Market Overview
The employment market has strengthened during the first half of 2010 with increased hiring activity across all white collar professional occupation groups. Our annual employment survey, which this year includes responses from over 800 senior managers from Australia’s corporate sector, reveals 33% of employers anticipate an increase in staff numbers over the next six months. Some 56% believe their staffing levels will remain stable, with only 11% saying a reduction in headcount is likely.
The vast majority of hiring activity is occurring on a full-time basis and reflects growing confidence in the long term business outlook. Employers are showing a willingness to invest in their workforce to secure business critical skills before the job market tightens. Despite being temporarily obscured by the global financial crisis, the professional skills shortage remains fresh in the minds of corporate Australia. Some 41% of employers surveyed believe a skills shortage will become an issue for their business during the next 12 months.
With respect to business function, there has been a strong focus on front line recruitment during the first half of 2010. Companies looked to increase revenue lines and market share during the first stages of the upturn, prompting demand for professionals in areas such as sales and account management. The focus on front line staff remains strong as we enter the second half of 2010, although we are seeing a measured increase in demand for back office professionals to support increased levels of business activity.
Staff retention will be a core business challenge over the next 12 months. During the economic downturn, companies retained their top front line performers and support staff with business critical skills. Many of these employees were asked to cope with increased responsibility and work volumes without a review of salary. Now that the employment market is recovering, these employees are less cautious about a career move and actively looking for their next opportunity. Employers that fail to address this situation risk losing their most experienced and capable people at a time when their skills are crucial to support business growth.
Given the limited movement in private sector salaries during 2009, the issue of remuneration is more of a concern for employees in 2010 than we have seen in previous years. Yet as a retention strategy, salary review rates third on the list of initiatives employers are focusing on over the next six months. By far the most favoured retention strategy is strong leadership which was nominated by 44% of employers, followed by training and development at 23% and salary review at 21%. This suggests there is a disparity between what staff want from their current employer and what they are likely to receive.
Of the employers planning to increase salary levels in the next six months, the majority will be giving rises in the 2-4% range. Some employers will have the capacity to offer larger increases to retain their most valued employees, but in all cases the challenge will be in balancing increased payroll costs with the pace of business growth. Talent management will be a major challenge over the next 12 months as business leaders strive to align business strategy and capability.
