A study of more than 1,500 human resources professionals has revealed the cost to hire an employee has more than doubled in the past year.
The costs have gone to an average of $23,860 per candidate, up from $10,500 the previous year. These insights come from the HR Industry Benchmark Survey, an annual Trans-Tasman survey of more than 1,500 Australian and New Zealand human resources professionals conducted by ELMO Software and the Australian Human Resources Institute (AHRI).
The HR Industry Benchmark Survey is now in its third year and explores the core challenges, priorities and opportunities for HR professionals in Australia and New Zealand.
While the survey found the cost to hire is skyrocketing, businesses also report that the time to hire new employees has increased to an average of 40 days in Australia and 50 days in New Zealand. Up from 33.4 days in Australia and 36.5 days in New Zealand in 2021.
ELMO says the costly and time-consuming recruitment process comes at a difficult time for employers, with recent research by the company finding 43% of workers plan to actively search for a new role in 2022. But it says the high cost of hiring isn't deterring employers, with 54% stating they plan to grow their workforce, and 38% say they expect it to stay the same size. The hiring intentions also signal a welcome return to pre-COVID-19 hiring patterns after last year's decline to just 39% of organisations anticipating headcount growth.
The survey found that small-to-medium sized businesses with fewer than 200 employees expected the most significant headcount growth, with an anticipated growth rate of 26%. This was followed by enterprise size firms with more than 2,000 employees at 24%. Mid-market organisations with between 200-1,999 employees expected a growth rate of 17%.
ELMO says the high growth targets and the high cost to hire may be behind employee wellness initiatives taking out the top spot in the stated priorities for HR professionals in 2022 as employers seek to retain top talent by focusing on wellbeing. Employee wellness initiatives were the top or medium priority for 88% of HR professionals in 2022, followed by compliance (84%) and learning and development (82%).
"The cost to hire new employees is a great incentive for employers to do all they can to retain their talented workforce," says ELMO Software CEO, Danny Lessem.
"After two years of ups and downs, employers may have been hoping for some semblance of stability in the year ahead. Unfortunately, they will face some significant cost increases as the cost of the war for talent looks like businesses will pay it."
He says it will be hard enough for organisations to try and recruit talented people to fill the roles that have originated due to the growth of the business, let alone try to replace departing employees.
"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. Having a clear dollar amount for the cost to hire new people may be the reminder some organisations need to prioritise their people," says Lessem.
Sarah McCann-Bartlett, CEO of the Australian Human Resources Institute, says, "The research confirmed that organisations' biggest issues over the next 12 months are recruitment, followed closely by skills and leadership development.
"This isn't surprising, with anticipated higher turnover, increased hiring intentions and skills shortages all coming to the fore at the same time."