The candidate-short job market presents significant challenges to large and growing employers right now.

At the start of this new year, many businesses are starting to think about hiring new employees. But there are a number of obstacles to tracking down and securing talent, and those obstacles are hampering growth opportunities for many.

The fact is, Australia is suffering a critical skills deficit, with occupation shortages doubling in 2022 as the labour market tightens. Job vacancies have grown more than 40 per cent in the year to August 2022, reaching 309,000 jobs, according to the report.

The number of occupations struggling to fill positions has jumped from 153 to 286 over the year, meaning nearly a third of all Australian sectors are confronting serious worker shortfalls.

A NAB survey of business owners also reveals that four in 10 (38 per cent) think the labour shortage impact on their business is very significant when looking to the next three months, up from 35 per cent in Q2.

NAB Executive for Business Metro Michael Saadie says the continuing shortage of labour could impact the growth prospects for many small-to-medium enterprises (SMEs).

“When speaking with business owners, it’s clear hiring and retaining staff remains a critical challenge and is preventing some SMEs from growing as quickly as they want.”

The hiring demand in New Zealand is very strong, but talent shortages are more severe than they are in Australia, a report from global recruitment software company JobAdder has found.

The report highlights the worsening candidate shortages, with a significant decline in applications per job. Some believe that New Zealand organisations will be feeling it worse than their Australian counterparts.

Regardless which side of the ditch you’re running a business on, the scarcity of talent requires some quick thinking from businesses to deal with the crisis.

Here’s a look at four key challenges employers face when attracting talent at the end of 2022 and beyond.

1. Workers aren’t afraid of switching jobs

The potential to lose the talent that businesses currently have is growing. Gartner HR practice research shows that 17 per cent of Australian employees were actively seeking a new job in the second quarter of 2022, down slightly from 18 per cent in Q1.

The survey also found that the proportion of employees engaging in passive job search behaviour, such as updating a CV or contemplating quiet quitting, continued to increase and is now at 57 per cent.

The survey found that employees list respect as the top reason for leaving an employer and joining a new one.

“Being treated like a person is one of the most important priorities for Australian employees,” said Aaron McEwan, vice president in the Gartner HR practice.

“We’re now seeing organisations providing more flexibility, stability, and importantly, more manageable workloads.”

2. The need for flexibility is real

Employees have become accustomed to workplace flexibility. This flexibility is important around when they work, but also where they work.

A survey by global technology company Alludo reveals that 76 per cent of employees no longer want to work a standard 9–5 day. However, half (51 per cent) of Australians are still working standard hours, highlighting an important gap.

Ultimately, if businesses don’t evolve their management style to give employees more freedom and flexibility to choose where, when, and how they work, data shows that half (51 per cent) of people would consider quitting or even changing careers.

Christa Quarles, CEO at Alludo, says true leadership isn’t about getting people in a room to do what you want.

“It’s about giving employees the room to deliver amazing results. It’s time for leadership teams to leave the mandatory 9–5 office experience behind and recognise that freedom and flexibility are key to not only working better, but living better.”

Recruiter Cynthia Harris of Heart Recruitment says employees have more choices than ever before.

“Right now is a pivotal moment in talent,” said Harris.

“Our relationship with work has changed forever. Collectively, we’re aligning our priorities, reimagining work, and reinventing the relationship between work and life.

“Understanding what matters and what motivates talent is the key to tackling attraction and retention challenges.”

3. Economy-led redundancies are on the way

Employers will face two key challenges in the next 12 months: maintaining engagement among a fatigued workforce and managing the impact of potential economy-led redundancies, Gartner research has found.

The possibility of a recession and potential redundancies or cuts is real.

“Consider alternative options for exhausted staff, such as offering a pay cut to take a break from work or promote job-sharing where appropriate.

“Think about your staff in a holistic manner and make sure they rest and recharge when needed,” said McEwan.

Ben Neumann is the managing director of hospitality group Liquid Infusion, which employs more than 150 staff.

“In my industry, the challenge is trying to get casual hospitality staff to settle down at one workplace.

“The market is rife with high once-off offers for spot shifts, as high as $60 an hour.

“Often, staff wait each week to see which employer is offering the most for staff.”

Recruitment agencies are constantly reaching out to people on networks like LinkedIn, asking what salary they’re on and offering to find them a job at the current inflated market rate.

“If a potential candidate shows interest in the higher rate, the agency places them almost immediately at a new workplace, as the demand is so high, creating a very transactional job culture, which doesn’t promote longevity,” said Neumann.

4. Onboarding: First impressions can make all the difference

For those employers able to attract and recruit new employees, creating a welcoming, professional experience for new joiners is critical to success in hiring.

A recent survey of 1000 employees of small and medium-sized businesses found that 71 per cent would be put off staying in a business if they had a bad onboarding experience.

The research, commissioned by MYOB, also found 79 per cent of respondents believe onboarding can make or break a new hire’s experience with a company.

“Our research indicates how people are more willing to move around in a hot market, so it’s imperative that businesses take time to consider how they onboard new hires, as this could help retain good people,” said MYOB chief employee experience officer Helen Lea.

“Onboarding can have a direct impact on the longevity of an employee, with previous research showing it can improve hire retention by over 80 per cent and productivity by over 70 per cent.”

In short, both Australian and New Zealand-based employers of large and growing businesses face significant headwinds when it comes to recruitment in the year ahead, but taking the time to improve your employee experience, work culture, and the systems you use for workforce management will help you remain competitive while talent is thin on the ground.

This article was first published on myob.com/au/ and has been edited for brevity and republished here with permission.