Saturday, 17 July 2010

Retaining and managing talent – key to growth

Challenges SMEs face at the developmental stage.

TALENT management is essential for all companies, especially for small and medium-scale enterprises (SMEs), in order for them to grow their business. However, recruiting and retaining talent is always hard for SMEs due to their size and lack of emphasis on staff management.

A lot of SMEs view talent management as a “cost”. This need not necessarily be so. The problem is exacerbated when new generations are not interested to work in SMEs; they prefer to join multinational companies (MNCs).

SMEs tend to take in family members or those within the family. When this is not possible, they employ outsiders.
 
Malaysian Institute of Management (MIM) general council member Zul Baharom says managing talent is a problem for large and small organisations alike.

“In this regard, family-owned businesses suffer the most. A way out of this perilous situation, as seen by early entrepreneurs, is a marriage of convenience. Another fast way out is to maintain family interests,” he tells StarBizWeek.

“This crucial stage of developmental growth often coincides with a period of low profit, which explains why proper talent management development is usually not considered by the owners,” he says.

Zul Baharom: Managing talent is a problem for large and small organisations alike.
 
In situations where small organisations do invest in talent management, the results have been surprisingly positive.

“Take the case of the SMR Group, a family-based small HR training and consultancy company of some 32 years. It grew to become an international enterprise and was later listed on Bursa Malaysia,” he says.

Its founder and owner Dr R. Palan believes that talented people play a key role in ensuring the company’s culture and business to remain “right”.

“This was achieved by a long process of talent management and intervention to get the better managers and consultants in place. Thus, there is a need for third or fourth generations of family owners to develop to the fullest potential, the talent within and re-orienting the company culture and values towards the future development of their businesses,” he says.

Retaining talent

Malaysian Institute of Human Resource Management president Ramley Razalli says it may be difficult for SMEs to secure talent due to the general perception that they lacked success and, therefore, lack stability.

Ramley Razalli: SMEs must select those with entrepreneurial inclination.
 
“However, we have found that SMEs are generally successful and the well-known ones may be able to attract talent, but not necessarily the best,” he says.

SMEs must find avenues to publicise their success stories to be branded, he says.
“Some information technology (IT) companies are successful in recruiting talents. This is perhaps, due to the pioneering spirits of the individuals. They are like artists, and there is a big market for those who are good,” he says.

Ramley says associations should employ human resource experts to assist and guide members.
Meanwhile, SMR HR Group chairman and chief executive officer Dr R. Palan says SMEs have to find innovative ways to secure talent as traditional job hiring approach may not work for them.

“Championing their vision and mission, showing the talent their growth path, will enable the SMEs to win the war for talent,” he says.

He says large corporations may have the ability to offer more but SMEs are nimble; they can offer more on a personal basis. SMEs have to communicate this fact when recruiting, he says. The main and first issue, says Palan, is finding the right person for the right job.

R. Palan: Find innovative ways to secure talent.
 
“The person may be qualified but need not necessarily be suitable for the SMEs. The issue of differentiating competencies for success is an important one,” he says.

SMEs need talent that is in short supply and the Talent Corporation that is being set up in the 10th Malaysia Plan is expected to identify their needs and address them.

“The second problem is one of retention. SMEs don’t have the bandwidth of MNCs or government-linked companies (GLCs) when it comes to compensation and remuneration,” he says.

He says the high employee turnover is an obstacle for SMEs growth, thus SMEs have to consider initiatives such as flexible benefits, employee share options and partnerships.

Talent development spending is unnecessary?

Zul says investment in talent management can help to attract and retain senior management.

“An employee see the company’s commitment in developing talent management as a positive indication of the owner’s effort to expand its business horizons. It goes without saying that a pool of trained and talented professionals will become more engaged and motivated,” he says.

This has a tremendous impact as it enables talented managers to link their future professional career development with the company’s long term business plans.

Palan says talent management and retention will be considered as “expensive” if this is seen as a cost but if good employees are viewed as “an asset”, this can be seen as an investment and value creation.

“In the past, money motivated people but today – purpose, passion and autonomy are strong motivating factors. The carrot and stick approach may no longer be the only way to keep good people and the sooner SMEs recognise that, the better it will be for their bottom line,” he says.

He says SMEs can take advantage of the funds allocated for the development of talent by the Human Resources Development Corp.

New generations prefer MNCs?

MIM’s Zul says young people today tend to view working in an SME or running one’s own business as last resorts, something they will only consider when they are unable to find work in a larger company.

“The preference is to work in MNCs or GLCs because they perceived these organisations as being more stable. They want to get away from the ‘home environment’. This may explain why Felda schemes are still being run by the same people who pioneered the scheme,” he says.

He points out that the majority of SME owners prefer to do everything themselves and distrust the younger generation.

“They will take in family members or those within the family. When this is not possible, they employ outsiders. It is imperative for SME entrepreneurs to set up a pool of talents for succession planning to ensure the survival of family business,” he adds.

Ramley says the selection process is important.
“SMEs must select those with entrepreneurial inclination, those open to multi-tasking, and in some cases those with a nose for marketing but without academic qualifications,” he says.

He says SMEs must employ a different breed of talent unlike those employed by MNCs and large companies.

“Job designing is important in SMEs to ascertain the type of talent required. In doing so, they will be able to search and secure the talents needed,” he says.

Palan says SMEs with the right leadership can offer much.

“Microsoft started with four employees and companies such as Google and Air Asia with less than a dozen employees. They grew into world class large companies,” he says.

By LEE KIAN SEONG
lks@thestar.com.my

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