Here’s how SMEs can address their talent shortage

Several studies and reports have highlighted the challenges faced by SMEs in attracting and retaining top talent. All of my clients lose sleep over the talent shortage.

According to a 2019 report by the Confederation of Indian Industry (CII), almost 90 percent of SMEs struggle to find the right talent, and over 50% face a shortage of skilled workers. The report also found that SMEs face this challenge due to limited resources, lack of brand recognition, and poor work culture.

Widespread issue

Additionally, a study by the National Skill Development Corporation (NSDC) also found similar results. The study noted that the talent shortage is particularly pronounced in industries such as manufacturing, construction, and IT.

Across the spectrum of industries, this is a growing concern. Despite India being one of the largest economies in the world and having a large pool of talented professionals, SMEs here find it hard to attract professionals. There are several factors contributing to the talent shortage.

The lack of good employer branding is a key issue faced by SMEs — many are simply not well-known. So, they do not have the same level of recognition as larger companies. This makes it difficult for them to woo skilled professionals.

Key reasons behind the shortage

Limited resources are another major factor. Compared to larger companies, SMEs have limited resources, including financial, technological and human resources. This makes it challenging for them to provide competitive compensation packages and other benefits to attract and retain top talent.

This leads to another related issue: poor work culture. Many of these companies have a poor work culture, which can lead to high employee turnover.

Limited growth or career opportunities in these companies is another issue that keeps potential employees from joining them. SMEs often lack the job positions and infrastructure to provide employees with growth opportunities.

How to address the shortage

To address the talent shortage, it is important that SMEs focus on building a positive work culture, providing competitive compensation packages and benefits, and investing in the growth and development of their employees.

Additionally, SMEs can partner with educational institutions and other organisations to create training and development programmes that can help attract and retain top talent.

Here are a few suggestions to address the talent shortage:

• Enhance your brand: As written before in these columns, SMEs must work on enhancing their employer brand by highlighting their values, mission, and vision, and creating a positive work culture. This can help them attract and retain good talent by showing that they are not just a fly-by-night sort of company, but a community of professionals with a shared purpose.

• Invest in employee training and development: Such programmes will help employees grow and develop professionally. This can include providing access to learning resources and opportunities for professional development, such as workshops, leadership coaching and mentoring.

• Offer competitive compensation and benefits packages: While this is required to lure good talent, it is not easy for SMEs to do this. One possibility will be to give benefits that cannot all be offered by larger companies, instead of just plain money. These could be flexible work hours, frequent holidays, health insurance, and paid time off, which can help attract and retain top talent.

• Leverage technology: Look at leveraging technology such as remote work tools and cloud-based platforms to attract and retain top talent. This can help them provide a flexible and modern work environment, even if they are limited in resources.

• Collaborate with educational institutions and other training organisations: Tie-ups to create training and development programmes can be made with local institutions that want to help the society around the area. This can include internships, apprenticeships, and mentorship programmes.

• Launch employee engagement initiatives: SMEs can offer employee engagement programmes such as regular performance reviews, team-building activities and opportunities for employee feedback to help retain top talent.

• Foster a diverse and inclusive workplace: This isn’t just for large corporations. An inclusive workplace culture can be built by promoting diversity, equity, and inclusion in hiring practices, policies, and programmes. This will also help attract and retain a diverse talent pool.

By focussing on the above plans, SMEs will be able to address their talent shortage challenge to some extent in 2023.