PEOPLE are often cited as one of the most important assets for a company. But small businesses have traditionally found it a challenge to attract and retain the right talents to grow the business.
And with the changing dynamics of work due to the pandemic, it has, perhaps, become even more difficult for companies to engage their employees.
Just as it is no longer business as usual for a company’s operations, Cllement Tan, group chief executive officer and managing director of RAMSSOL Group Bhd, points out that this approach should also be applied to a company’s human capital management.
“It is important to firstly acknowledge several seismic shifts underway in the broader area of human capital management.
“Human resource (HR) frameworks today must consider differing needs stemming from multi-generational workforce, increased digitalisation, hybrid workplaces, the ‘talent war’ and balancing HR processes, or automation, with aspirations in creating inclusive, engaging and rewarding workplaces, ” says Tan.
Increasingly, conversations around diversity, wellbeing, reward systems and HR on-the-go are also taking centre stage.
This certainly makes the role of HR more complex than just hiring and firing.
With the push for digitalisation among SMEs, Tan says technology is also becoming instrumental in managing and automating HR processes while providing insights in the decision-making process to enable companies to better engage their workers.
“We have seen first-hand how effective, productive and innovative an engaged workforce can be. This corresponds to several pieces of research where businesses with highly engaged employees showed 21% higher levels of profitability and organisations with a good culture increased revenue by four times, ” he adds.
RAMSSOL develops digital solutions in the field of human capital management. This includes solutions that automate routine administrative processes like attendance and payroll, monitor and analyse employee data, integrate “intelligent technology” across workforce management and drive employee engagement.
According to Tan, there are several principles that SMEs need to consider when undertaking HR digitalisation initiatives. Employers will need to understand employee sentiment, improve data collection processes that will give them insights to employees’ needs, engage and motivate their employees as well as provide a platform for them to connect.
All this can, certainly, be better carried out with the help of technology.
Tan notes that there are tools that provide real-time insights to employee sentiment, which will enable management to better plan and take action to improve their engagement with employees rather than wait for the year-end performance review to find out how they are doing.
A study by US-based Qualtrics reveals that employee engagement is at 67% when feedback is collected and acted on at least quarterly. This drops to 50% when the frequency is only once or twice a year.
Tan points to its Feet’s app – which uses features like gamification with leaderboards, point-based rewards and recognition systems that can be converted into products offered by brand partners – as an example of technology used in HR.
The app is suited for SMEs with as few as 10 employees and more and is sector agnostic. It has been implemented for clients across the region in banking, training providers, digital and branding services, energy and power and manufacturing.
Technological solutions, he emphasises, should serve as an effective internal communications tool to constantly engage, empower and motivate employees and offer them a social platform for an inclusive, collaborative and sharing culture.
“This helps to drive innovation and creativity at work, ” he says.
Notably, SMEs have generally been reluctant to use technology. And while the pandemic has forced many businesses to look at ways to automate their operations, HR is rarely an area up for consideration.
Tan attributes this to a lack of awareness on the importance of employee engagement among SMEs and on the ripple effects that poorly managed employee experience have on business performance.
This is coupled with a fluid understanding of what employee engagement really is.
“There is also this fear of the unknown and resistance to change, particularly with tech-based projects, no thanks in part to several perceptions. SMEs think that digitalisation is always costly and that it is only about improving payroll and nothing more.
“There is also this assumption that there must be regular system maintenance and a need for IT experts.
“And most would rather invest in their supply chain or inventory systems, ” he adds.
However, Tan opines that small businesses are not aware about the potential that technology like artificial intelligence can bring in terms of enhancing their workforce and business performance, and in allowing companies to understand and address HR gaps and inform business strategy.
“There are two business elements to consider in employing technology – mitigation of risk and costs, as well as positive business performance.
“A clear win for SMEs through effective employee engagement is creating a better workplace that naturally results in measurable metrics such as better retention, productivity, knowledge retention, continued upskilling, product and service innovations and subsequently, in building a stronger employer brand.
“Collectively, this is an understated, competitive advantage, ” he says.
Additionally, having a more engaged workforce can help mitigate cost by way of reducing hiring costs, absenteeism, loss of tacit knowledge, gaps in succession planning and prevalence of mediocrity that can impact service quality and overall business performance.
“Did you know that the estimated cost of replacing an employee is at least 75% of their annual salary?” Tan says.
The use of technology could also help SMEs attract a younger and more vibrant group of employees while equipping and building a future-ready workforce. This will also enable a more diverse and agile organisation.
Tan states that the average employee engagement score across Malaysia is 54%, which is slightly above the global average of 53%. This means that there is a huge appetite for active, transparent and collaborative relationships between employer and employee.
A paradigm shift is important and timely for SMEs, and incorporating HR digitalisation in their growth plans will work to their future advantage, particularly with the government’s efforts in building a digital economy post-pandemic.
With the availability of grants and government support in the digital space, Tan urges SMEs to capitalise on them to enhance their workforce agility.
A clear focus on employee engagement will help companies better retain their talents, reducing employee churn, and improve business sustainability.
“The global human resource management market is anticipated to reach US$30.01bil by 2025, and the extended HR tech segment of work, which includes workforce productivity, gig economy, enterprise benefits, workforce healthcare and robotics, would be worth about US$300bil.
“Investments in newer HR tools and systems have been rising steadily and 70% surveyed across Asia Pacific are looking to increase their spending on HR tech, ” he says, noting that the case for SMEs to join the bandwagon is rather compelling.
For the last three years, the adoption of HR tech has been in the double-digits and small organisations are the fastest-growing segment among all new HR tech adopters.
Tan estimates that SMEs and state-owned organisations will become the largest consumers of HR tech, which would be a boon for RAMSSOL’s business moving forward.
“We will continue working hand-in-glove with SMEs to drive economic recovery and long-term business sustainability.”