How To Plan Your Best Budget For 2021

This year has been so crazy in so many ways, it can be hard to believe that the usual end-of-year tasks are upon us. Yet the calendar marches on no matter what’s going on, and it’s time to start strategizing for 2021’s recruiting budget and needs. If you’re having trouble quantifying (or even visualizing) what recruiting will be next month, let alone all next year, we have some tips and strategies to help you get started.

Take Stock Of Where You Are Now

It’s no secret that 2020 probably didn’t turn out the way you expected for your organization when you were a bright-eyed, bushy-tailed budget planner about a year ago. Few industries and companies have been left unscathed by this year’s global events. Still, this year’s metrics are the place to start when you start to build a budget for your recruiting and hiring squads for next year.

Start by looking at what worked, what didn’t, and how resources were spent accordingly. Obviously, the pandemic will provide a lot of color as to how things were different this year than others, but you should be able to separate out what was impacted by COVID-related changes and what was just the course of business. Bring in the leaders of your recruiting and hiring teams to talk through the successes (and some misses) of the year.

Some key metrics to request and keep in mind as you start looking back:

  • What were the monthly costs associated with recruiting for the past year? Be sure to include ”hidden” costs like technology licenses, staff resources, relocation fees, or other costs associated with bringing recruits on board. And don’t forget background check/candidate screening costs, as well as any health and safety-related costs.
  • What was the monthly/quarterly cost-to-hire this year? What were the highs and lows? This year was complicated by having an unprecedented shutdown period in many industries, as well as a shift to working remotely and creation of flexible work arrangements. How did this impact your cost-to-hire this year versus last year?
  • How long, on average, did it take you to fill positions? Time-to-hire may continue to be wonky compared to previous years’ stability, but this metric can still help you figure out if your team is spending more time (and thus needing more resources) to find the right candidates, or if the time-to-hire has actually gotten shorter in the current labor market.
  • Which recruitment methods have yielded the highest success over the past year? This is where the brutal honesty part comes in. If social media led to the most hires while paid job ads yielded underwhelming results, now is not the time to try to find the silver lining in the paid job ads. It’s important to understand what should probably be reduced (or maybe even nixed) to maximize your resources moving forward.
    Moving forward, you may also want to evaluate what kind of in-person recruiting your organization does. Even if vaccines and appropriately distanced venues make in-person events more viable in 2021 than in 2020, it’s still going to take a while before those are fully up and running. If you don’t see job fairs, etc., making a comeback for you hiring team, adjust the budget for them accordingly.
  • Will you likely need to upgrade the tech you use to recruit? For example, social media costs may be low, but if you’re going to seek a more comprehensive, programmatic approach to recruiting using an AI-enabled solution or other advanced technology, you should start anticipating the likely costs of onboarding new software or hardware. You don’t necessarily have to commit, but scoping out potential programs and getting cost estimates can help you get in the right ballpark.

Sitting down with your recruiters and and organizing your thoughts around your past year will help you refine next year’s needs, even if things are a bit in flux.

Crunch The Numbers

Once you have a larger idea of what your recruiting budget plan is for the next year, it’s time to start putting numbers behind it. This is always a challenge—unless you’re blessed with psychic ability, you can’t predict the future with total accuracy. But you can make educated guesses based on where you’ve been and start reaching out to your HR team to see what they anticipate for the coming year. Are some departments planning to expand? Are temporary staffing needs in the cards for a particular project or initiative? Your HR team is your “boots on the ground,” so to speak, and they can help guide next year’s projections.

If you haven’t done a lot of staffing-specific calculation, or you’re looking for different ways to approach it, there are tools that can help you get started, like these existing formulas and templates.

These are some of the recruiting and hiring Key Performance Indicators (KPIs) that you’ll want to have on hand:

  • Hires per month. This is simply the number of hires you made last year. From this, you can determine patterns and create estimates for next year.
  • Average time-to-fill. By understanding how long the recruitment process typically takes for your organization, you can make more realistic estimates for next year.
  • Cost-per-hire (CPH). You can calculate this by using the basic formula CPH = recruiting costs/total number of hires. The costs should be both internal (staff resources, employee referral programs, background check fees, etc.) and external (advertising, outside recruiter fees, etc.).

Essentially, you want to gather as much data as you can from the members of your team who have been handling recruiting and hiring throughout the year.

Understand The Context Of 2020’s Results

In addition to those basic metrics, another key to building a proper recruiting budget is to ask your team for context details as well as the bottom-line numbers. For example, if you came in under budget on social media outreach last year but it led to more hires, that’s useful information. Breaking out your recruiting results into specific buckets (like advertising, recruiting events, employer branding, etc.) and analyzing how each performed will help make a more informed, data-driven decision for next year.

This year was incredibly challenging, and next year might be just as challenging in new ways. Still, the more you can bring context and data-driven analysis to your recruiting review and planning, the better off your organization will be to weather those bumps.

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