News Stop: Manpower problems for SMEs

Lately, there has been a lot of talk in Today about the difficulties faced by the small medium enterprises (SMEs). Looking at the trends of the articles, I sensed that there are two major issues which all SMEs in Singapore faces. The first is manpower and the second is branding. The challenge has always been to convert the “mama” shop bosses to think about expanding their business to the next stage. Here is an article from Today about this issue, and we will comment on how to deal with these issues.

From the article “Staffing woes weigh on SMEs” by Lee Ching Wern in Today Online, here are some excerpts on the article that we like to draw your attention.

Manpower issues have catapulted past perennial concerns like access to financing and operating costs to become the second biggest challenge faced by small and medium-sized enterprises (SMEs) here.

According to survey results released by DP Information Group on Monday, 37 per cent of the 1,000 SMEs polled cited manpower among their top three concerns, up from 28 per cent last year. Some 14 per cent indicated human resource problems as their biggest growth hindrance, double the number in the survey last year…….

Studies have shown that career prospects are the most important criterion people look for in a job, followed by workplace culture and remuneration. Also, there could be more opportunities to advance in an SME compared to an MNC.

SMEs may not necessarily have to compete financially with the MNCs for the right talent. There are other ways they can attract staff, said Ms Annie Yap, managing director of recruiting firm GMP Group.

Studies have shown that career prospects are the most important criterion people look for in a job, followed by workplace culture and remuneration. Also, there could be more opportunities to advance in an SME compared to an MNC.

In order to attract quality middle managers, SMEs can also offer creative share option schemes for the key employees.
“They can put in place long-term incentives to retain talent — for instance, stocks for a public company, or alternatives like phantom stocks and deferred bonuses for a non-public company,” said Mr Kwan.

Currently, many SME bosses use their gut feel when hiring.

“The typical style of an entrepreneur when he wants to select someone for a post is to say ‘When I see, I will know who I want,” said Mr Tan.

“This intuition has often served them well. But as their business grows, they may not always be able to depend solely on this,” he said.

It would serve the SMEs well to invest more resources in the screening and selection process. Having a rigorous selection process will ensure that the SMEs hire the right talent to be groomed.

It would serve the SMEs well to invest more resources in the screening and selection process. Having a rigorous selection process will ensure that the SMEs hire the right talent to be groomed……

SMEs should also adopt the strategy of grooming “raw talent” as they might not be able to compete with big companies with big budgets, said Mr Kwan.

To retain staff, providing them with a clear career development path is crucial.

“You need to have a plan for them. After this stage, what is next for you, and what are the key performance indicators you need to achieve to get there?” said Ms Yap.

And while monetary compensation may rank third in the order of importance, it is still a big factor. Give the staff what they deserve…….

I am not surprised that SMEs are facing this problem. They are fighting against a culture from many that the best job that one should work for is in the multi-national companies. I actually disagree that the problem is about career planning track. One can just perform the same survey on undergraduates or poly students who are planning to leave school, and ask them exactly the same questions. A lot lies in the prestige of the jobs. The SMEs will continue to face such problems if most people have this perception that working in McKinsey is better than working in Tan and Co.

How do we solve this problem? The article suggested two approaches: a career plan for the employees and share options rewards. I agree with both approaches, but will like to insert a third one: welfare and flexibility. Depending on the nature of the SMEs, the entrepreneur need to plan out the welfare and flexibility for the employee. One major problem for MNCs is that the processing for an employee’s welfare is extremely slow, and the career plan is usually stuck in the middle management.

How about welfare? A principal of a primary school once got her students to paint the school, and her reason is that if the students don’t have a say in how their environment is shaped, they would not enjoy learning or find school to be boring. The same theory can be applied to the office.

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