Skip to the main content.

3 min read

Do You Know If You Overspent Your Recruiting Budget This Year?

Recruiting costs can sometimes be unpredictable – salaries don’t get negotiated in the most optimal way, benefits packages may turn out differently than you planned, and you may end up sending more jobs to search that you originally planned.

Do you know if you overspent on your recruiting budget this year? If you did, how are you going to make sure it doesn’t happen next year?

Chances are you didn’t budget correctly for recruiting spend last year – costs are rising quickly:

In 2014, U.S. companies increased their average talent acquisition costs 7% from 2013, driven in part by an increase to nearly $4,000 cost per hire in 2014 – Bersin by Deloitte

Costs are rising because the cost of talent acquisition is increasing – candidates are demanding more to be found and more to be acquired. To get a handle on exactly where spend has increased, start by collecting an overall picture of your recruiting costs.

The largest part of your budget – your agency spend – can be better understood in the context of your entire budget.

Collecting your recruiting costs can be challenging, especially when it comes to direct hire recruiting agencies, because funds are spent through several different contracts and channels.

To begin, get a handle on both your internal and external recruiting costs to see the impact direct hire agency recruiting is having on your organization.

Getting a hold of your internal costs

recruiting budget

Everything that you spend internally, or subsequently, your internal recruiting team spends their time doing, is considered an internal cost – salaries, benefits, development and more.

Human Resources Metrics defines your internal recruiting costs as, “fixed” or “overhead” expenses comprising everything from recruiter compensation and benefits to office and technology expenses. These costs are an obvious classification. These operating expenses are defined as virtually all costs required to maintain a staffing operation.”

When it comes to recruiting, take some time to figure out exactly how much time your team spends on talent acquisition and recruitment efforts. In this area, there is hidden potential for optimization in 2016.

Next week, we’re releasing a toolkit to help you collect all of your personal internal and external recruiting costs, but in the meantime, check out Glassdoor’s recruiting budget to use as a guide for your internal cost collection.

Getting a hold of your external costs

recruiting budget

The funds you spend anywhere other than inside the walls of your organization – agency use and fees, application tracking system (ATS) subscriptions, job advertising and fairs, and more is considered and external expense.

Human Resources Metrics defines your external recruiting costs as, “expenses are…referred to as sourcing costs and include advertising, agency and search fees as well as the costs associated with Internet postings.

External recruiting costs include virtually all, primarily external expenses involved in identifying and recruiting candidates. Sourcing costs are usually incurred for a specific position or positions, but they can also include general initiatives such as employer branding.”

For many organizations, the largest line item in their overall recruiting budget comes from their external costs – direct hire recruiting agency fees.

Agencies: the $8 billion dollar leaky faucet

Direct hire recruiting agencies are an $8 billion dollar industry – but planning for their use will help you to optimize your recruiting budget in 2016. They’re a leaky faucet because they’re not often planned for, an industry bad-habit that needs to change.

In order to get a handle on this particular line-item in your 2016 budget, you have to know how much they cost, the average direct hire agency fee, and how you can track both your spend on agencies and the quality of your agencies for the best return on investment (ROI) for your organization.

Collecting your internal and external recruiting costs to understand your agency spend is just the first step of handling your direct hire recruiting agency spend this budget season.

Remember – agency spend isn’t just about expense, the quality of your agencies directly impact the quality of your hires.

Understanding how you can leverage the right agency relationships to affect your organization in a positive way is the first step to an optimal recruiting budget.

Keep an eye out for our Recruiting Leader Data Toolkit next week – it’s packed with worksheets to help you get a handle on this stuff. In the meantime, BountyJobs data might be able to help you start your budgeting process. If you’d like to know more about how we can help you, contact us.


Quick Hires, Quality Talent: 6 Ways to Reduce Time to Fill

Quick Hires, Quality Talent: 6 Ways to Reduce Time to Fill

I'm sure this isn't a surprise—filling open positions quickly is super important to your organization, regardless of size or industry. After all, a...

Read More
Top 5 Terms for Every Recruiting Agency Contract

Top 5 Terms for Every Recruiting Agency Contract

Signing a contract is a big deal—especially when you're reviewing or signing on behalf of your organization.

Read More
Majority of U.S. Workers Considering New Jobs Due to Inflation

Majority of U.S. Workers Considering New Jobs Due to Inflation

U.S. jobless claims haven’t been this low since September 1968 – for the week ending April 2, initial jobless claims fell to 166,000 (a decrease of...

Read More