Hiring isn’t free. The costs associated with things like advertising job openings, dealing with recruiters, and the time that employees spend reviewing and interviewing candidates can add up fast. Below, researchers and practitioners discuss the benefits of establishing a hiring budget.

Know Average Costs
In 2017, Fayetteville, Ark.–based business consultancy Zweig Group conducted a hiring spending survey looking at architecture, engineering, planning, and environmental consulting firms and found that fewer than one-third have a budget for human resources (HR) and recruiting, even though the average cost of hiring a new employee for an architecture firm is $4,454 according to their survey.

“A lot of firms don’t know these numbers,” says Randy Wilburn, director of recruiting strategy at Zweig Group. “That’s a real disconnect.”

Wilburn says hiring usually takes between 30 and 60 days, and the typical $4,454 per hire is an industry average that can climb much higher depending on the position being filled. Also, hiring is almost always happening, especially at bigger firms. Wilburn estimates that, at the industry’s average annual turnover rate of roughly 10 percent, a 200-person firm that wants to grow by 15 percent annually could be spending more than $200,000 a year on hiring alone.

“These firms don’t break down spending and they don’t measure their return on investment when it comes to hiring people,” Wilburn says.

Track Your Spending
Wilburn recommends that firms of any size pay more attention to the costs of bringing in new employees. Two of the largest factors to pay attention to are how much a firm spends on the staff time of its HR department (or, more likely, its HR person) or on the outside recruiters that many firms rely on to do the time-intensive job of finding good candidates. Tracking spending in these two categories alone would help firms get a better idea of how much their hiring costs are and how to budget for them. Wilburn also suggests tracking expenses for other parts of the process, including advertising, promotional recruitment materials, travel, interview training for the employees doing the hiring, and relocation packages offered to new hires.

“There are firms out there that do it well,” Wilburn says, “but they are the exception and not the rule.”

To keep the costs of hiring under control, leaders at Shive-Hattery Architecture + Engineering, a 400-person firm with seven offices in Iowa, Illinois, and Indiana, meet monthly to discuss business operations, and hiring and recruitment costs are included in a regular report.

“We track it very closely,” says director of HR Tina Kueter. “We talk about where is our cost per hire now, how much have we spent this year compared to last year. It’s all relevant.”

Create a Protocol
Because of Shive-Hattery’s size, turnover is an everyday concern. “We’re constantly in hiring mode,” Kueter says. In 2016, 46 new employees came on board. By mid-2017, 40 more had joined the team.

To ensure that the costs associated with turnover are fiscally manageable, Kueter says it’s important to have a system. Shive-Hattery’s involves first identifying the specific needs of the office and meeting with leadership to decide where to look to fill the need. Then the job postings start going up and the firm’s in-house recruiter starts contacting potential candidates. As resumes roll in, the team leader who’ll be in charge of the future employee begins picking prospects. HR then starts with a sort of screening call, to establish what Kueter calls a baseline: “Can we meet your expectations and would you meet ours?” Once candidates have been narrowed down, they’re called in for two interviews—one technical, the other to gauge the cultural fit. Afterwards, HR, the recruiter, and the firm’s leaders hold a formal roundtable discussion on the candidates and make their pick.

“There may be outliers with certain candidates where you might handle things a little bit different but fundamentally we stay with our process,” Kueter says. This helps to prevent any accusations of prejudice, but also helps keep costs under control. Kueter estimates the firm’s cost per hire at just over $3,700 for 2017.

Not all firms may need to systematize their hiring to such a degree, but Wilburn argues that paying more attention to the cost and process of hiring is part of becoming a better business—and a better place to work. “We’re dealing with a finite supply of human resources. Recruiting and more importantly retention is one of the most important issues in the design space,” Wilburn says. “It’s important for firms to go that extra mile.”