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An Unequal Playing Field: 75% Of SMEs Struggle To Compete For Talent Against Big Business, As Recruitment Costs Soar

New research from HR, payroll, and employee engagement platform Employment Hero reveals that 75 per cent of Small and Medium-sized Enterprises (SMEs) in Australia and New Zealand (ANZ) are struggling to compete for talent against multinational corporations (MNCs), with 64 per cent also disadvantaged by prohibitive job ad costs.

Released today, Employment Hero’s The State of Recruitment Report found that advertising rates for SMEs have surged by 81 per cent over the past year, with the average cost to advertise a role reaching $5,380 in Australia and $6,429 in New Zealand (NZ). Despite being the backbone of the economy, SMEs face an untenable hiring process, especially when advertising costs equal almost one month of an average wage.

Adding more fuel to the fire, hiring leaders for SMEs are dedicating 39 hours per week to hiring activities, including time-consuming tasks such as candidate interviewing (seven hours per week), candidate screening (six hours per week), and candidate testing (five hours per week).

Additionally, new hire turnover poses a considerable challenge, with 17 per cent of candidates not passing probation or remaining in their roles after the first six months, which leads to a dramatic increase in costs as SMEs must restart the entire recruitment cycle.

Ben Thompson, Founder and CEO of Employment Hero, said: “Given the dire need to find talent is a critical issue for SMEs right now, we must address how SMEs can put their best foot forward to compete against MNCs. It’s important to highlight the advantages of working for an SME over a multinational for job seekers and employees, especially during busy seasons such as Christmas when business owners rely on casual workers.

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“To tackle the unequal playing field, SMEs must leverage their recruitment advantages. These include offering tailored employee packages, greater flexibility in working arrangements, and a more hands-on working culture. Candidates can be a ‘big fish in a small pond’ whose achievements directly impact the business. SMEs also offer less competition for progression and salary increments.

“While small businesses may face budget constraints against MNCs, strategic showcasing of strengths in areas like culture, flexibility, and growth allows them to compete effectively. SMEs also boast a faster hiring process, with 48 per cent completing it in under ten days, compared to the industry average of 30 days,” Mr Thompson added.

With the ANZ economies and the global cost-of-living crisis continuing to sting employers and employees alike, SMEs face the full brunt. However, there are still many ways SMEs can leverage the nature of their business and entice new talent against the competition.

“The key for SMEs going forward will be to maintain a dynamic and agile work environment that is appealing to job seekers and aligns with how employees prefer to work. It’s often smaller businesses that can offer these perks and have more breadth to understand their employees' strengths better to develop a working model that benefits both the satisfaction of staff and business output.

“What our report has made very clear is the significant gap in the playing field between SMEs and MNCs, and while this has been an issue for a long time, with the ANZ economies the way that they currently are, we can’t afford to be letting our small business community lose its livelihood,” ended Mr. Thompson.

Employment Hero’s new Series F growth round of AUD$263 million will help serve as a lifeline to SMEs in ANZ, as the company evolves from an HR and payroll software platform to a fully autonomous solution for employers to recruit, pay and manage talent seamlessly, compliantly and in a more cost-effective way.

The round, led by leading global growth fund TCV (and subject to Foreign Investment Review Board approval) signifies Employment Hero’s commitment to fuel the team's growth in NZ, as the company sets out to become one of the largest ANZ tech exports since Xero, Atlassian and Canva.

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