How To Budget For Recruiting
When it comes to building and growing your startup one of the most important elements is how you assemble your team. Before you get to the step of deciding who will be on it, it’s important to look at what is the budget, and what is involved for the search. Also consider how will you break down all the steps to keep it as pain free as possible.
We sat down with CEO and founder, Jessica Stielau of The Sourcery, a leading recruitment firm in the San Francisco Bay Area as well as Early Growth Financial Services Principal and Consulting CFO, Sirk Roh.
Together they illuminated steps and processes to help you better understand what is involved. These tips will aid you in putting it together and designing an ideal budget that will support your needs as a start up in the now and beyond as you grow.
Slide 1: How to Budget for Recruiting
Slide 2: Speaker Intro (1:03)
Slide 3: Introduction of Topics (3:47)
Slide 4: Committing Time & Resources (4:23)
Slide 5: What resources – or how much time – will this take? (4:28)
Slide 6: How Much Time Should It Take? (5:38) *Visual diagram breakdown
Slide 7: Whom to Hire, And When (10:05)
Slide 8: Factors to Take into Account (10:08) *list of concerns
Slide 9: Do You Already Have Someone That Can Help? (18:13)
Slide 10: Who Do You Already Have That Can Help? (18:17) *list of internal checks
Slide 11: Breakdown of Tasks (25:12) *recruiting task checklist
Slide 12: Options for Help (35:35)
Slide 13: Comparing Options (35:38)
Slide 14: Options Breakdown/Analysis (36:31) *table breakdown
Slide 15: Custom Blend of Resources and Budget (49:16)
Slide 16: Thanks! Contact Info
Committing Time & Resources
Jessica: “I think a big question that people have is just how much time and how many resources is this going to take?
There is a big difference between being able to hire your friend or hopefully a friend of a friend and how much time it takes to make an out-of-network hire.
Usually that goes ideally pretty quickly versus how much time and effort to make one of these out of network tires and at certain points and the company’s growth you can outpace your ability to make in in network hires.”
How much time – will this take?
Jessica: “(info from Sequoia Capital) …it takes, for an average tech startup to make 12 hires, they estimate it takes 990 hours and Sequoia recommends of their talent function that you make forty to sixty percent of your hires from referrals.”
How Long Will You Need This Person?
Jessica: “One of the things that you want to think about is just how long you’re going to need this person and that can be really tricky.
There may be an opportunity to hire this person as a temp or a contract hire instead of a permanent position and that also might give you the opportunity to eventually move them from attempt, to hire and maybe try them out a little bit like sort of a try before you buy”
The Opportunity Cost
Jessica: “It’s going to take a lot of and so one of the things you want to think about is just where the internal resources you have are going to be used best, and in order to think about that you want to consider the opportunity cost of the person recruiting.
If you’re an executive within the company your opportunity cost is pretty high, so if there are tasks within recruiting that can more easily be done by someone who is admin level let’s go ahead and have them do that to try to minimize the opportunity cost.”
Sirk: “We’re seeing a lot more outsourcing of recruiting.
If you think about the amount of time that a CEO, or an executive team, or an engineering team has, you really need to be thinking about how typically, for early stage companies, product development and customer / revenue acquisitions, those are the things that we need to be focused on. Everything else we can prioritize but that is what we should be focused on”
Jessica: ‘One thing that’s helpful is to understand what a successful close rate looks like. You should be targeting closing at least sixty percent of the candidates you make offers to.
That’s what we mean by closing, how many of the people do I make an offer to actually accept the offer and want to join my company. Sixty percent is a minimum benchmark that you want to be hitting and if you’re not hitting sixty percent that’s a stop and fix problem.”
When to Outsource Recruiting
Sirk: If you’re looking for multiple hires, and you have a story to tell. You want to work with a partner that is going to understand the story, be able to communicate that story and be able to recruit multiple recruits. Then I think recruiters make a lot more sense”