Amid manpower crunch, SMEs should invest in upskilling to thrive: business leaders

WITH manpower woes ranking high among the concerns of many small and medium-sized enterprises (SMEs) in Singapore, upskilling efforts are key to bridging the gap, said business leaders.

This is especially true as technology continues to revolutionise the way businesses are run and customers are served, disrupting the status quo, said Koren Wines, managing director of Asia at Xero.

The Covid-19 pandemic “saw SMEs accelerate their digital journey and implement new solutions to adjust to changing commercial conditions”, she noted.

But even as Singapore moves past the pandemic, consumer attitudes have shifted – contactless payments are more widespread, and a higher number of people make purchases online.

“In order to truly realise the value technology offers, businesses need people who are interested in technology, understand it and know how to use it,” said Wines.

Yet, many SMEs feel that they do not have the time and resources to build – and maintain – the necessary pipeline of talent, noted Chester Leong, managing director of accounting and tax services provider BoardRoom Group.

Upskilling the capabilities of their current employees is one way for SMEs to cultivate the talent they need amid the ongoing manpower crunch, Leong added.

Indeed, in the Singapore Business Federation’s National Business Survey 2022/2023, almost all the companies surveyed (96 per cent) indicated that they face manpower issues.

Those issues included rising manpower costs (75 per cent), attracting and/or retaining younger workers (51 per cent), and a limited pool of local high-skilled labour (47 per cent).

Apart from manpower issues, upskilling is “the necessary response to an economy that will have greater unpredictability and a faster pace of change”, said SkillsFuture Singapore (SSG).

Advances in technology, including the application of AI, are compelling a relook at job roles, while the constraints of carbon require new enterprise capabilities, SSG added.

Utilising government schemes for upskilling

To that end, government schemes such as the SkillsFuture Credit can be used by individuals – including those in the employ of SMEs – for upskilling, said Leong.

SMEs are also eligible for enterprise-level schemes, such as the S$10,000 SkillsFuture Enterprise Credit, which covers up to 90 per cent of out-of-pocket expenses on qualifying costs for supportable initiatives.

In 2022, about 560,000 individuals and 20,000 enterprises participated in SSG-supported programmes, while some 192,000 individuals used their SkillsFuture Credit to offset course fees.

SMEs comprised 96 per cent of the 20,000 companies that participated in SSG-supported training programmes.

“My advice to my SME clients has been to send their employees to SkillsFuture courses, or even to external courses, because this really helps them improve their productivity,” said Leong.

For instance, BoardRoom has advised some of its SME clients in the food and beverage (F&B) sector to tap available government grants to upskill their employees in areas such as hygiene and cleanliness.

“In the F&B industry, it’s difficult for many SMEs to even find the right staff, so our advice for them to close the gap is to upskill their current staff, by going for available courses,” Leong said.

SMEs should also look to partner relevant government agencies, such as SSG, to identify areas of improvement, he added.

“For some SMEs, being small can confer the advantage of nimbleness, of being the first mover to seize new opportunities. However, a lack of scale can also be a disadvantage,” said SSG.

“We recognise that SMEs may lack the scale and infrastructure of large companies in building workplace learning and workforce development capabilities,” it added.

To bridge that gap, train-and-place programmes like the SkillsFuture Career Transition Programme and SkillsFuture Work-Study Programmes are available for SMEs here.

More than 1,900 individuals joined SkillsFuture Work-Study Programmes in 2022, which were delivered with more than 600 participating companies. The programme allowed attendees to gain work experience while pursuing industry-recognised qualifications.

Another option for SMEs to consider is the Jobs-Skills Integrators (JSIT) initiative, which was announced by Deputy Prime Minister Lawrence Wong in February during his Budget statement.

The government will pilot the scheme in the precision engineering, retail and wholesale trade industries, where there are higher concentrations of mature workers and SMEs.

“Through JSIT, SMEs will be able to fill employment vacancies efficiently, support in-employment workers to progress in their careers and job seekers to find jobs,” said SSG.

Adopting digital tools when upskilling

For SMEs taking the first steps towards upskilling, ensuring proficiency in using new digital tools is critical for businesses wanting to stay competitive and relevant, said Wines.

She cited the positive impact that Singapore Corporate Services, a Xero certified advisor, was able to make on local trading and distribution company Teck Huat & Co.

Previously, Teck Huat & Co were using desktop accounting systems and even kept financial records on physical ledgers, Wines said.

After a few months of training its staff on Xero’s solution, the company managed to shorten its financial closing process from 45 days to only seven days, without having to hire any additional headcount to its finance department.

Xero also offers certification training for its accounting and bookkeeping partners, Wines said.

“We run regular educational webinars and sessions on product features and benefits to help demystify technology for users,” she added.

Additionally, an oft-repeated question when companies adopt digitalisation is whether new technology will replace jobs.

“The short answer is yes and no,” Wines explained.

She added: “Technology is already replacing and automating repetitive, manual tasks in business; however, that said, for more complex and nuanced work which only humans can do, people who understand technology and can leverage it, will replace those people who cannot.”

How businesses facing psychological or behavioural barriers to digital adoption can get started: Xero’s One Step study

• Encourage small steps, not giant leaps: Small businesses often struggle to adopt technology because they’re daunted by the perceived uncertainty and difficulties that come with investing in something new. Breaking down the adoption processes into simple, clear steps helps small businesses rethink their uncertainty about the risks ahead.
• Celebrate small business peers: We are more likely to try something new if we see others like us doing it – and benefiting. One good way to do this is to look for case studies that deal with similar or like-minded businesses, and show clear linkages between actions and outcomes.
• Don’t get left behind: Take a long-term perspective on technology adoption, and it becomes clear that today’s ‘good enough’ is usually tomorrow’s ‘not enough’. Clearer contrasts between the status quo and the outcomes of new technology can help small businesses perceive this clearly.
• Measure benefits in a relatable way: Using measures that small businesses already deal with (like revenue gains or user-friendliness) can help, as can a transparent view of possible challenges and practical ways to overcome them. The more technology’s benefits resonate with small business owners on a personally experienced level, the more likely they’ll be to take the first step.
• Narrow and simplify choices: Ways to overcome decision paralysis can include limiting the number of choices on offer, using direct ‘like to like’ comparisons between options, and simplifying language to focus on processes and outcomes rather than statistics and features.