Businesses opportunistic but growth could be stunted by employee losses

An overwhelming majority of employers (84 per cent) felt they had to make too many redundancies during the downturn and many now lack the right teams to grow their organisations, according to extensive research released today by Hudson, the leading provider of integrated talent solutions.

The research findings, part of the Hudson 20:20 Series report Positioning for Growth - Building a Dynamic Workforce in a New Economic Era, reveal 80 per cent of employers have an active focus on growth, but their attempts to rebuild and improve the strength of their workforce are falling flat. Employers say that almost half (44 per cent) of their current hires are 'not good'.

The results, taken from 605 employers and 1,690 employees across New Zealand and Australia, show both groups have positive outlooks – 85 per cent and 82 per cent respectively say they are feeling positive about the economic future. A third (29 per cent) of employers go further saying their outlook is 'upbeat and opportunistic'.

"There is definitely cautious optimism in the New Zealand marketplace, especially considering the mood recorded only one year ago," says Marc Burrage, Executive General Manager, Hudson New Zealand. "But despite this, the fact remains that many employers experienced minimal growth, in some cases decline, throughout the last twelve months."

Over half of the employers surveyed (53 per cent) report that during the downturn ‘some scheduled business development/plans were put on hold’; 51 per cent report that their profit/revenue decreased; and well over a third (38 per cent) say that they downgraded their profit outlook.

Overall 10 per cent of New Zealand’s workforce was lost through voluntary redundancy, enforced redundancy or staff leaving of their own accord and employers say that 23 per cent of these losses were high performers. Almost two-thirds of employers and employees alike (59 per cent) say their teams are under-resourced and 54 per cent of employees say the team they work in is now weaker.

"During the downturn many organisations 'cut the fat' but these results suggest that many also 'cut into the muscle'. Employers desperately need to bolster not only the size, but also the strength of their teams to bring their businesses back to a place where they can compete effectively in their markets and establish a solid foundation for sustainable, long-term growth," said Burrage.

With ‘prudent optimism’ returning, for employees it has also prompted a growing sense of confidence. Almost two-thirds (62%) of employees report that they are actively or passively job seeking and, of these, 93% are planning to be in a new role within 18 months.

"These figures forewarn a staggering degree of movement in New Zealand's workforce and a fresh set of challenges ahead for employers. Employers need to replenish their teams following workforce losses, retain talent, attract new employees to grow teams and ensure that new recruits are high performers – all against a backdrop of fierce competition and greater movement among employees."

Many businesses (57% of those surveyed) are already feeling the skills pinch – this is up from 44% of employers experiencing skills shortages last year.

“It is predicted that shortages for specialist skills in some sectors, most notably IT, will get much worse as the recovery takes hold,” says Burrage. Career development continues to be the most important trigger for employees to contemplate a new role. So, whilst increasing liquidity in the workforce opens up possibilities for employers to bring people into their business they need to account for the likelihood that they will also lose people unless they are putting emphasis on defining clear career progression for their existing employees.

“It’s quality, not quantity that will make the difference. The effects of a poor hire go way beyond simply the cost of back filling the role. A bad hire will damage a team and have a negative effect on existing high performers. There's a real risk that a bad appointment could see existing high performers move on.

The survey also examined employers' current hiring procedures. Employers say they appreciate the importance of robust hiring processes in appointing good hires and their impact to the overall health and performance of their businesses. Many also say they have these processes in place. However, the majority of new hires are made on the basis of resume screening and simple interviewing whilst more sophisticated methods that look at motivation and career fit are hugely under-utilised.

"There's clearly a disconnection between employers' perception of how robust their hiring procedures are and how effective they are in reality. It’s incredible how many employers apply the 'gut feel' approach to hiring when there are proven systems to find, attract and retain high performers," said Burrage.

“To attract and retain the best people, employers need to be able to clearly articulate the benefits of working for their business - including career development opportunities, potential for future promotion, work environment and workplace culture,” says Burrage.

The whitepaper recommends employers update their techniques to include more sophisticated tools in their hiring methods and better understand the direct relationship between the effectiveness of the procedures they use and the success of their hires.