Running a business is difficult, especially for startups. Depending on the type of business you run, it could take years to become profitable. Restaurants, for example, have to be open for an average of 4-5 years before they turn a profit. For them, budget is king.
Even for businesses that have been around a while, budget is always everyone’s top priority. When you have salaries to pay, supplies to buy, and bills to consider, where does recruitment fit in?
According to Google, recruitment fits in first. They have been dominating the tech market for years, and a big reason for that is their recruiting strategy. When it comes to budgeting for recruitment, they offer some great lessons. Explore 3 recruitment budget tips below:
#1- Invest in the Best
In business, the less you have to spend, the more you can make; it’s the one thing almost everybody knows. However, that doesn’t mean you should avoid spending on principle. Some things, including recruitment, earn more profits when you spend more. Many companies have begun to take notice of recruitment; In 2011, only 4% of budgets were allocated to recruiting on average. By 2014, it had tripled to 12%.
Google’s former Vice President of People Operations, Laszlo Bock said in an interview that Google spends 2x what the average company does on recruiting. They quickly picked up on what many companies are still learning—if you want to make more money over the course of time, you have to spend more on talent in the beginning stages of building a company. Hiring the highest quality candidates from the start is one of Google’s biggest keys to success.
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When you think “Google,” you probably have a pretty good idea of what their brand is and what kind of people work there. That doesn’t just happen on its own; Working on employer brand is an ongoing effort that will have an impact on your recruiting budget. That is, it’s going to cost you. However, as Google has shown through its innovative strategies and domination of the market, employer branding has had an impact on its profits.
And moreover, branding actually matters to candidates. About 11% of job seekers said they would decline a job offer from an employer with a bad reputation–even if they were unemployed. While 11% seems like a small number, keep that figure in mind when recruiting in a competitive landscape or trying to source in-demand skills. Failing to invest in employer brand means you could be missing out on talented candidates who actually need work.
Don’t have a Google-sized budget? Focus on your current employees. Call them out on Instagram, tag them on Facebook, and feature them on your blog when they’ve completed a large project. These are easy things companies of any size can do to show their talent pool what it’s like to work there!
#3- Be Extremely Thorough
Google’s recruitment strategy is intense and rigorous. Their average time-to-hire is as long as six weeks, and no wonder; candidates go through eight stages of vetting before they receive a job offer. Google receives over one million resumes per year, so this vetting is as necessary as it is helpful.
By the end of the recruitment process, Google only offers jobs to 0.01%-0.04% of the candidates. Being this extreme in your recruiting process is going to cost you a little extra upfront. You may not need eight different stages, but being thorough will definitely pay off in your retention numbers and when it comes time to continue hiring. According to the U.S. Department of Labor, the cost of a bad hire is as much as 30% of the employee’s first-year earnings.
Investing so much of its budget into finding and securing the right hires positively affects Google at multiple levels. They’ve paved the way for companies large and small, to realize that quality-of-hire is more important than cost-per-hire. Use their recruiting tenets as guiding principles as you build your plan for this year and the next. After all, you may not be Google yet, but if you put talent first, you can be!
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