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How SMEs can compete with big boys for talent (ST 28 Sep)

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Sep 28, 2009

How SMEs can compete with big boys for talent

Play up perks they can offer, adopt new hiring trends: Experts

By Fiona Chan

AS THE economy takes surer steps towards a recovery, businesses may be considering hiring in earnest again.

But while this may be good news for job seekers, it will bring to the fore one of the perennial headaches of small and medium-sized enterprises (SMEs): how to compete with multi-national corporations for talent.

During the recession, as people were laid off from banks and larger organisations, SMEs had an edge in recruitment, say human resources consultants.

But the irony was that smaller firms were themselves also suffering from the downturn and unable to pick up the displaced talent. Now that the economy has improved, both big and small firms will be in the market for the same people.

So how do SMEs get an edge over the big boys, who can offer better pay, lucrative stock options and comprehensive benefit packages?

One way is to emphasise the perks SMEs do offer that larger companies cannot, said Mr James Mendes, managing director of Asia-Pacific at recruitment specialist Alexander Mann Solutions.

‘What SMEs do have in their favour is they can offer a higher degree of flexibility for employees, often because of their ownership structure or how they manage their business,’ he said.

‘You find there are many talented people in the market who actually prefer working for SMEs because of the variety of work and the opportunity to climb the career ladder quite quickly.’

In large organisations, people are often ‘contained’ in one particular area, doing a specific function, said Mr Mendes.

Employees of an SME, however, get exposure very quickly to a broad range of functions and responsibilities, making it easier for them to understand how the company works as a whole.

‘One of the other things quite attractive about an SME is that its employees can witness the growth and development of the company because it’s small, and they’re able to see the effect they’re having on the company,’ Mr Mendes added.

Another recruitment solution that may be counter-intuitive: SMEs should take a leaf from the very firms they are trying to outdo.

A growing trend among larger firms is Recruitment Process Outsourcing, or RPO for short – the act of a company outsourcing its entire hiring department. This is a big step up from relying on external help only to source for employees, for instance, through ad hoc executive searches.

Many companies ‘just want the hire, they don’t care so much about the process’, said Mr Zachary Misko, global RPO director at Kelly Outsourcing and Consulting Group.

Companies using RPO can opt to have Kelly employees replace their entire hiring team, or to have a mix of Kelly employees and their own staff form the recruitment department.

His job is to find the ‘wasted areas’ in the recruitment process, from identifying job openings and posting recruitment ads to organising job interviews and making the final offer.

‘At every step of the process, we ask: ‘How long does that take? What’s the wait time? How many people are involved?’ Then we see where we can streamline and save costs,’ he said.

Kelly, which began providing RPO services in 1995, has reduced the recruitment cycle from 90 days to 60, and lowered the defects within the offer process from 120 a month to 20.

The company helps its clients save an average of 30 per cent in terms of the cost per hire, said Mr Misko.

In the first year, companies can save 20 per cent to 56 per cent in recruitment costs, even after including RPO fees, he added. ‘The savings come from not having to hire human resource personnel and pay agency fees for executive searches, and eliminating redundancy in recruitments.’

The main benefit of RPO is that companies can leverage on the RPO provider’s economies of scale.

Kelly, for instance, has a key ‘candidate relationship management’ tool: an extensive database of 850,000 potential candidates. It has put this together by spidering the Internet 24/7 and conducting searches of social networking sites, association websites, family homepages and even blogs to find candidates.

Companies can use this existing database instead of having to post several job ads, thus immediately saving money and time.

But RPO may not be for everyone, said Mr Misko.

‘We always do a process of discovery for each potential client, and if we realise that we can’t do recruitment cheaper than the company can, then we won’t take on the job.’

Even if smaller companies see no need to outsource their recruitment using RPO – given that they probably do not have dozens of job openings to fill at any one time – they can still borrow from the principles of the process, said Mr Mendes.

‘You wouldn’t necessarily deploy an RPO solution for one hire, but you would take the principles of best practice of RPO and use that for one particular role.

‘For instance, you would use referrals, run an ad campaign for that particular role and use direct calling rather than going to an executive search firm,’ he said.

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