Nearly six out of 10 small businesses fill staff vacancies by recruiting the friends and family members of their current employees. Amid labour and skills shortages, businesses with 20 or fewer on staff are looking to fill the gaps via word-of-mouth from those already in their ranks. The findings were included in the wide-ranging MYOB small business survey released last week.
Newspapers were still the preferred method of recruitment for nearly a third of all vacancies. Recommendations via professional associations also were used in about 27 per cent of cases, the internet 19 per cent and recruitment agencies 16 per cent. About a quarter of businesses expected to hire in the next 12 months and many of these relate to hospitality industries such as accommodation and restaurants. A big issue for any business is determining the return on investment in people, says the chief executive of the Australian Institute of Management of Victoria and Tasmania, Susan Heron. “Typically, the debate centres on the fact that it seems easier to measure, say, how effectively a machine is spitting out widgets than how a manager’s leadership skills lifts the bottom line,” she says. “This has led to most executives continuing to regard employees as a cost to the business.”
She says research in the US has proved there are links between investment in human capital and performance and profit. The McBassi & Company survey demonstrates a high positive correlation between companies that invest more than the average in employee development and much higher sales per employee, far better gross profit margins and improved share price, she says. The company looks at five factors that have an impact on employee performance:
- Leadership practices, including communication, inclusiveness, supervisory skills, executive skills and leadership development;
- Employee engagement, covering job design, commitment, work/life balance, and systems for continual employee evaluation;
- Knowledge accessibility, including collaboration, information sharing, information collection systems and the availability of job-related information;
- Workforce optimisation, covering processes, conditions, accountability and hiring practices; and
- Learning capacity, including innovation, training, development, values and support.
The MYOB survey found that the effect of the much-talked about WorkChoices legislation on Australian recruitment intentions was still open to debate. When asked if they were “more likely to hire more employees under the WorkChoices legislation” 42 per cent said they were neutral. Nearly 20 per cent of small businesses strongly disagreed the legislation would lead to them employing more. Just over 22 per cent of businesses said “lack of available trained workers to draw on” was expected to be worse in the coming year. Three-quarters of businesses believed they were performing well. Sectors involving health and education rated their performance highly with 85 per cent stating they were performing “very and quite well”. Retail was down from 79 per cent to 64 per cent. A further question asked them about their confidence levels in the coming year. Three-quarters said they were confident, including a quarter who said they were “extremely confident” about their prospects. Reflecting drought conditions, the lowest figure of 59 per cent related to agriculture while the confidence level among business services and property sectors was a very high 86 per cent. Businesses who said they were optimistic planned to make more investments in their enterprises. Fifty-seven per cent of business said they would invest more money in the coming six months.
Predictably, fears of an interest rate rise were a number one concern for small business. “Australians are clearly getting out and about in these good economic times,” MYOB managing director Tim Reed said. “Another interest rate rise could have some pretty substantial impacts on consumer spending, with knock-on effects to businesses in the leisure sector, such as accommodation, cafe and restaurants.” The MYOB survey results were taken from a poll of 1804 small business owners and general managers.
Stonewater Consulting Group – SCG – is a leading firm of executive recruitment consultants, providing professional career advice and guidance for candidates seeking executive jobs and management positions across a wide range of industry segments including accounting, legal, finance and banking. Our client services include talent management, executive search specialising in locating senior level managers and corporate executives as well as providing human capital advice & services. Make an online enquiry or contact one of our Principals to hear first-hand how we can add genuine value to your business.