Insights

​From culture fixes to AI strategy – your recruitment battle plan for the year ahead

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Shrinking talent pools, record staff turnover and juggling five generations in the workplace – why we need to rewrite the recruitment rules this year.

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Rising cost of living, geopolitical conflicts and economic downturns are leading to stagnation in labour markets around the world. But as we enter a new financial year, Australia is still performing well, with continuing low unemployment rates and plenty of steady demand in the aged care, community care, disability and healthcare sectors.

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Since July 2024, businesses have been more cautious about hiring due to economic uncertainty. Many of our clients delayed recruitment projects by three months or more. But with a stable government in place, momentum is slowly starting to pick up again.

Before organisations can win the race for exceptional talent, they need to get over the hurdles of skill shortages, hybrid headaches and Gen Z’s increasing presence in the workforce. Here’s how to hit the ground running with your recruitment in FY 2026.

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1. Skill shortages intensify the talent war

Skills shortages in sectors like healthcare and engineering will continue to increase competition for quality candidates in the year ahead. Demand is also sky-high for skilled workers in the aged care and disability sectors, both in-home care and residential care. Organisations in these sectors are under mounting pressure to find quality staff from a limited pool of candidates.

But even in the areas where there are plenty of skilled employees available, exceptional candidates will always be in short supply. To attract extraordinary candidates, you need to offer them something extraordinary in return. Employee benefits are a good place to start, with research showing the top things Australian employees want are health and wellness programs, followed by flexibility.

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2. Culture is key to winning the retention game

In a tight market, it’s not just about attracting the best people – you need to retain them. Record numbers of organisations are reporting employee turnover of 20% or more, due to high workloads, conflict, poor working relationships and not enough opportunities for learning and development. And while large organisations have the resources to address these issues, small to medium businesses don’t and they can often struggle.

If retention is a problem for your business, it’s time to take an honest look at your culture. Smaller organisations with a successful employee value proposition and positive culture will have the best chance of competing on a level footing with larger organisations when it comes to attracting and retaining the best talent.

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3. Gen Z is reshaping your workforce expectations

By 2030, Gen Z and millennials will make up 74% of the global workforce. Many younger employees started their careers during COVID and have only ever known a remote or hybrid office environment, missing the chance to learn and connect face-to-face.

They are also digital natives, and expect technology to be a core part of your onboarding process, along with in-person interactions. Make sure you’re using communication platforms that matter to Gen Z and that they are comfortable with. The same applies to older employees too – with five generations in the workplace, you need to be willing to accommodate different work style preferences across the board.

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4. Hybrid work needs a strategic approach

Hybrid work arrangements are here to stay, with the exception of industries like banking where we’re seeing a push for full time in the office. But while they are very popular with employees, hybrid arrangements do present a few challenges. Research suggests collaboration skills are in decline, virtual meetings are ineffective, and an incidental learning is almost non-existent unless intentional structures are in place.

If space permits, best practice is to specify anchor days when everyone is in the office. Encourage employees to build social relationships by partnering new hires with more senior employees, or onboarding them in cohorts so they can build bonds.

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5. AI will separate the leaders from the laggards

AI is here to stay and this year we all need to get proactive about using it. Organisations that don’t will get left behind. Used well, AI also has great benefits for recruitment. But we need to be strategic with it – think about how you can better automate admin tasks so your team can spend more time on people-related tasks. And look for ways AI can make processes more efficient to have a higher impact on a candidate level.

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The year ahead looks positive for organisations that can master multi-generational teams, use AI strategically and build a strong culture with a solid employee value proposition.

If you need any help with your recruitment in FY26, please get in touch.