WA CEOs look to recruit despite low growth expectations

Western Australian chief executives are most likely to recruit new staff to expand businesses into other areas of growth, while only 13 per cent think the economy will improve next year, according to The Executive Connection's latest Quarterly Confidence Index.

While recruitment agencies were the preferred method of recruitment at 28 per cent, WA respondents were the most likely to use personal referrals with 22 per cent saying they had done so.

Employees leaving wanted more money, according to 43 per cent of respondents, while 47 per cent indicated they would look overseas to hire new staff this year -tradespeople being the most popular at 36 per cent.

Western Australia also recorded the highest levels of employment for part-time staff and contractors, at 10 per cent and seven per cent respectively.

TEC chief executive Mike O'Neill said it was more difficult to find new staff this year, with 88 per cent of WA respondents agreeing with him.

"There has been a significant drop in the chief executives who recruit based on potential and ability to train," he said.

"This could be related to the fact that very few new hires are expected to stay over five years with a company."

The full text of an announcement from TEC on the national statistics is pasted below

Chief executives are in build mode with strong plans to increase fixed costs and staff numbers to handle expectations that 80% of companies will grow revenues this year, according to the latest survey of Australian chief executives released today by TEC (The Executive Connection), the world's leading chief executive membership organisation.

Nearly half of Australian CEs said they are looking to recruit overseas, mainly for staff in professional services, trades and middle management.

Service companies are the strongest sector, with 85% predicting revenue growth and 76% planning to expand staff numbers. Across all sectors and states, most CEs expect the value of the dollar to remain the same.

"A huge constraint is staff and 68% of CEs said it is harder to find staff now than last year," explained Mike O'Neill, TEC Chief Executive. "Nearly 70% of recruitment is for new positions - to handle organic business growth, or to expand into completely new areas of business.

"There has been a significant drop in the CEs who recruit based on potential and ability to train (from 63% to 40%). This could be related to the fact that very few new hires are expected to stay over five years with a company (less than 30%)," O'Neill said.

• This year staff are less likely to move to a competitor (5% compared to 10%) or go looking for more money (24% compared to 41%), while many are leaving for geographical reasons (13%)
• Less CEs are using money the keep staff (40% compared to 51% last year). Training is down to 32% from 48%, as is promotion down to 26% compared to 42%. The big incentive to stay is a positive organisational culture, sited by 69% of CEs.
• One quarter of CEs report over 15% staff turnover, rising to over one third of service CEs. Over half of CEs do not have a formal program to lower staff turnover
• People aged 35-49 are likely to stay in the job longer according to 46% of CEs. 20% believed that there was no difference between age groups.

The Q107 TEC Confidence Index questions were completed by 286 Australian chief executive TEC members during the last two weeks of February 2007. This quarter the survey also focused on recruitment and retention issues.

Economy Highlights

• The number of CEs who say the economy is in better shape today than a year ago has increased by a quarter from last year (28% now from 22% this time last year)
  • NSW the most pessimistic state - 19% said the economy had worsened in the last 12 months, with only 17% saying it had improved
• The economy may have reached a plateau, only 21% of CEs believe the economy will be better this time next year. The number predicting the same economic conditions has increased to 62% from 53% this time last quarter
  • SA is the most optimistic with 32% suggesting the economy will get better, a massive increase from the 4% of SA CEs that said it would improve last quarter
  • WA is the most pessimistic with only 13% suggesting economic conditions would get better next year
• This economic outlook hasn't stopped CE optimism regarding their own businesses - a huge 80% say their sales revenue will increase in the next 12 months (up from 74% this time last year), compared with just 4% who anticipate a decrease
  • The services sector is more optimistic with 85% suggesting revenues will increase (up from 76% last quarter) than the manufacturing sector with 76%
• Two thirds of CEs (65%) say their profits will improve this year, with only 9% (down from 13% this time last year) saying a drop in their company profits is on the cards
  • WA has had the largest increase in optimism from 57% last quarter to 69% this quarter
  • Women are significantly less optimistic regarding profitability with 66% saying it would increase, down from 75% last quarter
• QLD & SA are the most optimistic in term of increasing fixed expenditure, with 67% & 68% (respectively) of CEs expecting increases this year
  • SA has had a massive increase in optimism compared to last quarters results from 48% to 68%
  • QLD has also had large increase in this regard from 55% to 67% of CEs feeling optimistic of increased fixed expenditure
  • SA has also had a huge decrease in the percentage of CEs who believe fixed expenditure will decrease, from 26% last quarter to 11% this quarter
• CEs are significantly more optimistic in terms of increasing their employee numbers this year compared to this time last year, with 65% suggesting they would increase staff numbers compared to 52% last year
  • The service sector is significantly more positive in this regard with 76% of CEs saying they expected a increasing employee numbers, while only 47% of CEs in the manufacturing sector expecting an increase
  • NSW is the most optimistic in terms of increasing staff numbers this year, with 72% expecting this to occur
  • VIC is the most pessimistic in this regard, with only 57% expecting an increase
• The value of the Australian dollar is expected to remain stable by 70% an increase from 54% last year
  • The percentage of CEs who believe the Australian dollar will weaken (15%) has significantly decreased from this time last year (38%)

Recruitment & Retention issues - highlights

• 68% of CEs indicated it was harder to find new staff this year than last year
  • WA was the highest in this regard with 88% saying it was harder to find new staff, while SA was the lowest with 55%
  • 14% of SA CEs suggested it was easier to find staff, more than doubling the next closest state
• 69% of CEs said their main recruitment strategies were to hire to accommodate current business growth or to expand business into new areas
• Professional & Sales/Marketing staff were identified as the most difficult type of employees to recruit and retain (30% & 26% respectively)
• Recruitment agencies are still the most popular mechanism for hiring staff at 32%, but decreased from last year's 39% figure
• The next most popular method of hiring staff was online advertising with 27%
• 40% of CEs indicated the 'potential and ability to train' is still the most important criteria for hiring new staff, however, this figure has dropped significantly from this time last year (62%)
• 60% of CEs indicated 'multiple interviews' were the most common method used in the recruitment process, followed by 'panel interviews' with 28%
• A massive 88% of CEs said they sometimes or always include future team members in the recruitment process
• While still the main reason for staff leaving an organisation, the percentage of staff leaving their organisations due to 'wanting more money' has dropped considerably from this time last year (24% from 41%)
• Geographical relocation was identified as a common reason for staff leaving (13%)
• The majority of CEs (69%) said they offered a 'positive organisational culture' to encourage their staff to remain at their organisation, while 40% suggested they offered improved salary packages and 32% offered improved training (multiple answer question)
• More than half (54%) of CEs indicated they did not have a formal organisational-wide program for retaining staff, while 38% said they did not measure the full financial impact of hiring replacement staff
• Full-time employees (89%) makeup the majority of staff, and are also considered the most productive type of employee (82%)
• Female CEs indicated they were more likely to use permanent part-time or casual staff (30%), opposed to males (5%)
• Professional staff (33%) and tradespeople (17%) were identified as the most common type of staff to be outsourced in the next 12 months
• 52% indicated they did, or sometimes did, use contractors rather than hiring new staff, with 55% indicating using contractors made them worry about delivery and performance