When discussing the great resignation, the focus primarily goes on its effects on prominent IT, telecommunications, healthcare, and retail corporations. But what about its impact on Small and Medium Enterprises (SMEs)?
These companies may not be large corporations, but they are a prominent source of jobs for people, particularly those in developing countries. About 90% of businesses and 50% of employment worldwide are SMEs. And contribute a significant amount to a nation’s total income.
Even though the country is slowly beginning its recovery from the pandemic, many employees continue to leave their jobs in search of better opportunities. So, how does this great resignation affect SMEs? Let’s find out.
Effects of the Great Resignation on SMEs.
According to a recent study by SAP SE, 64% of SMEs in Asia-Pacific and Japan are having difficulty coping with the effects of the great resignation. 40% of the respondents also stated that more of their employees have resigned at present than a year prior.
Why are so many employees resigning now? The primary reason for this is inadequate salary. Their old companies can’t provide their requested salaries, prompting them to seek better opportunities elsewhere.
Furthermore, 91% of SMEs found that workforce volatility, including the great resignation, has affected their shift to a digital setup. This poses a grave problem, as 69% of the respondents stated that shifting online is essential for their company’s survival. They can’t transition online because they lack the skilled workforce capable of doing so.
Compounding this problem of retaining their current workforce is the difficulty of replacing those that left. The study also states that 53% of the respondents noted they’re having difficulty finding suitable replacements for vacant positions today compared to a year ago.
What Are SMEs Doing to Mitigate This Issue?
To meet the challenge posed by the great resignation, SMEs have begun adapting new policies to retain existing employees and gain new ones. These are:
Investing More in Their Employees.
One of the ways companies can accomplish more with fewer employees is by providing them with the necessary training and upskilling. Looking back on SAP SE’s study, 68% of SMEs state upskilling their employees is essential for supporting their digital transformation.
Doing so lessens the need for companies to immediately hire new employees, when their existing ones can do the tasks they need. It also incentivizes them to stay in the company since they care for their employees’ growth.
Providing More Incentives to Employees.
Gaining new skills and honing old ones aren’t the only ways to retain employees. Better pay and a flexible work setup are great ways to motivate employees to stay in a company. Having a flexible arrangement, in particular, is something many employees want nowadays.
Aside from keeping older employees, providing better incentives attracts new ones to join the company. This is the reason why according to the SAP SE’s study, 43% of SMEs are willing to provide better incentives to their employees. Having more incentives also improves workplace morale and motivates employees to work harder.
New Challenges Bring New Opportunities.
The great resignation has severely disrupted many Small and Medium Enterprises, forcing them to adapt or go down. And yet, many SMEs in Asia-Pacific and Japan remain optimistic about their prospects today. It’s hard not to see why, after having survived 2 years of the pandemic, they’re now looking towards recovering.