Recently there has been a rise in employers willing to give massive pay rises and sign-on bonuses to their staff in order to retain them.
This retention move is a means of escaping the increased cost and wait of hiring new employees. According to David Marin-Guzman, who wrote for Workplace Correspondent, the cost of hiring has more than doubled, and employers now have an average wait period of six weeks before hiring new employees. This will cause a delay in the growth plan of businesses.
Businesses are willing to give a pay rise as high as $40,000 to stop employees from leaving. Other businesses offer sign-on bonuses ranging from $50,000 to $100,000 if they commit to not leaving before the first three years are over.
David Marin-Guzman spoke to Avi Efrat, the founder of Fantastic Framing, to get his take on the matter. Fantastic Framing is a leading voice in the picture framing industry in Australia. They are a mobile picture framing service offering onsite picture and art framing around Sydney and the CBD areas. They have nine stores and focus on bringing the picture framing service to their customers.
Avi Efrat tells Marin-Guzman that he was focusing on offering his existing staff different incentives so they would not leave. According to Avi, this would reduce the cost of hiring new staff.
He said that these incentives included offering his employees company shares and rewarding them for their performance. However, this does not mean that he is not spending so much on recruiting new staff. Avi Efrat said he was also expanding his recruitment channels and that 30 to 40 percent of his budget goes towards hiring recruits.
Avi believes that business owners should be proactive and adapt to the market. He believes businesses will be at a loss if they continue doing what they are doing.
It is becoming increasingly difficult for businesses to find new hires. Avi says the time it takes him to find suitable candidates has doubled. It now takes him six to eight weeks, whereas it used to take him two to four.
He also said that the number of applications he used to receive for the job advertisements he made had dwindled. According to him, before the pandemic, he would get up to 30 applications for each job advertisement, but now he could only manage seven or eight.
This makes it difficult for Avi to pursue his growth plans for Fantastic Framing. Fantastic Framing saw a huge boom during the pandemic, seeing over a 70 per cent growth. Efrat is committed to further expansion. According to him, “we don’t stop.” However, the speed at which the expansion is going is slower than was projected due to recruitment difficulties. These difficulties were making preparation to open new stores take longer than it should.
The cost of retaining a staff member is more than it would cost the business to hire new ones. According to Paul Gollan, a Wollongong University management professor, businesses must take a new approach to navigating the labour market.