Top Components of a Recruitment Budget


Recruiting is one of the key components for budgeting for human resources. While around 30% of companies are planning to cut their recruiting budgets for 2021, for the most part, those cuts are based on hiring freezes and other factors that may be slightly lowering the demand for workers. Even companies that do not plan to hire in large quantities rely on strong recruitment efforts to fill their open positions with the best possible candidates.


However, identifying all of the key components of recruitment budgeting can be complicated and time-consuming. It is surprisingly easy to miss important factors when you are putting together your budget.

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This list provides the top things that you should include in your budget for the coming year. While it does not include everything, it should give you a solid grounding for setting up a plan for your HR budget.

Understanding Cost per Hire

One of the most important metrics for an HR team is cost per hire. Simply put, this is the average amount you will spend to hire new employees. While there will likely be some outliers, especially if you are hiring upper-level executives, you should be able to use cost per hire as a good tool to compare year-to-year hiring initiatives.


As you are figuring out how much your team is spending per hire, it is important to include all costs that go into the process, including internal and external expenditures. Forgetting to include items can not only throw off your calculations, but it can also make it difficult to compare your current cost per hire against previous years.

Major Components of Recruitment Budgets

For the most part, you can break the key components for budgeting for human resources into two different categories: internal and external costs.


Internal Costs

Internal costs include everything HR-related that happens in-house. These costs are largely fixed, which means they remain the same no matter how well the company performs.

Usually, the only ways to make changes to internal costs are to cut salaries, revamp programs, or in some cases, lay off employees.

Here are some of the common internal costs for recruiting:


  • Salaries and benefits for recruiters
  • Bonus programs for employee referrals
  • Interview costs, including travel for in-person interviews
  • Training and development for recruiting staff


While these costs can vary from year to year, they generally remain fixed, which means that they must be accounted for when calculating your cost per hire.


External Costs

External recruitment costs are generally more visible, which makes them a little easier to track. On the other hand, you may have more external items to account for, so it is important to keep track of your expenditures as you put your budget together.

You will frequently see many of these items on recruiting budgets:


  • Job posting fees
  • Registration fees and travel for networking events and conferences
  • Drug testing and background checks
  • Consultant and outside agency fees
  • Technology fees
  • New hire compensation, including bonuses
  • Skills testing


This is only a sampling of the costs you will need to account for. Building your recruitment budget often requires digging down into your company’s hiring process to discover every category to which you will need to allocate funds. Otherwise, you may miss a vital piece and be left without the funding to cover it.

The Importance of Skills Testing

One of the line items in recruiting budgets that has the best return on investment is skills testing. eSkill’s Talent Assessment Platform can help you cut your cost per hire by up to 70%, saving time and money.

Skills tests allow you to determine which applicants have the skills they need to succeed in your company before you even look at their application.


Because eSkill works with almost every kind of applicant tracking system (ATS) software, you can easily add skills tests to the application process, automatically sending each candidate a link to the test you would like them to take.

With the largest available library of skills tests organized by job and subject, you can either choose to send out a pre-made skills test or create a customized test by combining existing assessments.


For example, if you were hiring for an administrative assistant, you could have candidates take the Administrative Assistant test, or you could combine that test with others, including soft skills tests like Data Checking or Following Directions.


According to Mercer, more than 40% of HR managers do not know what skills their employees possess. With eSkill, you can have that information at your fingertips. With a user-friendly dashboard, you can quickly organize that data to determine which candidates are most suitable for a position — in other words, who has the best JobFit.

Interested in Making Skills Testing Part of Your HR Budget?

Find out more about the ways that eSkill’s Talent Assessment Platform can make your hiring process more efficient. Request a demo today.

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