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Managing People in Small and Medium-sized Enterprises

Managing People in Small and Medium-sized Enterprises

  • 1 May 2023
  • By OCBC Business Banking
  • 10 mins read

Talent Management is an integrated set of Human Resource (HR) practices that focuses on retaining and developing talents with the goal of achieving positive HR outcomes, such as motivation, commitment, job satisfaction and trust within the company. Building a team of motivated workforce is a key strategic factor to achieve competitive advantage, one that is difficult to be imitated by competitors.

With the shift in working arrangements, HR practices come into the spotlight. Whether they have evolved and adapted to suit the current working person’s needs will be a telling factor in an organisation’s ability to recruit and retain the talents they need to grow their business. Similarly, finding new ways to train and upskill employees to remain relevant presents another challenge with the constant shifts in technology and workplace organisation. Following the change in the workplace, HR technology and tools have evolved and improved over time to provide another option for HR to implement more simplified and seamless internal processes so employees can focus on their own progress and not worry about administrative issues.

Based on McKinsey Global Survey 2018, companies with effective talent-management that enables talent attraction and retention are 6 times more likely to achieve higher total returns to shareholders than their competitors.

Challenges faced by SMEs

Due to financial constraints and the lack of HR strategy, SMEs are often faced with problems on getting the right talent in and retaining trained talents. These issues are further complicated by high recruitment competition as well as the perception of SMEs inability on offering career growth when compared to bigger companies. Another common issue is the hesitation of employee development in SMEs, with the concern of becoming dependent on a particular individual, and vulnerable when it comes to replacement.

In most cases, HR functions within SMEs tend to focus on the administrative rather than the strategic level. As there is no one-size-fits-all approach when it comes to effective talent management, here are some key factors to be taken into consideration for improving HR practices.

Talent Recruitment

The first step on acquiring talent would be to identify the key positions of the company as well as the capabilities that can help sustain its competitive advantage. Understanding the HR issues that relates to the organisational life stages of the business could also provide important insights for SMEs on developing human capital to support the changing needs of the business.

Apart from the qualifications and skills of applicants, their attitude and behaviour must also be evaluated to ensure that they are aligned with the vision and mission of the company. Employees who are proactive and can be committed to high performance standards could prove to be more valuable than high-skilled employees, especially during the early stages of the business.

The internet, especially social media is a great starting place to advertise job vacancies, as it is not only free, but also acts as a space to provide potential applicants information regarding the organisation as well as job descriptions. When it comes to covering talent gaps, the informality in SMEs does not just provide flexibility to the deployment of employees towards different roles, but also allows less costly work arrangements like part-time workers, freelancers and job-sharing. As the business grows larger, SMEs could look towards creating talent pipelines.

Talent Assessment

The assessment of talent should go beyond the performance of employees, and be inclusive of their attitude, commitment, role expansion, as well as the match between their personal values and the company’s values. In addition, employees should also be evaluated from the perspective of personal growth and development, which could provide valuable information for further individual development.

Doing so brings more benefits to the business in the long run as SMEs can widen their recruitment pool and inject a variety of talents and experiences into their organisation. A shuttered view limits the company’s choices within a big pool of assets and could in turn push much-needed talent into the arms of competitors instead. Stepping away from a pure performance-based evaluation can also show potential employees that an organisation is willing to invest in their individual developments and raise their assessment of the company image as a potential long-term employer.

SMEs should employ a measurable and consistent performance assessment system that is non-discriminatory and rational for the well-being of employees. A systemic assessment with clearly defined criteria could prove it to be unbiased and measurable. As talent assessment affects decisions on talent development, applying a continuous feedback system provides a higher quality assessment for future progress. Ultimately, an effective talent assessment is important so that talents can be identified, nurtured, and placed in key roles that enhances the competitive advantage of the business.

Talent Development

Nurturing and developing talent plays a crucial role in achieving HR goals and sustaining business growth. The objective is to cultivate the entrepreneurship spirit of employees and provide provisions for them to develop skills and knowledge required for achieving the vision of the business, as well as attaining their personal goals. Job satisfaction and loyalty can be nurtured if employees are assisted to reach their potential and meet their personal aspirations within the company. During the early stages of growth, SMEs should take priority on developing employees who can perform multiple job roles at various life stages of the business.

Empowerment efforts could be implemented into HR practices, such as allowing employees to partake in new recipe creations and clothing designs for restaurants and clothing companies respectively. Providing challenging roles and responsibilities could also encourage employees to commit in a continuous learning curve. As for developing expertise skill and collaboration among the employees, SMEs could look towards mentoring and coaching programs.

SME owners often take on leadership roles for running daily operations of the business. An engaging attitude combined with leadership values from a leader could facilitate assimilation and personal success of the employees. By working alongside employees and being sensitive to their needs, leaders can come up with accurate motivation systems, remuneration, and effective communication, which would support employees’ self-improvement as well as the retention of talented individuals.

Talent Retention

Employee engagement is an important factor that links to the retention of top talent, as those who find meaning at their work would naturally be more competent, committed and contributing. Employees with high engagement contribution are able to improve the overall performance satisfaction of the team as well as motivating others to work harder.

SMEs could provide employees the opportunity to participate in decision-making processes and strategic business planning, which can lead to greater work enthusiasm. Besides, employee motivation could be enhanced through HR policies like reward and incentives systems (based on talent assessment that mirrors company’s priorities), or job security. The informality of SMEs also allows the implementation of non-financial reward mechanism into their HR practices, such as appreciation of efforts, comfortable working environment, and flexible working arrangement. However, studies have shown that cash incentives are more important for high-growth companies than low-growth ones.

A company with a strong organisational culture in place could keep its employees engaged. Culture that values fairness, growth opportunities, job enthusiasm and sincerity in friendship could encourage commitment and innovation among the employees. SMEs should also cultivate a stronger connection between their workforce through the combination of empathetic leaders and clearly communicated company objectives. Furthermore, SMEs could try to incorporate Corporate Social Responsibility initiatives into its HR policies, as a company’s reputation could also positively affect the pride of employees.

By employing talent management that facilitates a positive employee experience and business success, SMEs can attract and build a team that are motivated to stay for the long run. While these talent practices can be either formal and informal to adjust to the organisations’ limitations and culture, they should be implemented consistently. Consistent practices will provide employees with a goal to look forward to within their work, and certain business banking tools are equipped to take a load off your plate and make the implementation much easier. These talent practices will show employees that their contribution is a valued asset to the business and continued efforts will result in a form of appreciation from the company. After all, one thing that remained constant through the peaks and troughs of endless economic cycles is that human resource will always be one of the world’s most valuable commodity.


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