According to the Human Capital Institute, talent management is best seen not as a set of topics, but as a perspective or a mindset. A talent-management perspective presumes talented individuals play a central role in the success of the firm. All corporate issues are seen from the perspective of ‘How will this affect our critical talent?’ and ‘What role does talent play in this issue?’
Small and medium enterprises (SMEs) face the same fundamental talent issues that large firms do. They need to attract, select, motivate, deploy, develop and retain talent. However, SMEs face some particular constraints that are more pronounced in the smaller firms.
A major premise underlying the success of any entrepreneurs lies in their recognition that purchasing is a critical process and makes as important a contribution as manufacturing, marketing, or engineering to the pursuit of a firm’s strategic objectives. Progressive firms have little doubt about purchasing’s impact on total quality, cost, delivery, technology, and responsiveness to the needs of external customers. The question to be addressed is what firms must do to achieve a competitive advantage from their procurement and sourcing processes.
Realizing these advantages requires shifting our view of purchasing from a tactical or clerically oriented activity to one focusing on strategic supply management. Strategic supply management involves developing the strategies, approaches, and methods for realizing a competitive advantage and improvement from the procurement and sourcing process, particularly through direct involvement and interaction with suppliers.
SMEs face unique challenges, which affect their growth and profitability and hence, diminish their ability to contribute effectively to sustainable development. Various challenges faced by SMEs including lack of innovative capacity, lack of managerial training and experience, inadequate education and skills, technological change among others results into various constraints in their operations.
It is a fact that using SMEs brings clear benefits. However, there are also a number of barriers that need conscious effort by those in the top tiers of the organization supply chain if they are to be overcome. Engaging SMEs usually means changing the way in which you deliver your procurement. SMEs are as a rule smaller, carry lower levels of insurance, may not have mature business policies and procedures, and may be put off by overly complex tendering processes. But by making small, manageable changes and carrying out some basic supply market analysis against your spend profile and categories, there is a high probability that you can actively include more SMEs.
From the perspective of a large organization, the main barriers to engaging with SMEs are usually a consequence of a lack of knowledge and information, including:
• Understanding what companies exist in the local area;
• Understanding when to contact these companies to allow them to participate effectively in procurement exercises;
• Understanding how to use the best tools to contact these companies (other agencies, face-to-face events, press and multi-media advertisements etc.).
At the other end of the spectrum, the two main barriers for SMEs are:
• Not having access to information about what is being bought and when (at first or second tier), meaning that an SME cannot participate or compete at the right times;
• Facing procurement processes and paperwork that are unnecessarily bureaucratic; an SME may not understand how to demonstrate compliance or how to market their services or competence in the first procurement stage, and therefore may never have the chance to progress to the full tender stages
Addressing these barriers requires strategic approach which may include the following:
• For services or works contracts, where possible change the specification to a more “output” based structure. This gives more scope to the bidder to describe an outcome rather than respond to a more prescriptive specification based on what has been done on previous contracts.
• If the contract is awarded to a new SME, ensure that they have a close relationship with you or are assigned a mentor to ensure delivery of both the specific contract obligations and any more general business development requirements set out in the contract.
• Due to lack of mature business processes and procedures, assign a mentor to the successful SME to help them to develop their processes and procedures.
• In the tender, allow SMEs to submit “action plans to create procedures” in place of the completed procedures themselves, if they have not been fully developed.
• Ask SMEs to explain their approach, or give them a policy statement against which they have to agree to deliver.
• If it is not really required for a specific work package, develop an appropriate bid bond threshold that may draw more responses from the SME market.
• In the tender, allow for alternative proof of credit history or financial stability such as references from a bank or copies of management accounts rather than audited accounts.
• As above, use a dual rather than a single source approach to spread the risk and minimise the chance of supply failure.
• Allow bidders to propose the use of associates as well as directly employed staff and assess the tender returns based on individuals’ experience and competence to deliver the job rather than that of the company.
• To avoid lack of knowledge about tendering process, Publish information about your tendering process on your website.
• Create a “How to supply” section and populate it with relevant information.
• Provide guidance on how to tender and your expectations in terms of levels of accreditations, experience etc.
• Host SME bid writing seminars to offer advice and support if asked. SME doesn’t know how to get their “foot in the door”
• As above, use your website to publish relevant information and contact details of local business support agencies if any.
• Communicate upcoming contract opportunities to business support agencies so that they can inform the wider SME community and/or local SMEs.
• Ask first tier contractors to sign a (voluntary) SME engagement code.
However, the direct actions of the top management team are not enough. A talent mindset must be driven through the organization. There are two most important ways to do so. One is to lead by example, which is necessary but not sufficient. The other is to hold managers accountable for good talent-management practices.
Meeting budget is no longer good enough: managers must demonstrate they are bringing top talent into the organization, retaining that talent, and developing that talent.
All in all, SMEs have fewer resources to throw at talent management yet face greater risks than large firms. These are not crippling problems, but it does mean SME’s have to be particularly thoughtful about talent management. SMES also have important advantages that can make them the envy of larger firms.
The review of the development strategies for our SMEs should be done with the aims to help them strengthen their business competitiveness. SMEs should be encouraged to invest in skills upgrading, new technologies and innovative processes, and to tap on the various schemes available to step up productivity improvements. The Government should enhance their support to SMEs in their move to intensify their business transformation to achieve quality growth. Further, the Government should enhance support for SMEs in the areas of productivity, innovation and capability upgrading. This will help SMEs boost their capabilities, restructure their business and remain competitive.
Vincent Ogonjo is a Procurement Practitioner at Strategic Supply Chain Consultants.
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