SMALL and medium-sized enterprises (SMEs) reportedly contribute to more than half of Singapore's economic output and employ seven in 10 workers, so it is no wonder that this pillar of the economy has been receiving heightened attention from the government in recent times.

Given their value and dynamism, human capital and management consultants Aon Hewitt has added a "Special Recognition" category for SMEs to its Best Employers-Singapore awards this year; Goodrich Global Pte Ltd was named Best Employer among SMEs.

Aon Hewitt began studying best hiring practices in 2001 to gain insights into what companies do to create a real competitive advantage through their people, and what they do to make their companies workplaces of choice. From this, Aon Hewitt also identified the best employers in Singapore and in the region.

Adding the "Special Recognition" category for SMEs enabled a deep dive into the people issues faced by companies in this segment, and also helped identify the key areas in which a disconnect exists between an employee and an employer's perceptions and expectations.

People issues

People issues are, quite strikingly, the biggest and most complex challenge faced by Singapore SMEs in attracting and retaining talent. If you ask fresh graduates where they want to work, they would usually cite Google, Facebook and other tech or multinational brands.

Very few would say that they prefer to join an SME. This is primarily because SMEs have never invested in building strong and compelling employer's brands.

Best employers share four common characteristics - high employee engagement, a unique and compelling employer brand, effective and engaging leaders and a high-performance culture in the organisation. High scores in those four pillars are what differentiate best employers from the rest.

The findings this year were quite startling on these counts for the SME category. Employee-engagement levels are represented by how employees say great things about their employer, are willing to stay, and strive to support the company's success (see Diagram 1 for the Aon Hewitt model).

Employee engagement is a daily challenge for SMEs. Nearly half their employees are now looking to leave the organisation, compared to only a quarter at Best Employers companies.

Employer brand

As far as unique employer brand is concerned, almost 40 per cent of SME employees did not understand what their employer brand stood for. On effective leadership and performance culture, around half did not believe there was an effective and engaging leadership or a high-performance culture in their organisation; in Best Employers organisations, 80 per cent believed they were working with effective leaders.

In a few other areas too, the SME category fared quite poorly. These were related to rewards and recognition, and learning and development. More than half of SME employees were unhappy with their rewards and recognition packages, against 72 per cent of employees being satisfied at Best Employers.

Nearly half of SME employees were unsure of what their career roadmaps were; they did not feel that they had enough opportunities to learn and develop - an interesting statistic in light of the thrust on the Singapore government's SkillsFuture initiative.

Employers across the board, and SMEs in particular, need to come up with ways to engage with their employees to create clear communication channels regarding skills development and career opportunities.

Young people today ponder whether there is real value in working for a smaller company. Those who think there is value harbour the hope that there is greater opportunity in SMEs to take on roles that will send them up the corporate ladder faster.

Critical factors that young workers rate highly include being able to have fun at work, to have career and learning opportunities and empowerment - and these are areas SMEs enjoy an inherent advantage. Given their relatively smaller size and more hands-on approach, they are better placed to imbue their workplace with such attributes.

To become a workplace of choice, SMEs need to develop their unique value proposition so they stand out from other SMEs and from the bigger companies.

SMEs also need to cultivate trust in their employee by developing "Trust in Action", defined as employees' confidence in the organisation's ability and commitment to improving the employment experience.

Trust in Action

This is critical when more than half of SME employees do not believe that their employer will address people issues or implement HR-related initiatives and programmes. Trust in Action scores at Best Employers organisations were 79 per cent, outperforming the market average by 17 per cent.

Recent research showed that Trust in Action scores have a direct and significant correlation with the four Best Employers themes of highly-engaged employees, a strong and compelling employer brand, effective leadership and high-performance cultures.

Given the close relationship between Trust in Action and employee engagement, organisations at minimum should respond quickly after an engagement survey with an honest debrief on the results and a realistic plan of action, and then deliver on the plan.

The journey to becoming a Best Employer starts with an awareness and a business vision that requires putting in place the building blocks. This baseline entails an SME benchmarking itself against best practices in its sector and implementing an action plan tailored to its employees' needs and expectations while serving the business growth vision.

Then the employer needs to communicate its initiatives consistently and effectively, along with the expected outcomes.

The last stage would be to put in place the tools and processes to deliver on the promises and to live up to the employees' expectations.