This is how SME can be bigger…

SMEs must turn the tide, November 23, 2012

NOV 23 — As Singapore continues to tighten the rules on entry of additional foreign manpower, small and medium enterprises (SMEs) are facing an increasing shortage of human resources. The problem is far-reaching, as SMEs employ approximately 70 per cent of the workforce in Singapore.

The conundrum was pointed out by Deputy Prime Minister Teo Chee Hean last month at a dialogue session: “We have to be mindful that many of our SME owners are Singaporeans too. Many of the workers are Singaporeans. If we squeeze too hard, they will lose their jobs too if (the SMEs) move abroad or close down.”

In other words, anything which affects SMEs’ ability to survive in turn puts Singaporeans’ jobs at risk — making HR management a problem that affects everyone in Singapore.

That SMEs face tremendous competition in hiring local talent is an undisputed fact, and I think it will continue to be one of the biggest challenges they face over both the short and long term.

According to a survey by the Singapore Institute of Management, two in five SMEs in Singapore are grappling with challenges in recruiting and retaining talent.

Indeed, the SME hiring process has become increasingly complex, as it is affected by many interconnected issues. Many Singaporeans will tell you that they want to work in the financial sector, the Civil Service or in other “white-collar” jobs.

Industries such as construction find it difficult to attract locals, but these are the very sectors in which SMEs predominate.

The preference for white-collar jobs has been inculcated in Singaporeans since childhood. Mothers tell their sons to become doctors, lawyers or accountants, and advise their daughters to marry professionals.

Lazy children are warned: “If you fail in your studies, you will end up with a hard life. No one wants to work in a factory!” A white-collar job is presented as the be-all and end-all of the academic journey.


At the same time, there are stereotypes of what SMEs can offer against what multi-national corporations (MNCs) can provide.

SMEs are considered poorer paymasters: if the same position is offered by an MNC and an SME, Singaporeans believe they might lose out in terms of salary or other benefits if they choose the SME.

Nor is it the salary alone. Employees look at the big picture today; factors that make a job more attractive include recognition of one’s efforts, the work environment and the opportunity to develop skills and unique expertise — all of which are thought to be more likely to be provided by an MNC.

Additionally, SMEs are often seen as more reluctant to spend on developing their employees’ capabilities, from upgrading existing skills to courses about new technology. Fostering innovation is also considered very low on the priority list for SMEs.

The government has been helping to get SMEs on a level playing field with MNCs, rolling out numerous subsidies for skills training, innovation and productivity schemes, grants for work-life balance initiatives and programmes to tackle staff shortages.

For instance, Max Talent launched in April has sought to help SMEs attract and retain local professionals, managers and executives; the two-year place-and-train programme matches PMEs with job vacancies.

However, the number of applications for such programmes, whether because of lack of interest or awareness, remains relatively low.


In order for the SME to truly compete with MNCs in terms of attracting good talent, an SME must invest in, or be seen to offer, equivalent benefits to a job candidate.

Resource-strapped SMEs often neglect the fact that being an “employer of choice” means something different to everyone. SMEs should consider offering non-wage benefits designed for employee health and wellness, be it physical, emotional or financial. These can include a fitness programme, childcare facilities, hairdressing and laundry services which can be arranged with minimal financial outlay to the company.

You do not need to have a big operating budget to do what Google has done. You just need to know when to create excitement in the workplace with a well-placed perk. For instance, an SME business partner of mine recently bought an Apple iPad for an employee to recognise his hard work over the past few months.

Other less tangible factors are also important. Employees appreciate bosses who provide a clear vision and a chartable future that they are excited by. A smaller company can have a strong brand and a bright future; it can be more nimble and host enlightened management who can introduce innovations more easily.

Employees can be exposed to a wider range of learning opportunities on-the-job, and often rise up the ranks much more quickly. And in the age of the Internet, small companies have the opportunity to affect the global economy and even become MNCs themselves.

As the government strives to move the economy up the productivity chain, companies, especially SMEs, need to review their reliance on sheer manpower. They also need to demonstrate that they have the branding and strategic vision to bring their companies to the next level. They have to behave comparably to MNCs in terms of hiring and training their staff, in order to acquire the talent they need — and to begin to change the mindset of many. — Today

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In Tune specialises in finance and accounting outsourcing, human resource (HR) outsourcing to SME business owners in Malaysia; that traditionally cannot afford professional services which they now can at a fraction of the cost less the headache; so that they have more time to focus on the business operations that matters to them.

Why hire an executive when you can now get at least one qualified professional with an executive at less than an executive pay?


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