According to the Australian Bureau of Statistics (ABS), January 2024 saw a seasonally adjusted increase in the unemployment rate to 4.1% and the underemployment rate increased to 6.6%. These statistics suggest potential challenges in the labour market, emphasising the need for employers to consider other important factors when deciding to hire. While the beginning of the year may have presented a favourable time to hire, organisations still need to evaluate their current needs and future projections. Factors such as business requirements, budgets, current employee performance/satisfaction and long-term strategy, should all be carefully considered when making hiring decisions.
Business Requirements:
In the world of IT, there is a significant reliance on contractors brought on board to fulfill short-term or project-specific needs, often requiring specialised or unique skill-sets. However, the process of upskilling current staff to address these needs can be both time-consuming and costly. Velocity Global reports employee’s needing to spend an average of nearly 10 hours a week, or 25% of their typical workload studying and completing upskilling programs. Therefore, this approach may not be suitable for quick, short-term requirements.
Hiring a new employee with the necessary skills and experience readily available is often more convenient. Working with a recruiter can significantly reduce the time it takes to hire by more than a month. In a candidate-rich market, employers tend to get inundated with applications, therefore it is not uncommon for the shortlisting process to be lengthy e.g. interview invites can take a few days to a few weeks for individuals to receive. Additionally, employers need to consider an employee’s notice period, which typically is four weeks, further delaying the process. Recruitment agencies add value by saving time for employers, as they invest daily in building talent pools of qualified candidates who are readily available.
Similarly, in the blue-collar industry, where turnover rates are high and there’s requirements for a large volume of workers, recruiters play a crucial role in swiftly filling positions. For example, time to fill can be in a matter of hours to a couple of days, providing candidates who are compliant, qualified and ready to start immediately.
Budgets:
A general rule of thumb is that if the cost of not hiring exceeds the cost of hiring within the next year, then it is certainly the right time to bring on employees. EOFY may present as the right time to hire for many businesses, as it is typically a time for businesses to review their budgets for the past fiscal year and use this to determine how they will allocate resources and set financial goals for the upcoming year. When creating a recruitment budget, businesses should consider the following
Fixed costs
Variable Costs
Recurring costs
Time period
Advertising
Recruiters
Training/Assessments/Compliance
Current employee performance/satisfaction:
When employees are overwhelmed due to increased workload or a business experiences rapid growth, the demand for productivity often outpaces the capacity of the existing workforce. In such situations, employees may find themselves stretched thin, leading to feelings of being overworked or burnt out. Consequently, this not only affects employee satisfaction and morale but also increases the likelihood of errors and decreases productivity. Moreover, when employees are consistently operating at full capacity, they may struggle to effectively address customer needs or capitalise on business opportunities, ultimately resulting in lost revenue for the company. Therefore, it becomes imperative for employers to recognise these signs of strain within their workforce and take proactive steps to alleviate the pressure.
Long-Term Strategy:
Long-term strategic planning plays a significant role in determining whether a business should hire additional employees. When considering a company’s growth and sustainability, hiring decisions should align with activities and goals to support this. This could include expanding into new markets, launching innovative products or services, or enhancing customer experience.
Additionally, hiring new employees isn’t just about addressing current gaps in capacity but also about building a strong and resilient workforce that can adapt to evolving market and industry changes.
To attract the best talent, it is imperative for organisations to implement a long-term recruitment strategy, thereby securing the right talent in place to drive success and achieve organisational goals.
In conclusion, as organisations navigate the complexities of the labor market, it's essential to approach hiring decisions with careful consideration of various factors, such as business requirements, budgets, employee satisfaction, and long-term strategic goals. By prioritising these considerations, businesses can ensure they're equipped to make strategic hiring decisions, while building a resilient workforce poised for sustained success in the ever-changing market.
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