THIS year has proven to be a tumultuous one globally, characterised by layoffs in the tech industry, rising inflation, increased cost of living pressures, recessionary fears and geopolitical instability.
Amid these uncertainties, the recruitment market in Malaysia faces its own set of obstacles.
Despite an overall increase in hiring activity, employers grapple with issues like skill mismatches, changing dynamics between employers and employees, as well as the influx of Gen Z individuals into the workforce, each with their own set of expectations.
Moreover, the robust Singaporean dollar is attracting talent across the border, posing additional challenges for Malaysian employers.
In stark contrast, Singapore has seen its total employment rate grow for the sixth consecutive quarter.
Despite the expected challenges in the business environment, employers in Singapore continue to express optimism in their hiring plans, actively seeking talent to fill niche or backlog positions.
While both countries exhibit positive hiring growth, the question that looms large is whether hiring costs have surged in line with the increased cost of living.
A recent report by Employment Hero, titled “State of Recruitment 2023”, encompassed a survey polling 515 business leaders in Malaysia and Singapore from businesses of all sizes between June 9 and 12 this year, highlighting that hiring costs are on the rise, primarily due to the increasing cost of living.
Factors such as labour shortages and higher commissions from recruitment agencies have also contributed to the upward trend in hiring expenses.
Small and medium enterprises (SMEs), in particular, are facing significant challenges in competing with multinational corporations (MNCs) for top talent and accessing job boards due to budget constraints.
Employment Hero MD of Asia Kevin Fitzgerald said the differences between SMEs and MNCs when attracting talent are striking.
MNCs have a natural advantage as they can afford higher salaries and greater employee benefits.
In the report, 86% of hiring managers agreed that SMEs struggle to compete for talent with larger corporations.
Against this backdrop, Fitzgerald said SMEs are also facing prohibitive costs when it comes to accessing job boards and investing in the right technology solutions.
“While smaller businesses can generally hire faster, competing with MNCs typically means they spend countless manual hours in the hiring process, slowing down productivity and profitability,” Fitzgerald added.
Impact on Hiring Duration and Costs
Key findings of the report stated that it takes up to an average of 41 days to hire leaders in both Malaysia and Singapore, making it the lengthiest process among surveyed countries.
Also, over 50 hours per week are dedicated to hiring activities with tasks like candidate interviewing and screening being the most time-consuming.
The report also revealed that a significant contrast in the cost of advertising roles between Malaysia and Singapore (S$2,493 [RM8,690]), with the latter being over 10 times more expensive.
Apart from that, 86% of respondents believe that small businesses struggle to compete with MNCs for talent while 81% agree that the costs of accessing job boards are prohibitive for SMEs.
Furthermore, factors contributing to increased hiring costs include rising living costs, labour shortages and higher job board posting expenses.
High Turnover Cost
Elaborating on the increasing costs in the hiring processes due to high turnover rates, Fitzgerald said turnover is one of the costliest things that can happen to a business.
For employers, especially those SMEs, it is important to treat the cause of turnover, not just the symptoms.
“Interestingly, our survey results revealed that hiring leaders with the least number of applicants and the fastest hiring times had the lowest new hire turnover rates. High turnover is often a result of companies not vetting candidates thoroughly enough or providing adequate onboarding and training.
“To fix this, it is important to treat the cause of turnover, not the symptoms. This can be achieved by streamlining the hiring and onboarding process for more successful outcomes and greater employee retention,” he told The Malaysian Reserve (TMR).
On the other hand, comprehending the transformation of the hiring landscape and its effects on businesses and job seekers in a rapidly changing economic context, Fitzgerald emphasised that the economic influence on the recruitment process has been substantial.
“This impact has resulted in notable consequences for both businesses and job seekers in the current challenging economic environment,” he said.
Additionally, he pointed out that financially prudent businesses are meticulously examining their hiring budgets, which is affecting the number of hires they undertake and the methods they employ for recruitment.
On the talent side, businesses are increasingly seeking people with advanced technological skills and adaptability, along with core skills relevant to their industry.
As geographical boundaries blur due to remote work, job seekers in the region are now looking for spots at a global level, which means increased opportunities but also with more competition.
This has created its own problems. While there is a vast talent pool, the volume of applications has increased, presenting businesses with an entirely new challenge of hiring the right people.
“Once hired, 19% of candidates do not pass probation or remain in their role after the first six months, which complicates the hiring process and contributes to hiring costs,” Fitzgerald said.
Importance of HR Technology Solutions
To increase efficiency in hiring processes within the economic challenges, Fitzgerald highlighted the importance of human resources (HR) technology solutions.
“These solutions can offer job ads, screen resumes, conduct interviews and assess candidates based on their skills, personality, as well as culture fit.
“In the case of Employment Hero’s Swag app for example, our biggest differentiator is that we are creating micro talent pools so that any employer on our platform can log in and see that they have a queue of people who are interested in working for them and the specific roles they are filling.
“In the long run, this does a great job of preventing turnover thus, saving time and money,” he added.
He concluded that the ever-evolving hiring landscape is reshaping businesses’ approaches to talent acquisition, making adaptability and efficiency more crucial than ever.
Source: https://themalaysianreserve.com/2023/11/21/recruitment-challenges-amid-economic-uncertainty/