Should we hire better qualified people who might burst our budget?

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Hi Ian,

I am running a SME with 22 staff. We are in the financial services sector. Contrary to many people’s belief, we don’t have fat margins and we all compete for talent. This puts paid on my HR budget. While we pay a little below the market, we offer intangible benefits that compensate for that. However, we are still facing a manpower shortage especially in attracting the right talent. We have been disappointed before by such talent when we paid higher than market and then got no performance, so we really are not sure about how to remunerate our people, especially those who are directly responsible for building the business. So, my question is should we pay more to get better people?

Terribly Troubled

Dear Terribly,

I feel for you because the issue of hiring the right people, especially for us SMEs, is always number one on our list of woes. If we hire talented people and they don’t feel fulfilled in the role, they probably won’t stay for long. If we hire less talented people, they stay too long! So “damned if we do, and damned if we don’t!” So how can we solve this problem?


The first question you need to answer is, “What do you want to achieve?” Your intent drives your actions and you need to have a clear intent for your HR policy, especially in relation to your talent and key people. If your intent is to have people to simply fill the position, then you will be in for a huge disappointment when their performance falls short of expectation. You might end up in a net negative territory when it comes to hiring them.

If your intent is to find the right person to lead your business to fulfill more lofty goals, and to ensure that these goals are delivered, then you must go upscale and offer a compensation package comparable to what this person’s alternative prospective employers will offer. Remember, compensation does not simply mean money. Talent is usually attracted by more than the money; they want to see the vision, the strategy and the possibility for growth.

The issue with SMEs is that we sometimes cannot offer the growth prospects that MNCs can offer. Growth would therefore have to come more by way of personal development than professional development.


Obviously your company’s financial position is a key constraint. How well you are doing and how much you can afford to pay will impact how much you can offer.

Another constraint would be your industry’s operations. Some industries operate 24/7 (shipping, logistics, security) and these will impact work-life balance more than desk-bound nine-to-five jobs. Your solution to affording your people a balanced life will be key in attracting and keeping talent.


When developing options, we seek direction from the intent. Is the intent having warm bodies or is it getting performance? If it is the former, then your compensation plan must include intangibles to form a holistic solution.

If your intent was simply to get the performance, e.g. sales calls, production or fulfillment, then you might like to look at outsourcing your solutions. The pay-per-use solution may well be more cost-effective in the long run, although they are not cheap in and of themselves.


SMEs are in a difficult position because in a tight labour market that is skewed in favour of larger organisations, smaller companies have to be inventive in their resourcing solutions. Yet SMEs don’t necessarily have to be boxed in. One of the things that we have over MNCs is our flexibility and our adaptability. We must be able to use these to offer new opportunities to talent that MNCs cannot offer. We must be able to enlarge each person’s contribution to provide greater significance to our staff than MNCs can offer. We must be able to be nimble to embrace market white spaces that MNCs ignore. These are what SMEs can offer and these are the keys to making your resourcing more creative.

I wish you all the best!

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