It’s that time of year again. The Christmas lights are on, the John Lewis advert is out and Christmas coffee cups are all over the high street. It’s also that time of year when clients start to ask: “How much should I budget on my recruitment advertising next year?”
Here is my (very) rough guide with some ‘rule of thumb’ advice to help you when thinking about your recruitment budget for next year.
To keep it simple, let’s assume that we are talking about an organisation of 1,000 employees – just scale accordingly depending on the size of your own organisation.
For those you don’t know the number of hires, your churn, then let’s assume that on average (according to the great Bill Boorman) people move jobs every 2.6 years. Let’s say that you fill 50% internally. So, every year you will need to advertise externally for 20% of your work force.
For an organisation of 1,000 people. That means 200 hires per year.
The stronger your employer brand, the more people are likely to apply for free (organically) and the higher your conversion rate will be.
As we are talking broadly, I would say that 60% of applications is a good benchmark to be attracting organically and it would be reasonable to expect a 15% conversion rate (from click to completed application).
So now we just have to do the maths.
Assuming, that you need an average number of 5 applicants per interview and 5 interviews per hire are needed, then you need to spend to generate 25 applications per role.
60% of which are generated organically (15 per job).
So, we need an additional 10 applications per job to ensure that they are all filled.
Finally, 200 jobs x 10 applications means we need an additional 2,000 (paid for) applications.
Based on an average paid applications costs of £5.00 then you would need to spend £10,000 per year per 1,000 employees which is £50.00 per hire.
So, the formula looks like this: Total employees x 20% (churn) x £50.00
Which can be further simplified to: £10.00 x Total Employees
Clearly if you hire nurses, techies, teachers, scientists or other hard to fill roles then the cost per application will be higher (though on the flip side, chances are you will get less applications per job). If you hire volume, junior roles, it will be less. This is just a good place to start.
Equally, if you have a weaker employer brand (less than 60% organic responses) or a relatively poor application process (less then 15% conversion rate), then you will need to adjust your recruitment spend accordingly. However, your wins will be quicker if you invest in improving both of these first.
Above all, remember to adjust spend in real-time based on results. Good luck.
If you want to add automation technology, like ClickIQ, to help manage your recruitment advertising and optimise your recruitment spend and performance throughout 2019, we can help – add an extra £299 per month.
How much you should spend on sourcing is also a good question.
I am going a little off piste here, but let’s say 10% of your hires are very hard to fill. If we base this estimate on 20% placement fees and an average fee based on £35k salary.
It would mean: 20 x (20%x£35k) = £140k per annum.
Alternatively hire 1 or 2 in-house sourcers along with some CV database access and LinkedIn licences for quite a bit less.
ClickIQ is an Automated Talent Attraction Platform which uses AI and Programmatic technology to intelligently manage and optimise your recruitment advertising in real time, across an extensive network of performance based recruitment media.
Saving recruiters significant time and money whilst also increasing their advertising reach.
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