HR talent costs more to hire

by 10 Nov 2007

RECRUITMENT COSTS for HR hiring managers have increased by up to 25 per cent as companies pay higher salaries in the competition to secure top HR talent, according to a recent market report.

It found that several role types within HR are driving salary levels up due to demand. Contemporary HR skills, particularly in areas such as talent management, organisational development and leadership development, are proving extremely popular among employers in the drive to compete for talent, the report found.

Furthermore, the current skills shortage is requiring organisations to focus more on differentiating themselves as ideal employers, and many are looking to their HR departments to achieve this.

This has also led to an increase in the demand for specialised skills and more specialised roles becoming available, which has pushed the salary levels for these in-demand roles higher than ever before.

The report, which was released by Hudson Human Resources, said that this change in focus from the more traditional employee relations and legislation-based function has led to an increase in value for the HR function and an increase in quantifiable business impact, all of which is leading to higher levels of recognition and subsequently remuneration.

This, along with the continued competition for the best talent, will result in rising salary levels and will only continue into the next year, the report predicted.

It found that the average HR salary has risen more than $20,000 in 2007. Almost 70 per cent of managers surveyed have recorded higher costs, and of that number close to half have seen their recruitment expenses increase by up to 25 per cent.

“We are seeing HR become a more valued partner in an organisation’s success and increasingly being recognised as such,” said Richard Taylor, practice leader of Hudson Human Resources.

“Ultimately companies will have higher expectations of their HR staff. If HR commands a higher salary, the company will demand a higher return. HR will have to continue to improve its ability to measure its success.”

Companies need to invest heavily in retaining their HR talent to avoid getting into a situation where they have to compete for talent externally, Taylor said.

The report found that the skills shortage continues to put pressure on the HR industry. Salaries in the HR industry have increased over the last several years, reflecting the dominant role skilled people are playing in the recruitment process due to their scarcity. To secure top talent, the report said employers have to compete and pay a premium salary, regularly moving the goalposts on advertised or budgeted salary.

Successful HR teams will identify what the business critical demands are regarding HR, according to Taylor, and drive these areas forward without getting carried away doing what they historically think they need to.

“Organisations will start looking overseas for talent, particularly as HR becomes far less centred on the traditional aspects of legislation and employee relations and more focused on the contemporary skills of talent management, leadership development and employee engagement,” he said.

There may be some cultural nuances from one country or region to the next but when it comes to more strategic, business-focused HR, employees and organisations from London to Sydney and New York to Beijing require the same skills, knowledge and service delivery from their HR talent.”

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