board all the managers to understand their requirements in terms of new hires in the coming year.

Circulate a sheet similar to the following one and ask all stakeholders to fill it. This will help you understand how many new hires they may need in the coming year.

Based on this data, the recruitment cost analysis can be done more accurately.

Along with these number, you will need

• Expected designation: Knowing if the roles are for interns, managers, senior managers, etc. will help estimate what the likely expenses, both quarterly and annual, are for specific teams.
• Skills: In case you need to collaborate with external agencies, having a good idea about the niche skill sets your organization is looking for help; also, you might have to start this process early.

According to Sharon Jautz, Head of HR, WGSN

Not accounting for the length of time role will stay open. I have a rule: If you have met with at least 10 candidates and the role is still open, you need to reevaluate the role, decide if you need it and reevaluate your interviewing criteria.

Along with these numbers, what is needed to be taken into account is the turnover rate for each team and for the organization. The HR team needs to have a good understanding of how many employees would be leaving the organization in a particular year.

So, if the turnover rate is 10% and your total employee count is 2000, it means that 200 employees would be quitting the company next year. Hence, if you are looking to hire 160 new employees (from the above table), your actual count increases to 360. 200 for employees who have quit and 160 new employees.

Going back to past few years number and calculating turnover (If you do not have the number refer to average turnover over rate for industries from the web) for each team, give you an exact measure of the number of hires you would be hunting for in the coming year.

Step #2: Estimate basic recruitment costs

Recruitment costs refer to basic expenses associated with the hiring and recruitment process. These expenses are mostly recurring and often billed early in the year.

This cost may vary for each organization, but you have to consider common expenses across boards to have rough estimates.

• Job boards: They are a great starting point to draw attention from candidates, and are frequently used by major corporations. For example, Cutshort, Indeed, LinkedIn and Stack Overflow.
• Salaries: Occasionally, teams collaborate with contract-based recruiters and agencies on yearly basis. Don’t forget to add their salaries too.
• Employee branding: Branding campaigns, career page optimization, and video campaigns—these are just a few ways you can amplify your employer brand and educate employees about why they should work in your organization.

Look at the following sheet to understand better.

Also read: Nirvana Solutions uses HackerEarth Assessments to Reduce Cost Per Hire by 25%

Steps #3: Calculate the fixed cost

Fixed cost are costs associated with your recruitment process happens yearly and is usually processed in an orderly manner like salaries, partnerships, recruitment agencies, etc.

• Internal Salaries: Calculate internal salaries for existing employees. Make sure to add your HR team. The rules say for every 50 employees you should have 1 HR. Budget your internal salaries accordingly. Also, take into account the expenses if you are looking for new team members.
• Partnerships: Calculate the cost of any yearly partnerships which you plan to commit to. These partnerships can include an external recruitment agency, event agencies, social media promoters, and others.
• Recruiting events: Make a list of all upcoming virtual recruiting events like conferences you plan to take part in, in the near future and budget them in your sheet.

As Neil Williams from AVI-SPL says

I found that fees associated with events such as job fairs including air travel and lodging can be easily missed. Remember to think of each event from start to finish and all the necessary logistics involved.

• External recruiting agencies: Most of the companies tie up with external recruiters agencies or independent recruiters who help them hire candidates, especially for niche skills. Think of the approximate number of hires you plan to make for the year. Factor in the cost associated with each hire (paid to the external recruiter) when you prepare the budget.

Step #4: Estimate recruiting technology costs

Technology is a great enabler. As HR evolves with enabling technologies like talent assessment software and video interviews, companies can expect better recruitment and overall management.

Coding assessment software

While candidate sourcing is managed by multiple agencies, job portals, and social channels, it is imperative you evaluate candidates on the right parameters. Coding assessment tools like HackerEarth Assessments helps reduce hiring costs by 10X.

Companies have also been using HackerEarth talent assessment software for university hiring by evaluating candidates remotely—reducing large cost (travel, stay, man-hours, etc.) associated with campus placement.

Also read: 5 Best Practices for an Effective Hybrid Campus Hiring Strategy

Video interview software

While assessing candidates can be managed by technical interview software, an organization should evaluate the candidate in person before selection. However, candidates are often scattered across the globe and the cost associated with their travel becomes too high. This is where video interview software like EasyHire and Kira Talent comes in.

HackerEarth’s coding assessment software is accompanied by video interview software called FaceCode, which helps you assess candidates on their real-time coding skills while interviewing them. Since these features are bundled, there are more savings to be had!

Background check service

A background check is an essential service used by organizations to verify a candidate’s credibility. Major global organization work in this field and charge relatively high fees in verifying all the relevant information.

With the increasing usage of social media and networking, referral hiring is a good way to save on the background check service. Calculate the cost accordingly.

Pre-boarding software

Candidate pre-boarding has evolved a lot over the last few years. With multiple options in hand, candidate ghosting has been a major menace for the recruiters. It is extremely essentials to keep your candidates way before joining, helping them understand their role, responsibility, and progression.

Companies using pre-boarding software have seen reduction in drop-off by more than 45%. Some of the top pre-boarding software available are Beamfox, BoardOn, Talmundo.

Application tracking system (ATS)

Application tracking systems have not evolved much since their inception in the mid-90s. But due to high dependency on them, most of the organizations still prefer to have a good part of their expenses dedicated to ATS.

Application tracking systems help follow the entire journey of a candidate, from sourcing, interviewing, joining, to exit. Some of the top ATS across the globe are Taleo, Greenhouse software, iCIMS, JobVite.

Also read: Remote Work and Recruitment: An ATS Story

Step #5: Estimate your miscellaneous hiring costs

Tying in the ROI on the unexpected expense with the broader strategic HR and/or organizational plan helps get stronger buy-in for unexpected added costs

Ensure you make allowances for miscellaneous expenses that pop up frequently in your hiring cycle. A few expenses relate closely to the internal campaigns you decide to run with referral bonuses taking up the major chunk.

Next, average out all incentives paid in the last two years to have an approximate idea about the budgeting for incentives to be rolled out in the appraisal cycle. It is essential to keep a check on inflation and the industry-standard before zeroing in on a certain amount.

Some companies regularly offer bonuses to their employees, sometimes in the festive season or when the business has had a great year. Discuss with the leadership on the target goals, and any bonus roll-out in case targets are achieved.

Step #6: Calculate cost per hire

And the most important step, calculate the cost per hire before finalizing the budget. If you have a previous budget to refer to the cost per hire for earlier years, then calculate expected expenses for the coming year.

According to Neil Williams, HRBP, AVI-SPL

Calculate it by adding the actual recruiting expenses from last year and divide by the number of hires you made. Then, multiply your average cost per hire by the number of hires you plan to make this year. Add all projected internal and external costs.

The basic formula for cost per hire is

Cost per hire = Internal Cost + External Cost / Total Number of Hire

Make sure that your cost per hire should not increase exponentially for any given year and should be in sync with inflation, revenue growth, and a number of hires.

Tips for managing tech recruitment budget

Here are some tips for managing your tech recruitment budget effectively throughout the year:

1. Plan ahead: At the beginning of the year, take some time to plan out your hiring needs for the year. This will help you to estimate how much money you will need to spend on recruitment.
2. Set a budget and stick to it: Once you have a good understanding of your hiring needs, set a budget for recruitment. Be sure to include all of the relevant costs, such as job postings, advertising, recruiter fees, and background checks.
3. Track your spending: It is important to track your spending so that you can stay within your budget. This will also help you to identify areas where you can save money.
4. Use free and low-cost recruitment tools: There are a number of free and low-cost recruitment tools available. For example, you can use social media to post job openings and to connect with potential candidates. You can also use free job boards, such as Indeed and LinkedIn.
5. Partner with recruiters: If you have a lot of open positions, you may want to consider partnering with a recruiter. Recruiters can help you to find qualified candidates and to manage the hiring process. However, it is important to note that recruiters typically charge a fee for their services.
6. Invest in employee referrals: Employee referrals are a great way to find qualified candidates. Encourage your employees to refer their friends and colleagues for open positions. You can also offer incentives for employee referrals.
7. Hire for soft skills: Soft skills, such as communication, teamwork, and problem-solving, are just as important as hard skills in the tech industry. When hiring, be sure to assess candidates’ soft skills in addition to their hard skills.
8. Negotiate salaries: When negotiating salaries, be sure to factor in the cost of living in the area where the candidate will be working. You should also consider the candidate’s experience and skills.
9. Offer competitive benefits: In order to attract and retain top talent, you need to offer competitive benefits. This includes benefits such as health insurance, paid time off, and retirement savings plans.
10. Review your budget regularly: It is important to review your recruitment budget regularly to make sure that you are on track. You may need to adjust your budget based on changes in your hiring needs or the market conditions.

Plan your recruiting budget effortlessly

Make sure that your cost per hire should not increase exponentially for any given year and should be in sync with inflation, revenue growth, and a number of hires. Download a sample budgeting sheet for the coming recruiting year.

HACKEREARTH – TECHNICAL RECRUITING SAMPLE BUDGET SHEET

Blockchain technology

Cloud-based outsourcing

Recurring customer’s journey

Marketing personalization

The future is bright (conclusion)

What’s the one thing that’s made HackerEarth?

Our employee-centric culture, they chorus.

Surprise! Surprise!

Energy tanks are refilled here!

Put on party shoes every other day...

One “thank you” isn’t enough

Consider the following:

• Nearly two in five companies (37 percent) use social networking sites to research job candidates, according to a survey from CareerBuilder. – CareerBuilder April 2012
• According to a 2013 study by The Lucas Group, nearly 50% of employers admit to checking the social media sites of potential hires.
• Fast forward to 2018 and according to a white paper by Robert Walters 65% of hiring managers say they have viewed a job seeker’s LinkedIn profile and activity feed.

Step One: Be Active

Step Two: Smile!

Step Three: Headlines Sell Papers

Step Four: Content is King

There’s no such thing as finding the right time to catch up on your reading, is there? If you want to, you will.

Agreed not everyone is a bibliophile. But there are so many of us who find so many answers we seek in books from wonderful authors. Perhaps, reading is also an acknowledgment of willingness and humility, accepting that there is so much you don’t know.

Most people who aspire to become better, be it in their personal or work lives, look for books that introduce them to a plethora of ideas and possibilities.

As John Coleman says in his HBR article,

“deep, broad reading habits are often a defining characteristic of our greatest leaders and can catalyze insight, innovation, empathy, and personal effectiveness.”

Hopefully, this list of best HR books for HR professionals we’ve put together, after speaking with many managers and doing a bit of research, will make your life exponentially more fulfilling!

Best HR Management Books

1. Topgrading: The proven hiring and promoting method that turbocharges company performance by Brad D. Smart

Brandford D. Smart, in his book shares a strategic hiring system created by him, that, he has used quadraple the hiring success rates for hundreds of clients he has worked with. This book is an advanced compliation of Brad’s experience he has acquired while working with global giants like General Electric and Honeywell.

In this book, the author shares:

• Simplified Topgrading methods for entry-level jobs
• The new Topgrading snapshot, which screens out weak candidates in 15 seconds
• The latest version of Topgrading interview script
• Case studies from 35 companies
• Additional innovations created by Topgraders

Whether you want to dive deep into Topgrading hiring processes or upskill yourself with the topic, this book has rich in information by the expert himself!

Buy the book here.

2. The everything HR kit by John Pitzier

Want to get back to the roots of HR? Well, look no further than this user-friendly guide that helps you navigate through all the best practices of recruiting, interviewing, screening, selecting and managing employee performance. Besides giving you ample information on the basics of HR, this handbook provides you with a toolkit to improve your processes in today’s world and consistently streamline them.

Buy the book here.

3. Who by Geoff Smart and Randy Street

Just like the thoughtful title of the book, co-authors Geoff Smart and Randy Street emphasize the common challenges bigger organizations struggle with—ultimately falling into the trap of unsuccessful hiring.

This New York Times Bestseller emphasizes Smart and Street’s A Method of Hiring and discusses the fundamentals of hiring, which when implemented can give you the hiring success rate of 90%.

The book talks about:

• Avoiding common vodoo hiring methods
• Generating the flow of A players
• Asking the right interview questions

Buy the book here.

4. HR from the outside in: Six competencies for the future of Human Resources by Dave Ulrich, Mike Ulrich & Jon Younger

A top business book with survey data, examples, and stories, HR from the Outside In is brimming with insights for HR leaders. Changing and uncertain business contexts world over require HR professionals to invest in themselves and be equipped with new competencies while attempting to link corporate strategy and HR initiatives. The authors discuss six competencies:

1. Strategic positioner
2. Capability builder
3. Change champion
4. Technology component
5. HR innovator and integrator
6. Credible activist

These competencies will shape the future of HR. “Outside-in means that HR must turn outside business trends and stakeholder expectations into internal actions.” This book is a treasure trove of information to help HR professionals deliver value to employees and organizations and to external stakeholders, such customers, investors, and communities.

Buy the book here.

5. Powerful by Patty McCord

Patty McCord has helped create the Netflix Culture Deck—yes, the same deck that talks about the “no rules” culture. She has been the Chief Talent Officer at Netflix for fourteen years, and share her learnings from Netflix and other companies in the Silicon Valley she worked at.

In the book, McCord argues the age-old corporate HR practices that need to be abolished, and advocates practicing radical honestly. She breaks down the abstract subject “designing workplace culture” into actionable steps.

If you’re someone who is inspired by Netflix’s workplace culture and wants to understand and implement it in your company, then this book is worth a read!

But the book here.

6. Good to great: Why some companies make the leap…and others don’t by Jim Collins

A book that’s surely on every list of must-reads, Good to Great outlines six basic characteristics of companies that moved from good to great — Level 5 Leadership, hiring the right people, disciplined thinking, hedgehog concept or focusing on doing one thing really well, culture of freedom and entrepreneurship within a culture of discipline, sensible technological innovation, and the flywheel concept where success depends on a combination of small steps. Although some might argue that in this book is good or great depends on more quantifiable criteria, Jim Collings still has some amazing insights in this prequel to Built to Last to help HR managers take their teams to the next level. Companies such as Philip Morris, Pitney Bowes, Gillette, Wells Fargo, and Kroger are some of the good-to-great companies the author uses in this book.

Buy the book here.

Conduct accurate coding assessments and hire developers that are right for the job. Find out more.

7. People skills by Robert Bolton

First published in 1979, this communication-skills bible continues to fascinate readers. Robert Bolton, Ph.D., is President of Ridge Consultants, a New York-based consultancy firm that trains companies to have meaningful conversations and improving interpersonal interactions.

Good examples, scenarios, and techniques are used to explain concepts such as effective listening, conflict resolution, and assertiveness to enhance verbal and nonverbal communications in the workplace. An HR professional could even read Daniel Goleman’s Emotional Intelligence along with this and have more than enough tips to overcome all sorts of communication barriers. Many readers have been asking for a shorter revised edition with language and examples more relevant to the 2000s.

Buy the book here.

8. Love’em or lose’em: Getting good people to stay? By Beverly Kaye and Sharon Jordan-Evans

With reports on employee engagement and retention and their impact on organizational performance popping up every few months, a practical book such as this is a must-buy for every HR professional. Kaye and Jordan-Evans discuss 26 strategies to keep employees happy and make them stay.

The concepts may seem obvious but helpful navigation tools, interesting examples, stats, to-do lists, cultural references, and an overall neat execution make this book well worth the effort. For any HR manager or supervisor, employee relationships take up most part of their day and knowing how to effectively manage them is key. A manager self-test called The Retention/Engagement Index (REI) helps the reader navigate to chapters that would be most useful for them. (Also read – Best ways to improve employee engagement and retention)

Buy the book here.

9. Work rules! Insights from inside Google that will transform how you live and lead by Laszlo Bock

Forbes calls it a true masterpiece. And that it is. Under Laszlo Bock, former SVP of People at Google, one of the most innovative companies in the world, was named “the Best Company to Work For more than 30 times.” Drawing on his amazing experience, he chalks out a plan to attract the best talent in 14 chapters. Naturally, every company has its own character and can’t blindly copy Google’s unconventional ops and mission, but it can certainly use some amazing takeaways Bock shares — such as trust and empower employees, be experimental, create a high-freedom workplace, measure effectiveness of managers against outcomes you seek, believe in the power of the crowd, remember that not all perks are costly, and use interesting hiring practices driven by data. This gem of a book on Google’s HR approaches certainly has so many lessons to inspire HR and talent acquisition professionals.

Buy the book here.

10. Drive by Daniel H. Pink

A bestselling author and leading thinker on business and behavior, Daniel H. Pink pens a challenging and provoking book on motivation. Pink says most of what we know about what motivates us is wrong; the traditional carrot-and-stick approach is flawed and could end up doing more harm, such as leading to diminished performance, poor creativity, and unethical behavior, than good.

Using case studies and scientific research to make his case, Pink offers deep insights into an intrinsic and extrinsic motivator and their far-reaching implications in the business environment. In this book, Pink “reveals the three elements of true motivation: Autonomy – the desire to direct our own lives; Mastery – the urge to get better and better at something that matters; Purpose – the yearning to do what we do in the service of something larger than ourselves.” Really valuable lessons on goal setting, rewards, and motivation for an HR manager, right?

Buy the book here.

11. Why employees don’t do what they’re supposed to do and what you can do about it by Ferdinand F Fournies

Surely, every HR professional can relate to the title. Ferdinand Fournies, a former Columbia Graduate School professor and a renowned business management speaker and consultant, bases this book on the responses from 25,000 managers.

He talks about 16 different reasons why employees don’t do what they are expected to do and what managers can do about it to boost employee performance. A quick, easy, and enlightening read, this book outlines a practical framework for preventive management, getting rid of roadblocks via effective communication, and leading change — problems are acknowledged, solutions are mutually agreed upon, and every achievement is reinforced. The revised version also discusses practical aspects of modern workplace trends such as telecommuting, flexi-time, temp workers, and occupational stress and safety.

Definitely, this one’s a must-include in the HR business bookshelf!

Buy the book here.

15 recruiting tools that need to be on your radar for 2020. Get the Free Ebook.

12. Fierce conversations: Achieving success at work and in life, one conversation at a time by Susan Scott

Yet another amazing practical book on the magic powerful communication wields! She says, “While no single conversation is guaranteed to change the trajectory of a career, a business, a marriage, or a life, any single conversation can.” Fierce Conversations, targeted mainly at a business audience, emphasizes the need for tough, authentic conversations to enable growth and gives you seven guiding principles to take away with you.

For some readers, the book may be a tad too long with so many anecdotes, but for most, the book provides incredible action items and models to lead change through richer relationships. For HR people, Scott’s book can be hugely helpful in tackling issues in fast-paced business environments and make deeper connections with people.

Buy the book here.

13. Aligning human resources and business strategy by Linda Holbeche

Based on UK practices, this book has good insights for HR business partners. Dr. Linda Holbeche tells you “how you can strengthen and prove the relationship between people strategy and business success through your approach to performance and development and impress at the highest levels” (from the back cover).

The book is highly recommended for senior HR strategists. It discusses in detail, relying on research and examples, the need for strategic HRM and its hows and whys. The book helps HR better understand its ability to deliver value, align strategy, and influence culture.

Buy the book here.

14. Hiring for attitude by Mark Murphy

Bestselling author Mark Murphy, who is also the founder and CEO of Leadership IQ, says that most organizations have got their hiring approaches wrong because they are typically looking only for people with the right technical competencies. In their study, Leadership IQ found that 46% of the 20,000 new hires tracked over 3 years failed with the first 18 months! They found that coachability, emotional intelligence, motivation, technical competence, and temperament were the top 5 reasons and concluded that “attitude” was the main reason they failed.

In his book, Murphy tells you how to evaluate attitudinal characteristics to identify top performers through tests and sample interview questions, using case studies from companies such as Southwest Airlines and The Four Seasons. An easy, insightful read for all talent acquisition professionals out there!

Buy the book here.

15. The employee experience advantage by Jacob Morgan

Morgan tells you how to win the war for talent by giving employees the workspaces they want, the tools they need, and a culture they can celebrate. He argues that through better employee experiences, companies can address issues related to hiring and retention, customer satisfaction, and innovation. He offers a holistic view of employee experience through examples, data, case studies, and stories to ensure that employees come to work because they “want” to and not because they “have” to. Morgan believes you can achieve this by designing the culture, technology, and physical spaces the right way. To more how to enhance employee engagement, HR professionals should invest in this valuable read today.

Buy the book here.

Which HR management book is on your reading list?

And that’s a wrap! But, we would love to know which book out of these are you reading next. Until then, happy reading and upskilling.