Every November, recruiters face the same challenge: plan next year's recruiting budget while leadership says "hire more people" and finance says "with less money."

68% of recruiting leaders report being asked to increase hiring targets for 2026 while keeping budgets flat or reducing them.

The average company recruiting budget for 2026 is projected to be $4,200 per hire—down 8% from 2025.

Meanwhile, job boards are raising prices, candidate expectations are higher, and time-to-fill keeps increasing.

Here's how to build a 2026 recruiting budget that's realistic, defensible, and doesn't set you up for failure.

Start With 2025 Actuals (Not What You Budgeted)

Don't use your 2025 budget as a baseline. Use what you actually spent.

Most recruiting budgets are wrong because they're based on what was planned, not what was real.

Pull these numbers from 2025:

✅ Total hires made (not planned hires—actual hires)

✅ Total recruiting spend (job boards, agencies, tools, events, swag, everything)

✅ Cost-per-hire by channel:

• Direct applications (career site)
• Job boards (Indeed, LinkedIn, etc.)
• Agency/search firm placements
• Employee referrals
• Campus recruiting
• Other sources

✅ Cost-per-hire by role type:

• Executive
• Professional/salaried
• Hourly/frontline

✅ Time-to-fill by role type

✅ Offer acceptance rate

✅ 90-day retention rate

Having real 2025 data makes your 2026 budget defensible. You're not guessing—you're projecting based on evidence.

Calculate Your True Cost-Per-Hire

Most companies under-calculate cost-per-hire because they forget hidden costs.

Standard cost-per-hire calculation:

(External costs + Internal costs) ÷ Number of hires

External costs:

• Job board subscriptions (Indeed, LinkedIn, niche boards)
• Agency/search firm fees
• Background checks
• Skills assessments
• Recruitment marketing (ads, events, swag)
• Candidate travel/relocation

Internal costs (often forgotten):

• Recruiter salaries (allocated by time spent recruiting)
• ATS/recruiting software licenses
• Interviewer time (hiring managers, team members)
• Onboarding costs
• Recruiting operations support

The national average cost-per-hire in 2025 is $4,700. Tech companies average $7,500. Entry-level hourly roles average $1,800.

If your 2025 cost-per-hire was higher than average, expect finance to ask why.

Be ready to explain:

• Competitive markets (hard-to-fill roles cost more)
• Quality-of-hire (higher cost but better retention)
• Agency reliance (and plans to reduce it)

Build Bottom-Up, Not Top-Down

Bad approach: "Finance allocated $X for recruiting. Let's figure out how to spend it."

Good approach: "We need to make Y hires. Here's what it will realistically cost."

Bottom-up budget calculation:

Step 1: Determine 2026 hiring targets by role type

Example:

• 10 executives
• 40 professional/salaried employees
• 100 hourly/frontline employees

Step 2: Calculate expected cost-per-hire by role type (based on 2025 actuals)

Example:

• Executives: $15,000 per hire (agency fees, extensive search)
• Professional: $5,000 per hire (job boards, some agency use)
• Hourly: $1,500 per hire (job boards, referrals)

Step 3: Calculate total recruiting spend needed

• 10 executives × $15,000 = $150,000
• 40 professional × $5,000 = $200,000
• 100 hourly × $1,500 = $150,000
• Total: $500,000

Step 4: Add 10-15% buffer for:

• Unplanned hiring (backfills, unexpected growth)
• Market changes (if costs increase)
• Failed searches (some roles take multiple attempts)

Total budget request: $550,000-$575,000

Bottom-up budgets are defensible because they're based on real hiring needs and historical data.

What To Do When Leadership Says "That's Too Much"

Finance will push back. They always do.

78% of recruiting leaders report their initial budget requests being cut by 15-30%.

How to respond:

Option 1: Show the trade-offs

"If we reduce the budget to $400,000, we can afford to hire:

• 8 executives (instead of 10)
• 30 professional employees (instead of 40)
• 100 hourly employees (unchanged)

Which roles should we deprioritize?"

Forcing leadership to make explicit trade-offs prevents unrealistic expectations.

Option 2: Show cost of NOT hiring

"Each month we leave the Senior Engineer role open costs us $X in lost productivity / delayed projects / revenue impact."

Quantifying the cost of open roles helps justify recruiting investment.

Option 3: Propose efficiency improvements

"If we invest $50K in [referral program/sourcing tools/process improvements], we can reduce agency spend by $150K and still hit targets."

Showing how you'll reduce costs in one area to invest in another makes you look strategic, not defensive.

Where To Invest in 2026 (Based on Current Trends)

SHRM surveyed 1,200+ recruiting leaders about 2026 budget priorities. Here's where they're investing:

#1 Priority: Employee referral programs (63% increasing investment)

Why: Referrals have the lowest cost-per-hire ($1,200 average) and highest retention rates.

How to invest:

• Increase referral bonuses ($1,000-$2,000 per hire)
• Add gamification/contests
• Make referral process stupidly easy

ROI: Every $1 spent on referral programs saves $3-5 on job boards and agencies.

#2 Priority: Recruiting automation and AI tools (57% increasing investment)

Why: Automation reduces time-to-hire by 30-40% and allows recruiters to handle more reqs.

Where to invest:

• Resume screening AI
• Interview scheduling automation
• Candidate engagement tools
• Sourcing automation

ROI: One recruiter with good automation can handle 30-40 reqs instead of 20-25.

#3 Priority: Employer branding and candidate experience (51% increasing investment)

Why: Strong employer brand reduces cost-per-hire by 50% and increases application rates by 2-3x.

Where to invest:

• Career site improvements
• Employee storytelling content
• Glassdoor/Indeed review management
• Candidate communication tools

ROI: Better employer brand means more direct applications (cheap) and fewer job board dollars needed.

What's DECREASING in 2026 budgets:

❌ Job board spend (52% reducing) - Costs rising, quality declining

❌ Agency/search firm reliance (48% reducing) - Too expensive, trying to build internal sourcing

❌ Campus recruiting (31% reducing) - ROI unclear, entry-level remote work reduces need

How To Allocate Budget Across Channels

Based on 2025 industry benchmarks, here's typical budget allocation:

Job boards: 25-35%

• Indeed, LinkedIn, niche boards
• Budget for both organic and sponsored posts

Agencies/search firms: 15-25%

• Focus on executive and hard-to-fill roles only
• Negotiate volume discounts if using regularly

Employee referrals: 10-15%

• Referral bonuses
• Referral program management tools
• Contests and incentives

Recruiting tools/software: 10-15%

• ATS subscription
• Sourcing tools
• Assessment platforms
• Scheduling and automation tools

Employer branding: 10-15%

• Career site development
• Content creation (videos, employee stories)
• Events and recruitment marketing

Background checks/assessments: 5-10%

• Background verification
• Drug testing (if required)
• Skills assessments

Other: 10-15%

• Candidate travel/relocation
• Swag and candidate experience
• Conference/event sponsorships
• Recruiting team training

Your allocation will vary based on industry, role types, and hiring volume.

Metrics To Track in 2026 (To Prove ROI)

Finance will ask: "Did recruiting deliver value in 2026?"

Track these metrics to prove it:

✅ Cost-per-hire (vs. budget and vs. 2025)

✅ Time-to-fill (vs. 2025)

✅ Quality-of-hire (90-day retention, performance ratings, manager satisfaction)

✅ Source effectiveness (which channels deliver best candidates at lowest cost)

✅ Offer acceptance rate (higher = better candidate experience and comp strategy)

✅ Hiring velocity (are you filling roles faster year-over-year?)

Track monthly, report quarterly, and tie metrics to business outcomes.

Example narrative:

"In 2026, we reduced cost-per-hire by 12% while improving 90-day retention by 8%. Our investment in employee referral programs generated 40% of hires at half the cost of job boards. Time-to-fill decreased by 15 days, allowing us to fill critical roles faster."

Data-driven recruiting proves value and protects future budgets.

The Budget Planning Timeline

November 2025:

• Pull 2025 actuals
• Calculate cost-per-hire and source effectiveness
• Draft 2026 hiring plan and budget
• Identify efficiency opportunities

December 2025:

• Present budget to finance and leadership
• Negotiate and defend
• Get approval (hopefully)

January 2026:

• Finalize vendor contracts based on approved budget
• Communicate budget and priorities to recruiting team
• Start executing

Start budget planning NOW if you haven't already. December budget approvals require November preparation.

The Bottom Line

2026 recruiting budgets will be tight. Companies want to hire more with less money.

How to build a defensible budget:

1. Start with 2025 actuals (not what you planned, what actually happened)
2. Calculate true cost-per-hire (including hidden costs)
3. Build bottom-up (hiring needs × realistic costs)
4. Show trade-offs (if you cut budget, which roles don't get filled?)
5. Invest strategically (referrals, automation, employer brand)
6. Track ROI (prove recruiting delivers value)

The companies that get adequate recruiting budgets in 2026 will be those that prove ROI in 2025.

If you haven't started budget planning yet, start this week. December will be here before you know it.

Sources:

• SHRM: 2026 Recruiting Budget Survey
• Lever: 2026 Recruiting Budget Benchmarks
• Glassdoor: Employer Brand ROI Research
• Indeed: Pricing Update 2025
• SHRM: Cost-Per-Hire Benchmarks 2025