Hiring in SMEs: Challenges Compared to Big Companies

In Singapore, small and medium-sized enterprises (SMEs) play a crucial role in the economy, accounting for 96% of all businesses and contributing significantly to employment and growth. However, SMEs face unique challenges in hiring and retaining talent compared to larger corporations. This article delves into the specific difficulties SMEs encounter and explores strategies to address these issues.

Challenges in Talent Acquisition

Rising Recruitment Costs: One of the primary barriers SMEs face is the increasing cost of advertising job vacancies. A significant 86% of SME leaders in Singapore report that these costs have risen over the past year. Additionally, the expense of accessing job boards and higher commission rates for recruitment agencies further exacerbate these costs. Consequently, SMEs must allocate a larger portion of their budget to recruitment, which can be challenging given their limited resources.
Labour Shortages and Salary Pressures: SMEs struggle to compete with multinational corporations (MNCs) due to rising salaries driven by the cost of living and labour shortages. This makes it difficult for SMEs to offer competitive salaries, with 97% of SME hiring leaders citing this as a major challenge. As a result, SMEs often find themselves at a disadvantage when trying to attract top talent.
Technology Divide: Many SMEs lack access to quality technology that can streamline the hiring process, as such tools are often financially out of reach. This technology gap hinders SMEs’ ability to efficiently manage recruitment and onboarding processes. Moreover, it limits their capacity to automate tasks, which could otherwise free up resources for more strategic activities.
Prolonged Recruitment Cycles: SMEs in Singapore face prolonged recruitment cycles, with an average of 41 days to fill a position, which is the longest among surveyed countries. This extended period can lead to increased costs and decreased productivity. Furthermore, it may result in losing potential candidates to competitors who can offer quicker hiring processes.
Retention Challenges: After hiring, SMEs often struggle to retain talent. A notable 19% of candidates fail to pass probation or remain beyond six months, adding to recruitment costs. Therefore, SMEs need to focus not only on hiring but also on creating a supportive work environment that encourages long-term commitment.

Comparative Challenges with Larger Companies

Resource Constraints: Unlike larger companies, SMEs have limited resources to invest in HR teams, leading to overburdened staff handling multiple roles such as recruitment, retention, and employee relations. This can result in subpar performance across these tasks. Consequently, SMEs may struggle to provide the same level of support and services that larger companies can offer.
Competitive Salaries and Benefits: SMEs find it challenging to match the competitive salaries and benefits offered by MNCs. This limits their ability to attract top talent, with 96% of SME leaders citing this as a significant issue. As a result, SMEs must look for alternative ways to appeal to candidates, such as offering flexible work arrangements or a unique company culture.
Brand Recognition: Larger companies often have stronger brand identities, making it harder for SMEs to attract candidates who prefer the prestige associated with working for well-known brands. However, SMEs can leverage their agility and adaptability to create a distinct brand image that resonates with potential employees.

Strategies for SMEs to Overcome Hiring Challenges

Innovative Recruitment Solutions: Utilizing AI-powered recruitment platforms can help SMEs streamline the hiring process and reduce costs. For example, Employment Hero’s Swag app allows SMEs to post job ads for free and uses AI to match candidates with roles. Additionally, these platforms can help SMEs reach a wider audience and improve their hiring efficiency.
Niche Market Focus: SMEs can focus on niche markets where they can offer unique products or services, allowing them to stand out from larger competitors. By specializing in specific areas, SMEs can attract talent who are passionate about those fields and create a competitive edge.
Building Strong Brand Identity: Developing a strong brand identity can help SMEs attract talent by showcasing their unique culture and values. SMEs can emphasize their ability to offer personalized experiences and opportunities for growth, which may not be available in larger corporations.
Government Support and Incentives: SMEs can leverage government initiatives and incentives aimed at supporting small businesses. For instance, the Singapore government offers various programs under SkillsFuture to help SMEs upskill their workforce. These programs can enhance the skills of existing employees and make SMEs more attractive to potential hires.

External Resources and References

Employment Hero’s Report: “The State of Recruitment: Growing Costs and Concerns” highlights the challenges SMEs face in recruitment and retention.
DBS SME Poll: Reveals manpower issues as a significant challenge for SMEs, with 43% citing hiring the right people as a major concern.
SkillsFuture Singapore: Offers training programs to help SMEs develop their workforce.
Singapore Business Federation (SBF) Survey: Indicates that manpower costs and talent acquisition remain significant challenges for businesses in Singapore.

Additional Resources for SMEs in Singapore

Enterprise Singapore: Provides resources and support for SMEs to grow and innovate. Visit Enterprise Singapore
SkillsFuture Singapore: Offers training programs to enhance workforce skills. Visit SkillsFuture Singapore
Singapore Business Federation (SBF): Advocates for business interests and provides insights on economic trends. Visit SBF

Empowering Businesses with SGTUFF

At SGTUFF, we believe in creating a level playing field for businesses in Singapore. Whether you’re a tenant navigating leasing challenges or an SME striving for growth, we provide resources and insights to help you succeed.

Here’s how you can get started:

Become a Member: Unlock exclusive tools and networking opportunities with our Membership Plans.
Learn More: Gain practical insights into fair tenancy practices with our guide: Master the Code of Conduct for Retail Leasing.