How much does it costs to hire one employee?

As we enter the next decade, it will be more important than ever for HR professionals to quantify and qualify their work in a tangible way to increase their influence at C-suite and board levels, and weigh in on organisational decision-making, according to Monica Watt, Chief Human Resources Officer at ELMO Software.

Indeed, it costs organisations a staggering $18,982 on average to hire one employee, according to new research by ELMO Software.

The survey of over 1,500 HR professionals across ANZ found an organisation’s average cost of hiring a new executive is $34,440, compared to $23,059 for senior-level managers, $17,841 for mid-level and $9,772 for entry-level positions.

Australian companies typically fill vacant roles within 39.2 days — recruitment is over one-week slower in New Zealand, with roles filled within an average of 47.2 days.

High employee churn remains a central challenge for one in six (16%) Australian and one in five (20%) New Zealand HR professionals — more than half (52%) of whom are working to grow their organisation within the next year.

2020 top challenges
Looking to the next 12 months, ANZ professionals identified leadership development (37%), culture change (34%), upgrading technology (30%) and change management (30%) as key organisational challenges.

When it comes to recruitment, over two-thirds (67%) of HR professionals in New Zealand and almost half (46%) in Australia believe there is a skills shortage within their industry.

The competition for talent in New Zealand is ripe, challenging 64% of respondents, compared to 50% in Australia.

The research also found 41% of professionals only have basic HR metrics, and as a result, almost half (47%) struggle to identify quantifiable links between HR and the overarching business goals.

Time draining tasks
Almost three in four (74%) HR professionals identified that general administrative tasks took too much of their time relative to the value delivered, while on average, one in three (33%) felt the same of recruitment and executive search.

“With recruitment a pain-point for many HR practitioners, we were surprised to find 40% did not use any tools to improve the process — instead they manage manually, often across multiple spreadsheets,” said Watt.

“Technology has an integral role to play in alleviating inefficient, manual processes.

“Having one platform as a single point of truth has helped me, and can effectively support HR professionals to grow their business and retain top talent, as opposed to wasting time on admin and non-financial number-crunching.”

Employee management watchouts
When it comes to performance management, almost half (48%) of respondents are challenged to provide timely or meaningful feedback. Almost two in five (39%) organisations set unclear goals or KPIs for employees and lack personal development plans.

Two in five (41%) HR professionals are indifferent about the effectiveness of their rewards and recognition program, with one-third (33%) feeling their program is ineffective or extremely ineffective.

Despite this, almost half (49%) of HR practitioners use tenure/work anniversaries as an opportunity to reward employees, and two in five (40%) seek peer nominators — a ratio that rises to half (50%) for enterprise organisations.

“Setting targets and providing feedback ultimately enables your employees to be successful and your business to thrive,” said Watt.

“When these targets are hit, rewarding and recognising employees can be transformative for company culture and employee satisfaction.

“From acknowledging when someone’s done a great job and sharing positive feedback to gamified rewards programs, we’ve found tech can play a pivotal role in increasing employee engagement and decreasing turnover.”

Additional insights

• Employee engagement: Over one-third of companies (35%) do not have a formal process in place to measure employee engagement. While one-quarter (26%) of HR professionals are planning a process, the same number (26%) do not have senior leadership team buy-in and almost as many (25%) are too busy or do not have the resources to implement
• Remuneration and benefits: More than two in five (42%) respondents cited a misalignment between performance and remuneration as a key challenge, while over one-third (35%) worried their organisation couldn’t compete with external market rates
• Employee turnover: 17% is the average employee turnover rate across Australia and New Zealand in the past 12 months. The greatest rates of turnover are in cyclical industries, such as accommodation and food services (30%) and retail trade (25%), while mining, public administration and safety, and electricity gas, water and waste services experienced only 11%