3 in 3 SMEs struggle to compete for talent
SMEs are finding it difficult to compete for talent against multinational corporations and are suffering high rates of turnover, recent Employment Hero data shows.
New data from Employment Hero indicates that 75 per cent of SMEs across Australia and New Zealand are struggling to attract talent, with many finding the cost of job ads to be an additional barrier.
Employment Hero’s The State of Recruitment Report found that advertising rates for SMEs have surged by 81 per cent over the past year, with the average cost to advertise a role reaching $5,380 in Australia and $6,429 in New Zealand (NZ).
More than a quarter of hiring leaders surveyed by Employment Hero received four or fewer applications for their last open role.
“The number of applicants received varies across the size of the organisations. Microbusinesses with less than 10 employees were 98 per cent more likely to have 4 applicants or less, while larger businesses (with 201-500 employees) had an average of 50 applicants for their last open role,” the report stated.
The report also found that hiring leaders are dedicating 39 hours per week to hiring activities, including an average of seven hours interviewing candidates, six hours screening candidates and five hours of candidate testing.
The rate of turnover for new hires is also high for SMEs, with 17 per cent of candidates not passing probation or remaining in their roles after the first six months.
This leads to a dramatic increase in costs for SMEs as they must restart the entire recruitment cycle.
Employment Hero founder and chief executive Ben Thompson said SMEs must leverage their recruitment advantages to compete against multinational companies.
“These include offering tailored employee packages, greater flexibility in working arrangements, and a more hands-on working culture,” said Mr Thomspon.
“Candidates can be a ‘big fish in a small pond’ whose achievements directly impact the business. SMEs also offer less competition for progression and salary increments.”
While small businesses may face budget constraints against MNCs, Mr Thompson said that by showcasing strengths in areas like culture, flexibility, and growth, allows SMEs to compete effectively.
SMEs also boast a faster hiring process, with 48 per cent completing it in under ten days, compared to the industry average of 30 days.
However, despite being able to hire quickly, four per cent of hiring leaders in microbusinesses said it took more than a year to fill their last role.
“None of the other larger organisations with 10 or more employees faced the same issue — everyone else was able to fill their last role within a year,” the report said.
Recruitment costs are also on the rise across businesses of all sizes, according to the report. An increase in salaries due to the rising cost of living is the main factor driving up recruitment costs. This was followed by labour shortages.
A significant majority (82%) of hiring leaders also said that talent shortages have increased in the past year, with 25 per cent saying it significantly increased, 36 per cent saying it somewhat increased, and 22 per cent saying it increased a little.
Only 18 per cent of hiring leaders said that talent shortages did not increase at all.
“In Australia, an increasing number of small businesses are relying on younger family members to help fill workplace shortages,” the report said.
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