Singapore SMEs need to change their mindset

As Singapore continues to tighten the rules on entry of foreign manpower, small and medium enterprises (SMEs) are facing an increasing shortage of human resources.

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

SMEs face tremendous competition in hiring local talent and it will continue to be one of the biggest challenges they face. According to a survey by the Singapore Institute of Management, two in five SMEs are facing challenges recruiting and retaining talent.

Many 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. These are the very sectors in which SMEs predominate.

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 a SME, Singaporeans believe they might lose out in terms of salary if they choose a SME.

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. Fostering innovation is also considered very low on the priority list for SMEs.

The Government has been helping to get SMEs on par with MNCs, rolling out numerous subsidies for skills training, innovation and productivity schemes and grants for work life balance initiatives. However, the number of applications for such programmes, remains relatively low.

In order for the SME to truly compete with MNCs in terms of attracting good talent, an SME must invest in, equivalent benefits to a potential employee.

SMEs should consider offering non-wage benefits designed for employee health and wellness. These can include a fitness programme and childcare facilities.

Creating excitement in the workplace with a well-placed perk is also advisable. For instance, an SME business partner of mine recently bought an Apple iPad for an employee, to recognise his hard work.

Also, employees appreciate bosses who provide a clear vision and a chartable future that excites them. A smaller company can have a strong brand and a bright future; it is them who introduce innovations more easily.

Employees can be exposed to a range of learning opportunities on-the-job, and often rise up the ranks much more quickly.

SMEs, need to review their reliance on sheer manpower. They need to demonstrate that they have the branding and strategic vision to enhance their companies. Behaving comparably to MNCs in terms of hiring and training their staff, would lead to them acquiring the talent they need – and to begin to change the mindset of many.