SMBs are spending $7.6k a year on recruitment. Why isn't it working?

Australia's small and medium businesses (SMBs) are navigating one of the toughest economic periods in recent memory, and recruitment is emerging as both a symptom and a cause of their broader struggles. Employment Hero's 2025 Recruitment Report reveals that SMBs are spending an average of $7,600 a year on recruitment, yet only 6% describe their hiring process as excellent.

Amid economic uncertainty, inflationary pressures, and a persistently tight labour market, businesses are burning through valuable time and money on outdated hiring methods that fail to deliver. The result? A costly cycle of poor applicants, lengthy processes, and mounting operational strain that threatens business survival.

A fragile economy meets a fragile workforce

The Recruitment Report underscores just how precarious the landscape has become. Nearly half (43%) of businesses fear they won't make it through the next 12 months. Meanwhile:

• 78% say economic uncertainty has made hiring significantly harder

• One in three cite cost-of-living pressures and inflation as their biggest recruitment challenges

• More than half (53%) report increased employee turnover

• 64% say chronic understaffing is forcing existing staff into overtime, pushing up wage bills and burnout risk

These figures reflect more than hiring headaches; they signal the growing strain on Australia's business ecosystem. SMBs are being forced to do more with less, caught in a feedback loop where hiring challenges fuel turnover, and turnover worsens hiring pressure. Each poor hire or delayed placement drains time, cash flow, and morale.

For business owners already uncertain about their financial future, inefficient recruitment isn't just an operational issue; it's an existential one.

Why traditional recruitment no longer adds up

Despite economic headwinds, many SMBs continue to invest in manual, job-board-based recruitment that yields diminishing returns. The top pain points identified in the Recruitment Report include:

• 41% struggle with poor-quality applicants

• 40% can't find qualified candidates

• 37% say the process takes too long

SMBs spend thousands each year on job ads, only to be inundated with irrelevant resumes. The process is slow, expensive, and unsustainable. For larger employers, recruitment costs exceed $20,000 annually, making it one of the most volatile and least controlled expenses in the business budget.

In the current economic climate (where every dollar and every hour matter), traditional recruitment models are no longer fit for purpose.

Smarter recruitment for a smarter economy

The good news? Some businesses are adapting successfully. Take ITEC Group, an Adelaide-based disability and aged care provider. Previously spending $2,000–$3,000 a month on job ads, the company reduced its recruitment spend to $500 after adopting AI-powered tools. "It's a relief not having to post jobs and wait to be bombarded by applicants," says Jesse Hambrecht, ITEC's People and Culture Officer. "I can be more targeted in what I'm looking for."

This targeted, tech-enabled approach is what's helping resilient businesses thrive despite economic turbulence. By using AI-driven matching, integrated recruitment platforms, and centralised HR systems, SMBs are shifting from reactive hiring to proactive talent acquisition, saving both time and money while improving the quality of hire.

Allara Support Services' Carle Marquez agrees: "With SmartMatch, I can skip starting from scratch every time and running through numerous approvals. This will help our team scale, especially for roles we've struggled to fill."

A turning point for business resilience

Recruitment is no longer just about filling roles. It's about protecting business continuity in a challenging economy. By leveraging technology and data-driven solutions like Employment Hero's SmartMatch, SMBs can regain control over costs, access a wider and more relevant talent pool, and make better hiring decisions faster. These kinds of tools are becoming an extra set of hands for SMBs, providing the confidence to make smarter hiring decisions and setting them up for sustainable growth. 

In a period when nearly half of Australia's SMBs fear for their survival, smarter recruitment is not a luxury - it's a lifeline.