4 Ways Recruiting Budgets Will Change Over the Next Year
November 18, 2020
Last year we released our first Future of Recruiting report, sharing predictions about what recruiting would look like over the next five years. At the time, no one could have predicted that a world-changing event was right around the corner. While COVID-19 has only accelerated many of the trends predicted in the original report, its economic repercussions have profoundly impacted the way recruiters operate, especially when it comes to budget allocation.
To get a better sense of COVID-19’s impact on resources, in the latest edition of the report, we asked more than 1,500 global talent professionals how they expect their organization’s recruiting budget to change. The report’s findings reveal where some companies may be increasing or decreasing their spend, and how priorities are shifting.
Here are the biggest takeaways from the data:
1. Almost half of all talent professionals say their recruiting budgets are decreasing — especially for travel and events
As companies everywhere become more cautious about resource allocation, almost half (47%) of the talent professionals surveyed said they expect their overall recruiting budget to decrease.
Despite the challenges COVID-19 has created, some organizations are still in growth mode, with 9% of respondents anticipating that their recruiting spend will actually increase. Another 34% said their budget probably won’t change. But this is still a huge shift from 2019, when only 2% of hiring professionals reported planning to reduce spend on key recruiting initiatives.
Unsurprisingly, travel is the main area where talent professionals expect to spend less money moving forward, with three in four respondents (77%) saying their travel spend will decrease, compared to just 1% who say it will increase. With in-person gatherings likely off the table for the foreseeable future, spend on recruiting events is also declining, with 57% saying they anticipate their events budgets going down.
There is a silver lining here. While safety is the number one priority, the shift to a virtual environment has also made companies realize that some in-person meetings simply aren’t necessary. In certain cases, doing things online is both cheaper and more efficient. This may shape how interviews and events are conducted in the long term, freeing up budget that can be invested in other areas.
2. New emphasis is being placed on employee engagement and learning and development
At many companies, external hiring paused or slowed down as an immediate result of COVID-19. This led to an increased focus on efforts to engage, develop, and retain existing talent to avoid unnecessary — and costly — turnover.
While outside hiring is starting to pick back up, these efforts will remain a priority for talent professionals. In fact, more respondents said they expect their spend on employee engagement to increase (26%) than to decrease (24%), with 39% anticipating it will stay the same. And though 24% expect their learning and development spend to decrease, another 24% see it going up, with 42% saying it won’t change.
In terms of what these efforts will actually look like, many companies are turning to online learning solutions, such as LinkedIn Learning. These solutions can be rolled at scale, even to a dispersed workforce, which will remain an important consideration as long-term remote work becomes the norm.
“It's very cost effective,” says Jillian Geddes, senior manager of talent acquisition for the Middle East and Europe at KEO International Consultants. “I think what we'll actually see is a lot more online learning.”
3. Employer branding remains a key focus area
Another area in which companies are largely holding steady is employer branding. While 22% of respondents expect their spend in this area to decrease, 63% see it increasing or staying the same.
While the money spent on employer branding might not change too much, the messaging itself will. In light of both COVID-19 and the racial justice movement, companies are adjusting their employer branding content to ensure it’s inclusive, reflective of the current reality, and an accurate representation of their culture. The days of highlighting flashy perks and offices amenities are behind us: now, customers and candidates alike want to know companies’ stances on social issues and what they’re doing to support their employees — and the community at large.
As a result, empathy and transparency will be the defining features of successful employer branding in the months ahead. To continue attracting the talent they need, companies will have to invest not only in the medium, but also in the message.
“It's a space that's been really important to us for some time, but I do think our approach has changed there,” says Ben Murphy-Ryan, senior director of talent acquisition at Arm. “We are being more thoughtful around the messaging, around diversity, and we want to be authentic.”
4. Investments in recruiting technology will continue as companies emphasize efficiency
While 23% of talent professionals expect their budget for recruiting technology to decrease, 44% anticipate it remaining the same — and 20% see it rising.
One reason for this is the rise of video interviewing. After having no choice but to take their interviews online at the start of the pandemic, many recruiters and hiring managers saw firsthand just how efficient and effective this method can be. In fact, almost three-quarters (71%) of the talent professionals surveyed said video interviewing technologies could have a meaningful impact on their organization over the next 5 years, compared to just 52% in 2019.
Respondents also placed a greater emphasis on applicant tracking systems (ATSs), human resources management systems (HRMSs), and customer relationship management (CRM) software than they did in 2019. With some companies forced to scale back their recruiting teams, software like this that increases efficiency by eliminating manual processes will likely prove critical if hiring suddenly picks up.
“How do we make the recruiting process more efficient so we start to save money on it?” asks Francesco Bianco, global talent, capabilities, and organisational development director at Vodafone. “One of the ways to save money is the ability to digitize as much as we can to standardize the processes to become more efficient.”
Final thoughts: Budgets are changing, but not disappearing
Every company’s circumstances are different. But by taking this opportunity to evaluate where their investments will have the biggest impact, recruiting teams can reduce spend in non-critical areas — and re-invest where it matters most.
For more predictions about how COVID-19 will transform hiring, read The Future of Recruiting report today.
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