HR and Recruitment perspectives of SMEs
For this issue I am discerning most of my theories based on personal experiences and experiments (personal case studies) while working with SMEs, including researches from studies and articles for example LinkedIn such as Inc or CPID (UK), Sandbox Advisors or Case studies from universities, TAFEP / WSQ and journals. I will have the links of these articles as I write about certain traits or characteristics that were highlighted in articles and studies.
Why do SMEs have problems in recruitment and retention for talent?
It always makes me curious as to why SMEs have problems in recruiting and most often difficulty in retaining talent. The answer is obvious that many owners or businessmen have no knowledge about HR or simply think that it is not that difficult or not important. That is just one element in the equation. The other elements are not having a proper planning on staffing and strategic planning of talent acquisition. In other words most business people in SMEs have no knowledge of HR process and its benefits.
In some ways it can be seen when most SMEs in Singapore do not have pay slips or having problem to process one with an Excel application. Many do not have confirmation letters nor letters for promotion and so on. Neither do they have appraisals. It does not matter if you have one employee or two employees, they are still employees.
Why do SMEs have problems in recruitment and retention for talent?
It always makes me curious as to why SMEs have problems in recruiting and most often difficulty in retaining talent. The answer is obvious that many owners or businessmen have no knowledge about HR or simply think that it is not that difficult or not important. That is just one element in the equation. The other elements are not having a proper planning on staffing and strategic planning of talent acquisition. In other words most business people in SMEs have no knowledge of HR process and its benefits.
In some ways it can be seen when most SMEs in Singapore do not have pay slips or having problem to process one with an Excel application. Many do not have confirmation letters nor letters for promotion and so on. Neither do they have appraisals. It does not matter if you have one employee or two employees, they are still employees.
Scenario 1
Company A director once told that there is no need for a HR in his office. The reason being that there was only three (3) employees which included the director himself. The problem arise when three (3) got to four (4) and then to five (5) and then there were many. Without a clear directive nor mission nor objective to the need of having anyone.
Furthermore by not employing more locals into the fold made it more expensive hiring foreign talent who were more of acceptable talent than exceptional talent, as the need to provide accommodation and other benefits were a major cost. There were other considerations to the preference of recruitment too.
Furthermore by not employing more locals into the fold made it more expensive hiring foreign talent who were more of acceptable talent than exceptional talent, as the need to provide accommodation and other benefits were a major cost. There were other considerations to the preference of recruitment too.
The recruitment process turned the need to have more comfortable mindset of having to recruit a particular group of people as diversity and fairness was not considered or considered cumbersome. Other objectives are to other interest rather than the objective to recruit in accordance to the need of core business growth seem to be the trait. That led to many discontentment within the shareholders and growth declined as the HR and business focus shifted as the company slowly ate up on previous gains and winded down.
Here is an update on MOM findings.
http://www.todayonline.com/singapore/govt-identifies-more-50-firms-too-few-sporean-professionals?fb_action_ids=10152372272012141&fb_action_types=og.likes
Although I am curious in how they got the number 50, its a good start that there is work done as there are many SMEs in Singapore.
Scenario 2
Company B conducted an interview for an Accounts cum Administrator position, the director, a nice open minded individual, claimed that they are looking for one with lots of experience and that the future of the organization is about growing. They were trying to implement the POS and the ERP and also want a website for E-Commerce. It was great to hear that a company is looking to grow (not expand BUT grow within it core business perspectives).
He shared that the company hired a IT guy for about 8 months trying to do the website including the POS and ERP system for the company. The cost was S$1.8K a month.
A mental calculation, 8 month on the project S$1.8K just doing the website that would be a total cost of S$14.4K'. Nothing was achieved. What went wrong in this recruitment process?
Then came another director out from the blue, in the 2 hours of interview. Within minutes the second director raised doubts that the candidate can do all the work as stated in the resume. He then proposed that they will pay the candidate S$XK a month which was S$200 less than what had been advertised or agreed upon by the first director. The salary will be revised after 3 months of the probation. The two directors also emphasised that they expect loyalty with a long term employment. The candidate accepted the challenge. The directors inform the candidate that they would need the time to do a job scope and have a clear idea of what is required of the candidate. Thus they will follow up with the candidate on the next working day.
There was no news or feedback after that.
Scenario 3
Then came another director out from the blue, in the 2 hours of interview. Within minutes the second director raised doubts that the candidate can do all the work as stated in the resume. He then proposed that they will pay the candidate S$XK a month which was S$200 less than what had been advertised or agreed upon by the first director. The salary will be revised after 3 months of the probation. The two directors also emphasised that they expect loyalty with a long term employment. The candidate accepted the challenge. The directors inform the candidate that they would need the time to do a job scope and have a clear idea of what is required of the candidate. Thus they will follow up with the candidate on the next working day.
There was no news or feedback after that.
Scenario 3
About 10 years ago, Company C, conducted an interview for a IT personal in a company.The director was impressed with the candidate's certificates and determination to upgrade. But she was also skeptical of the individual as he was from a different ethnic group. After going through some personal information sharing, the director came to know that the candidate's girlfriend is of the same ethnic group as she and agreed to employ him.
As the director handed the letter of employment to the candidate, she informed that the candidate was selected mainly because, there was something that the candidate's girlfriend see in him. This was the main factor for her decision to employ the candidate.
As the director handed the letter of employment to the candidate, she informed that the candidate was selected mainly because, there was something that the candidate's girlfriend see in him. This was the main factor for her decision to employ the candidate.
I think three (3) scenarios are enough although there are many more examples, these three examples or case study would determine how SMEs recruitment process work.
What was the problem of all three scenarios?
(Lets sit back and think for a moment)
In all three scenarios we know that these people have extremely intelligent business acumen. Although two of the companies wind down or scaled back during the years. They know how to bring in revenues for the company and cutting cost. But they process HR in accordance to their experience, perception, reasoning, guessing and not having HR knowledge, was a weakness that cannot be disguised.
(Lets sit back and think for a moment)
In all three scenarios we know that these people have extremely intelligent business acumen. Although two of the companies wind down or scaled back during the years. They know how to bring in revenues for the company and cutting cost. But they process HR in accordance to their experience, perception, reasoning, guessing and not having HR knowledge, was a weakness that cannot be disguised.
These organizations define their knowledge of HR in terms of experience, assumptions and perceptions instead of experiments, studies and understanding. This hampers them from further growth of their company.
The first scenario (1) the owner did not realise if the HR perspectives were in the right order and having a HR mission statement, a HR directive, HR planning, HR objectives and strategy, the company would not skew or move away from the core elements in the business. If they have hired the right people, instead of hiring too many foreign employees, having them as directors later (increasing the pay in accordance to the required EP components), restricting hiring process for the need of doing the core business which eventually and completely derailed business into winding down.
The second scenario (2) the owner had no idea that to have his store have a POS, start a ERP and E-commerce website, he had to approach a professional outsource company to have a project done within 3 months and the cost and time would have been lesser.
Top it of, the government grant that they can make use for achieving growth. They could have employed someone who knew how to procure a IT project to provide more consultation and having the aspiration of the directors of the company fulfilled.
(see my blog previous blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro http://michaelrsmorgan.blogspot.sg/ ).
Top it of, the government grant that they can make use for achieving growth. They could have employed someone who knew how to procure a IT project to provide more consultation and having the aspiration of the directors of the company fulfilled.(see my blog previous blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro http://michaelrsmorgan.blogspot.sg/ ).
The third scenario (3) the director, not only have lack of leadership but lack of knowledge in HR process. A personal perception and ideology approach without knowledge of HR. Lack of confidence in her ability to make strategic decisions. Overall more of guess work or gut feeling and not of HR knowledge and understanding.
There are more primary concerns on SMEs HR perspectives and recruitment which takes into consideration
- wages (which is an important component to consider. The question is do they want to grow or do they want to maintain the same standards). Just as their client will pay more for quality products and good services, for quality work, the same principles play the part.
- having no idea of a job scope (please do read "Worst hiring mistake : Misrepresenting the job" http://www.inc.com/flash-steinbeiser/hiring-managers-get-your-story-straight.html )
- shareholders > personal interest (and not business objective or strategic business growth)
> No planning for diversity
> No HR strategy
> No knowledge to motivate and invest in HR (cost factor)
> person centric and not business centric (No long term strategy for growth)
> not taking calculated risk or plan for risk aversion.
(wants only their race/age/religion/gender. Influence decision making)
> influence in recruitment as SMEs build a culture upon the
perceived experience
perceived experience
- Culture > micromanagement
> fear to manage growth
> fear of being open to knowledge base organization as they
might be replicated.
> old school of understanding the next generation of workers such as Gen Ymight be replicated.
> they believe loyalty still exist when there are many layoffs in the economy.
> not able to lead and manage DIVERSITY.
- Recruitment Policies > Follow entire MOM guidelines. ( No initiatives, No creativity Not bothered)
- Unstructured HR approach
"Alot of times hiring managers aren't trained, or if they are, they don't pay attention to the training."
said Scott Erker, Senior Vice President of Selection System at DDI and author of the report,
KNOW MORE GUESS LESS.
What, why and how SMEs can and must improve their HR perspectives?
Before SMEs go onto the WHAT, WHY and HOW, SMEs must first change the mind set within. Here is a link on "Singapore SMEs Need To Change The Mindset" by Jeffrey Koh from SBR.
http://sbr.com.sg/markets-investing/commentary/singapore-smes-need-change-their-mindset
Here is the "what" to improve in SMEs HR perspective.
Here are some initiatives and case study by SNEF. Case study on Atlas Sound Vision Pte Ltd.
Here is the "why" to improve SMEs HR perspectives.
Why is it important to have good HR strategies and recruitment policies for SMEs business growth?
Its important for SMEs to pay more attention to HR strategy or HR itself due to the rapid transformation in business growth. The right skills, talent and the right fit is needed to proceed with business growth from one horizon to the other.
I will look into the 3 horizon of business growth which is applicable to all business and for SMEs it is crucial.
In order to maintain a consistent growth or sustainable growth there are 3 horizons. Most SMEs, prefer to stay in stage one or horizon 1. They have the resources for that horizon as it is a core business perspective. Which means it was the reason for them to start the business.
As time goes on, other business or competitors may rise to the 2nd horizon by improvement in their strategic involvement in HR, IT. Taking the example of scenario two, the company wanted to improve process, and set the path for further growth. Having said that it is important to align their recruitment process in attaining the right candidate as they would be involve in growth enhancement. These candidates will be involved in growth enhancement building of the company to the 2nd horizon and would be involve in preparation for the 3rd horizon of growth.
As time goes on, other business or competitors may rise to the 2nd horizon by improvement in their strategic involvement in HR, IT. Taking the example of scenario two, the company wanted to improve process, and set the path for further growth. Having said that it is important to align their recruitment process in attaining the right candidate as they would be involve in growth enhancement. These candidates will be involved in growth enhancement building of the company to the 2nd horizon and would be involve in preparation for the 3rd horizon of growth.
As the business grows anticipation of growth (planning) by having the right talent with the ability to plan and forecast process, things will further improve as in the case of Atlas Sound Vision Pte Ltd ( See the SNEF link above ). This growth is a cycle, as environment changes and business innovation changes process will change and need of specific talent would be required.
Studies on SMEs in Singapore. The CIPD (UK) have done a study on Singapore SMEs which includes case studies of Atlas Sound Vision Pte Ltd, Home Fix DIY, Jason Marine and Mothercare Singapore
(please refer to the link. The study is 85 page long so please do make time to read it. https://www.cipd.co.uk/binaries/6185%20SOP%20Singapore%20SME%20(WEB).pdf)
There are many avenues for SMEs to take or make. Get your employees trained on HR perspectives or get yourself as employers to gain the knowledge first hand. There are courses for employers by SNEF and for the employees there are WSQ courses to enhance their value and gain more knowledge.
For employers :
http://www.sgemployers.com/
and
http://www.wda.gov.sg/content/wdawebsite/L102-ForEmployers/L208-WSQforEmployers.html
For employees (supported by WSQ/WDA) and with many grants available ( See my blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro. http://www.michaelrsmorgan.com/#!blogger-feed/c1orn/posts?pageToken=CgkIARjAqv7j3SgQ-730wcSnsbAV )
For employers :
http://www.sgemployers.com/
and
http://www.wda.gov.sg/content/wdawebsite/L102-ForEmployers/L208-WSQforEmployers.html
For employees (supported by WSQ/WDA) and with many grants available ( See my blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro. http://www.michaelrsmorgan.com/#!blogger-feed/c1orn/posts?pageToken=CgkIARjAqv7j3SgQ-730wcSnsbAV )
The days when people look for a job is over. The future is where people look for a career. SMEs must learn to remodel their mindset, strategy, structure and stop blaming talent for their own weakness or fear. Its about time they ask what is wrong within and find the answer and strengthen their knowledge and lead rather than manage situations. When selection process is weak it is not that individual's fault nor every other employees fault, it is the selection process fault.
SMEs must learn to find and know the answers. Know more Guess less
There have been many interviews and recruitment process that I have attended, and have even attended just to experiment and test interviews to know and understand the techniques that have been used by SMEs. Interviews are the most important process in selecting the right people. Brand of the company and culture is important for the potential candidates. Most interviews that I have attended during the 25 to 30 years have not change in the way they do it and have not made HR important for being competitive. Do it professionally and make it important in the culture of the organization.
Importance in having HR in your organization.
What must be understood is that when there is no knowledge or planning on HR in many organization. In the long run your competitors, will take the initiatives and walk all over you. Take the first step to change the mindset and perception about HR and make it as an important step of strategy for the company's growth potential.
For more help and information please click on the links :-
Singapore SME portal
http://www.singapore-sme.com/
IDA
http://www.ida.gov.sg/Business-Sectors/Small-and-Medium-Enterprises
SMF
http://www.smecentre-smf.sg/
ASME
http://www.asme.org.sg/
SPRING
http://www.spring.gov.sg/RESOURCES/Pages/sme-guides.aspx
SNEF
http://www.sgemployers.com/
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