Small and medium enterprise bosses need to rethink business policies

The Singapore Chinese Chamber of Commerce and Industry (SCCCI) unveiled the findings of the latest SME Survey last week and reported that productivity measures fell from 90.3 percent last year to 87.9 per cent this year. More significant is that 88.9 percent of the respondents revealed were looking to hire rank-and-file workers, compared with 69.4 percent for ITE and polytechnic graduates, and 62.9 percent university graduates. What this points to is that SMEs are still looking to fill more lower level positions, possibly to fill the numbers that may have been lost through the tightening of foreign labour quotas without a concomitant job redesign. In this article, we discuss three significant implications of this and how we SME bosses need to embrace higher-value adding activities.

Stuck in the past

One significant implication of this is that SMEs may still be stuck in the past - doing things that they had always been doing - and perhaps expecting things to be better. The fact of the matter is that things might well get worse going forward because of the slowdown of the economy. With manufacturing already in recession, and GDP growth rate being cut each quarter, the signs cannot be clearer that businesses need to reinvent themselves. Yet by still relying on rank-and-file, we see that SMEs are interested in maintaining the status quo, swapping cheaper foreign labour with a little more expensive Singaporeans; yet all the while maintaining the way things have always been done. SMEs may well be stuck in the past and they need to modernise their operations and their business model, before the market totally slips from under them.

Low value

Rank-and-file staff are expected to keep the machinery humming. Many companies do not expect them to contribute to change and innovation, because they are busy working the status quo. In fact, because of the squeeze in labour supply, most SMEs now operate with fewer headcount, yet with higher payroll. Most of the rank-and-file start and end the day doing the most menial tasks, with no time to contemplate the more important issues like operational excellence or innovation. Yet this very fact locks them into doing low value work, and ultimately, also locks the business in low-value work. If the enterprise doesn't shift its focus on higher-value business, hiring more knowledge staff, and keeping the business lean, SMEs will find it more and more difficult to grow, and ultimately, run itself to the ground.

Structurally displaced

Not only do people find themselves displaced, but organisations may also find themselves out in the cold when they are no longer viable. In Singapore, where the government is making it their focus to raise the competency level of all Singaporeans with SkillsFuture, the availability of rank-and-file workers will diminish. Many of them will demand higher value work, work that is more meaningful and fulfilling. No one wants to do rank-and-file work anymore. With no more supply, SMEs need to value-up their business operations, employing higher value people to deliver higher-value business. Otherwise, SMEs may themselves be structurally displaced.

The writing has been on the wall for a while now and it is not likely to change. Individuals and businesses alike need to look to increasing their value. The shift from rank-and-file operations to more value- and knowledge-based business is a necessity. Without it, SMEs will find the shortest route to oblivion.

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