Revealed: This is how much the Great Resignation is costing you

Skills shortage, inflated wage growth and a historically low unemployment rate create a perfect storm

Revealed: This is how much the Great Resignation is costing you

ELMO Software and the Australian Human Resources Institute (AHRI) have released the data from an industry survey of 1500 Australian and New Zealand Human Resources (HR) professionals. The HR Industry Benchmark Survey has been conducted annually for the last three years. The data gives insight into the core challenges, priorities and opportunities for HR professionals in the year ahead.

Elmo Software CEO, David Lessem, added: “After two years of ups and downs, employers may have been hoping for some semblance of stability in the year ahead. Unfortunately, they are going to face some significant cost increases as the cost of the war for talent looks like it will be paid by businesses."

As HR professionals navigate ‘the war on talent’, the survey data reveals that one in four (24%) of survey respondents said their top challenge in 2022 would be recruitment.

“This isn’t surprising,” said AHRI CEO, Sarah McCann-Bartlett, “with anticipated higher turnover, increased hiring intentions and skills shortages all coming to the fore at the same time.”

What is surprising, is the cost of hiring an employee has skyrocketed to $23,860 per candidate. The number has more than doubled from $10,500 in the previous year.

“Having a clear dollar amount for the cost to hire new people may just be the reminder some organisations need to prioritise their people,” added Lessem.

The increase is attributed to the escalating importance of mid-level managers through the pandemic raising the cost of hiring people in middle-management positions.

The price increase comes at a difficult time for employers – Data released in ELMO’s Employee Sentiment Index last month revealed that 43% of workers in Australia and New Zealand are planning to actively search for new work opportunities in 2022.

“It will be hard enough for organisations to try to recruit talented people to fill the roles that have originated due to growth of the business, let alone trying to replace departing employees,” added Lessem.

In addition to the rising cost, the time it takes to recruit candidates has also increased. In Australia it takes on average, 40 days to fill a vacant position, up from 33.4% last year. In New Zealand the time frame is significantly higher, taking 50 days, up from 36.5% last year. When you break down the executive role recruitment data this increases to 59 and 86 days respectively.

Despite the rise in cost and time for recruitment, a really positive trend has emerged, the hiring intentions of businesses in 2022 are beginning to look a lot more like pre-covid hiring patterns - 54% of survey respondents said they were planning on growing their workforce during 2022. When broken down into industries, workforce growth was expected almost across the board but the industries that had the highest expected net workforce increase were, ‘information, media and telecommunications’, ‘not for profit’ and ‘healthcare and social assistance’. Businesses with less than 200 employees are anticipating the largest workforce growth at 26%, followed closely by enterprise size (+2000 employees) on 24%. Mid-market organisations (200 – 1999 employees) only expected a growth rate of 17%. 

With so many businesses looking to grow their workforce, the challenge for HR leaders will be finding enough good candidates to fill the new roles. In Australia, 54% of recruiting employers said that they were having trouble finding suitable applicants, and more worryingly, any applicants at all. 64% of employers in New Zealand believe skills shortages will impact the effective operation of their organisation or department during 2022.

“Employers have seen the cost to hire employees more than double in just twelve months as a skills shortage, inflated wage growth and a historically low unemployment rate create a perfect storm for hiring businesses,” explained Lessem.  

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