In the first months of 2022, with the economy simultaneously bearing the brunt of overseas disruptions and the fallout of Covid-19, it became increasingly apparent that inflation rates would rise. And rise they did. 

In the March quarter, inflation in Australia reached 5.1 percent — the highest rate in many years — and by the end of the year is predicted to peak at 7.2 percent, well above the Reserve Bank of Australia’s 2-3 percent goal. And with upheavals to the energy, agriculture, and minerals markets as a result of Russia’s invasion of Ukraine, higher inflation and rising interest rates will likely be pervasive for some time to come. 

Against this backdrop, managers are facing two conflicting priorities: trying to cut costs due to inflationary pressures, while simultaneously attempting to source and hire staff in an incredibly tight labour market. 

Here, we look at what Hiring Managers and employers can do to navigate these two conflicting trends when recruiting in this challenging environment. 

Do your market research and seek advice 

Despite job ads recording a small decline for the first time in 2022, they remain well above pre-pandemic levels, sitting at 52.4 percent higher than those of June 2019. This, along with a decline in job applications for the fifth consecutive month and the lowest unemployment rate in Australia since 1974, has made it increasingly challenging for employers looking to hire. 

As a result of “short supply” and the growing demand for talent, wages in certain areas have increased. Given the tight market, employees have greater bargaining power, and many organisations are offering a premium in the hopes of making themselves more attractive to potential hires. 

In this way, entering into the market with as much knowledge as possible is key. Knowing the current average salaries for the roles in which you’re hiring will allow organisations to remain competitive, rather than having job ads lost amongst the masses. Engaging recruitment professionals who have specialist industry expertise will likely be very helpful here: with in-depth market knowledge, they can assist you in drilling down into realistic salaries based on job descriptions. 

Be ready to compromise 

Though offering competitive salaries is indeed one way to attract job seekers, it may not be viable for every business given the current economic pressures. As a result, Hiring Managers may need to set expectations as to the level of skills and experience potential candidates possess if higher wages aren’t an option. 

Compromises may need to be made on less critical skills, and certain roles prioritised depending on organisational goals and strategy. For example, while senior roles may indeed require more investment, perhaps there is more scope for internal training and development for less senior roles. 

Hire for potential 

As mentioned above, offering a salary in-line with current market trends for certain roles may not be the appropriate strategy for organisations. In this way, hiring for potential will be extremely important. 

Rather than becoming hung-up on the technical skills and experience a candidate doesn’t have, instead focus on how they could grow and develop the required skills within your organisation. This means focusing on  transferable skills, their ability to accept feedback, willingness to learn, emotional intelligence and motivation to produce positive outcomes. 

While this may be a less straightforward, more daunting interview and recruitment process for Hiring Managers, it is something professional recruiters will be well-equipped to assist with. 

Furthermore, when hiring for potential, it is a good idea to consider the internal mentoring, development and training that can be leveraged or implemented to quickly get new employees’ skills up to scratch. 

Focus on retention and address attrition 

According to recent research conducted by PwC, the average cost to hire an employee has increased to $23,000 per candidate – up from an average of around $10K in 2021. Adding to this, the report revealed that in a study of 1,800 Australians, 38 percent were considering leaving their current employer in the next 12 months. 

With these numbers in mind, Hiring Managers and HR may consider it just as beneficial – if not more so – to direct efforts into retention, which might prove to be more cost effective. Here, organisations can look at what they can offer candidates beyond higher salaries, and dig down into what job seekers are really looking for at this point in time. 

Research shows that, though salary is indeed still a consideration in why individuals accept a job offer, things such as flexible work, training and development opportunities and even an organisation’s D&I policies are high on the list of importance, particularly for younger generations. 

By the same token, it will be useful to access your attrition data, to see why employees may be exiting your company. According to data from SEEK, 36 percent of Australian employees identified burnout, or a lack of work-life balance as one of their top reasons for leaving a job, while poor-leadership and culture were also top reasons. By addressing these, employers will have a greater chance of increasing employee retention and loyalty, thus potentially reducing the need to hire. There is also the opportunity here to create a team of employee advocates who will assist in promoting your organisation to those in the market looking for work. 

If you’re struggling to find staff in the current market, contact Bayside Group today. Backed by decades of experience, our specialist consultants have extensive networks and industry insights to assist you in finding the right employees for you.