Sydney—One in five new employees turns out to be a bad-hiring decision, heaping significant costs on Australian organisations, according to new research released today by DDI Australia. DDI's 2005 Selection Forecast, a global study into the hiring practices of almost 1,600 HR managers in 348 organisations, examines how organisations can help alleviate the financial impact of staff turnover through effective retention strategies.

The results of the 2005 Selection Forecast show that 25 per cent of employees leave an organisation because of a lack of growth and development opportunities, suggesting that leaders need to make work more meaningful and fulfilling for their employees. Further, when asked about what employees are looking for aside from salary benefits, hiring managers cited job advancement opportunities (73 per cent) and work/life balance and job stability (52 per cent each).

According to Dr Bruce Watt, DDI Australia Managing Director, Australian workers are demanding more personal fulfilment from their jobs. "Organisations that implement sustainable work-life strategies are more appealing to potential employees and from a business perspective, a positive approach to work-life balance leads to increased productivity, improved recruitment and retention, lower rates of absenteeism and a more motivated workforce," said Dr Watt. "In addition to this, it is imperative that staff development plans are active and managers need to ensure that they challenge their employees in relation to professional development. HR managers need to know enough about the business to recommend the right people for any new initiatives or projects," Dr Watt commented.

Highlighting the importance of effective retention strategies for Australian organisations is a shortage of skilled labour, the ongoing war for talent as well as a lack of internal resources and the onset of more complex hiring systems. When asked about barriers to hiring, a majority of respondents (46 per cent) selected "fewer qualified applicants", while 60 per cent of HR professionals described competition for talent as competitive or highly competitive.

Further, one in four indicated they have an insufficient number of HR staff and the same number revealed that their hiring systems are slow and cumbersome. Lastly, most organisations indicated they do not expect a long-term commitment from employees, meaning that it is becoming harder to retain quality performers. "Australian organisations are operating with smaller HR staffs and are recruiting new employees from smaller talent pools.

While advances in technology have simplified the recruitment process, HR professionals need the resources and buy in from senior management to ensure that these processes are effective," Dr Watt said. For those looking for a rationale for an increased investment into hiring procedures, the results of the 2005 Selection Forecast showed that organisations with high quality hiring systems outperform the competition.

70 per cent of organisations with a high quality hiring system indicated that they outperform their competition financially, while 60 per cent indicated that they outperform their competition in relation to quality, customer service, employee satisfaction and retention.

"Organisations that analyse and improve their selection systems are able to reduce the cost of replacing employees and will hire better quality employees who are more productive. The best quality hiring systems are integrated with other talent management programs such as performance management and training and development, thus enabling HR professionals to place the right people in the right position," Dr Watt said.

Editor's Notes:

• This study marks DDI's second Selection Forecast, which examines current hiring trends as well as comparative findings with previous surveys. More than 1,500 hiring managers at 348 organisations from 13 countries participated in the survey.
• Full copies of the report are available upon request.
• Interview Opportunity:  Dr Bruce Watt, DDI Australia Managing Director is available for interview upon request.