Hiring mistakes cost SMEs billions of dollars, research shows

New data from SEEK has revealed that hiring the wrong person could be costing Australian small and medium-sized enterprises (SMEs) an estimated $7.3 billion per year.

Making up 97 per cent of all businesses and employing more than half the workforce, small businesses are deemed the engine room of the Australian economy.

Yet, with the cost of conducting business continuing to rise, many small businesses are being stretched for time and resources to find the right people to fill their open roles.

In fact, the research – conducted by Nature in February 2026 with a sample size of more than 950 small and medium enterprise businesses across Australia and New Zealand – found that 32 per cent of SMEs indicated that it’s now harder to find the right person for their business.

This can come down to a variety of reasons, be it the surge of application volumes, with many irrelevant and unqualified candidates applying for roles, skills mismatches – in which the Australian Bureau of Statistics found that nearly 59 per cent of employing businesses struggle to find applications.

Also, SMEs are finding it difficult to compete with large corporate competitors offering higher salaries and comprehensive benefits packages.

The survey of more than 950 small businesses across Australia and New Zealand found that someone who was hired and didn’t match the expectations of the role can cost a business around $16,000.

The largest contributor stemmed from staff turnover, which accounted for more than 55 per cent of the total cost.

Training and performance management costs made up a further 34 per cent, essentially reflecting the extra time invested beyond standard onboarding requirements. The remaining 11 per cent came from direct financial misfortune linked to a wrong hirer’s actions.

The findings showed that hiring the wrong person for a role can carry significant costs across multiple areas for small businesses.

SEEK’s customer insights and research lead, Kylie Pascoe, said: “Finding the right people is vital to the success of any business, and this impact is often felt more acutely in businesses with smaller teams.”

The AI-driven candidate management platform enables SMEs to streamline recruitment by quickly identifying top applicants through smart filtering, screening questions, relevance ranking, and verified candidate details.

Australian small businesses continue to face growing recruitment challenges, with skills shortages, rising application volumes and increased competition for talent making it harder to find suitable candidates.

Hiring the wrong person can create significant costs for businesses through increased staff turnover, extra training requirements and reduced productivity.

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