The latest annual ELMO HR Benchmark Study reveals that the majority of small businesses plan to grow their workforce in 2023 but are being left behind in the post-pandemic recovery compared to medium and large companies.
In total, 76 per cent of Australian businesses of all sizes planning to grow their workforce in 2023, up from 50 per cent last year and the highest level since the study began in 2019. But while 89 per cent of large businesses (those with 2000 or more employees) expect to grow their workforce, only 70 per cent of small businesses (fewer than 50 employees) predict an increase in headcount.
Of those HR professionals who are anticipating a change in their workforce size in 2023, 48 per cent expect their workforce to grow by 11-25 per cent while 34 per cent anticipate an increase of more than 25 per cent. Only seven per cent expect their workforce numbers to decrease in 2023, while 15 per cent expect to remain the same size.
The plans to grow headcount comes despite the fact that recruitment remains the number one issue for HR professionals across the board, with 17 per cent choosing it as their top challenge in 2023 (the same ranking as last year).
Their recruitment woes are being compounded by difficulties in holding onto new hires. The survey found the average turnover rate in Australia for new hires within their probation period is 13 per cent, on par with last year, but almost twice as high as pre-pandemic levels in 2019 (7 per cent).
Difficulty in retaining new recruits is also highlighted by the fact that HR managers now say that finding the right candidates (30 per cent) is their company’s key recruitment challenge compared to skills shortage (26 per cent) and competition for talent (25 per cent), which were tied for first place in 2022’s report.
“The overall level of optimism was surprising given the fear of a recession globally and domestically, as well as the ongoing labour shortage,” ELMO Software CEO and Co-Founder Danny Lessem said. “But it’s clear from these results that small business have been hit harder and sooner than the big end of town when it comes to managing costs, competing for talent and maintaining profitability.
“The overall level of optimism is however a good reminder that, while job cuts in tech companies and professional services firms are in the spotlight right now, not all organisations will be impacted by economic uncertainty in the same way,” Lessem added. “While some sectors may be forced to downsize in 2023, either due to an economic downturn,others will outperform.”
Lessem that the high new hire turnover rate seems to be an outcome of the ‘bums on seats’ mentality of the last few years, without regard for the short or long-term costs.
“HR is now telling us that finding the right candidates is their biggest recruitment challenge and that suggests the focus has shifted from quantity to quality, in order to hire those who are truly right for the roles rather than choose someone without the necessary skills and experience,” he said.
“Given potential budget constraints this year and the need for high productivity as the economy slows, it makes commercial sense to hire well, rather than waste money churning through new staff. We anticipate that hiring throughout the rest of the year will be much more deliberate.”
