In the current compressed labour market, are you struggling to compete with more highly resourced companies in attracting and retaining talent to keep your business moving forward?
While earlier in the year the unemployment rate looked like it was starting to trend upwards, it has settled back down at 3.5%, so rumours that Australia is past the peak tightness in the labour market are unfounded.
Many SMEs are feeling the pain. In Banjo’s recent SME Compass Report, compiled from its Australia-wide survey of over 1000 SMEs, one in three SMEs said they were finding recruitment difficult.
There’s also a sense of frustration, as 61% of SMEs surveyed were ready to hire either permanent or contract staff in 2023, and on average were looking to increase their headcount by 6.
The reason for this hiring keenness was an optimistic and upbeat outlook on the back of growth in revenue for many, despite the challenging inflationary conditions.
As few SMEs have a dedicated human resource function, you’ll be familiar with juggling to run your business whilst trying to recruit staff with the right skillset in a highly competitive market.
Wage growth in line with inflation does mean many businesses are having to offer higher salaries than normal, to ensure they can attract the desired talent. In a recent Banjo webinar, Alan Oster, NAB’s Chief Economist, said wage growth in Australia is currently around 3.2% and is expected to pick up this year to around 3.5%.
According to Libby McDonald, Director of Headhuntly, a headhunting agency specialising in executive, digital and technology roles, “It might seem too expensive to offer a higher salary to get the right person for the job. But on the flip side, it can end up being a lot more costly to hire someone cheaper, who doesn’t have the range or level of skills that you want.”
SME Compass found that to combat salary challenges, businesses are using tactics like providing flexible working policies, or offering revised employee benefits.
They’re on the money with these moves, says Libby. “Offering a competitive salary is a key factor, but you can explore other benefits to attract talent, such as:
Libby also advises resisting the temptation to go for someone who’s a Jack or Jill of all trades but master of none. “Two part-time people with strong specialist skills can be better than one generalist, especially in some of the digital skills, such as SEO (search engine optimisation) or CRM (customer relationship management).”
“There’s a direct correlation between skilled, personable employees, and great customer experiences.”
The majority of businesses surveyed in SME Compass plan to recruit both permanent and non-permanent staff from Australia rather than looking offshore. While Australia can deliver most skill sets, if you need highly specialised workers or the talent pool has dried up in your sector, you may need to consider hiring from overseas. Before you do, make sure you understand the visa requirements and costs, and consider how you’re going to fund it.
If your business’ growth trajectory calls for urgent recruitment from home or abroad, an injection of working capital could be what’s needed to attract and retain talented staff. Working capital can also help smooth out seasonal fluctuations in revenue and support the need to boost head count with temporary or contract staff for peak periods.
To minimise staff churn in this environment, Libby has some advice, “Plan for the staffing you need. If you’re only focused on their flexibility for you as an employer, you can’t expect staff to wear that. Pay attention to and demonstrate what’s in it for the employee. In this job-seekers’ market if your employees feel let down by you, they’ll move on, and you’ll be back to hiring again.”
On the other side of the staffing coin, there are digital options to help businesses save on employee costs. Analyse the range of repetitive tasks in your business and consider whether you can invest in technology to automate them. Or look at engaging a virtual assistant.
Finally, Libby points out that there are some staff retention measures that cost nothing at all. “Employees need to feel valued and that they’re contributing to the business. Treat every employee as if they’re going to be tapped on the shoulder by another company tomorrow. That mindset can make a huge difference.”
