That’s according to ELMO Software’s 2024 HR Industry Benchmark Report which identifies the key challenges and priorities for businesses, according to a sample of 700 HR professionals in Australia.

The report found it now costs an average of $20,000 to hire a new employee, yet around one in eight are failing to progress past their probation, and “what’s more, it now takes 35 days for a new recruit to become fully productive in their role, an increase of 11 days compared to the 2023 survey”.

ELMO CEO Joseph Lyons says the figures are eye-opening, not just for HR leaders but for the broader C-suite too.

“At a time when productivity is front of mind for most businesses, it’s worth asking whether your talent processes are as efficient as they could be,” he says.

“Given the cost of hiring and the time it takes for recruits to get up to speed, it’s essential for HR leaders to know how successful their hiring and retention efforts really are.

“Otherwise, they could be wasting time and money, hindering productivity in the process.”

ELMO notes that the report’s findings closely mirror the company’s latest Employee Sentiment Index, a survey of over 1000 Australian workers, which reported one in eight (12%) new recruits are leaving within the first year and also asked respondents why they left.

Two in five workers (40%) said the main reason for leaving within the first year was due to the job or organisation failing to match the expectations set during the recruitment process - with one in three workers citing a poor impression of the workplace (34%) and a poor first impression or relationship with their manager (32%).

The survey also revealed that the first 30 days in a new workplace is the most critical time period for recruits, with two in five workers (38%) knowing if their new job was the right move within one month and just over a quarter (27%) making up their mind within one week or less.

Lyons says the Index’s findings further highlight how critical the employee experience is to retaining new talent.

“Meeting expectations and creating a positive first impression are vital for retaining new talent and businesses only have a small window of opportunity in which to do this,” he says.

“The better an organisation understands the success of their onboarding programs, the better position they will be in to retain new talent and minimise the impact on overall productivity and ultimately the bottom line.”

Elmo notes that employee engagement ranked as the top barrier holding back productivity and the Benchmark report also identified productivity as a top priority for Australian businesses in 2024 - but, according to HR professionals, if business leaders want to drive greater productivity, they need to tackle employee engagement first.

“A lack of employee engagement ranked as the top barrier holding back productivity in Australian organisations, followed by leadership capability and a lack of prioritisation,” the report notes, adding that “meanwhile, the uncertain economic conditions were highlighted as the biggest challenge facing local businesses this year, followed by a shortage of labour and hybrid work”.

The report also notes:

• Just under a third (27%) of HR professionals say they plan to use alternative employment arrangements, such as contractors, to cope with the economic insecurity this year. The same number (27%) plan to restructure their organisations.
• Around a quarter (23%) say they’ll reduce pay increases or freeze pay, 19% plan to reduce or scrap bonuses and 17% expect to make redundancies.

Lyons says organisations are taking a cautious approach this year as they wait to see whether interest rates will come down.

“The economic uncertainty is all the more reason for HR leaders to take a data-led approach to their strategy for 2024,” he says.

“Without visibility of key HR metrics and the costs involved in hiring and retaining talent, it’s impossible to manage budgets wisely. This year’s report drives home the importance of easily accessible data to view HR strategy from a commercial perspective.”