Talent management is an integral part of Human Resources. It focuses on retaining and developing employees to achieve positive outcomes. Building a motivated workforce gives businesses a competitive advantage over competitors.

With the shift in working arrangements, HR practices must evolve and adapt to attract and retain talent.  Another challenge SMEs face is how to train employees to keep up  with the constant shifts in technology and the workplace. Fortunately, new and improved HR tools can help simplify internal processes so employees can focus on their work.

A global survey by McKinsey in 2018 found that businesses that manage employees effectively are six times more likely to see higher returns.

Challenges faced by SMEs

Recruiting and retaining the right talent is one of the most common problems SMEs face. This is often due to financial constraints and a lack of proper HR strategy. These issues are further complicated by high competition as well as the perception that SMEs are unable to offer career growth when compared to bigger companies.  Another common issue is that employee development can also be difficult if SMEs fear depending too much on one person, leaving them vulnerable when it comes to replacing that employee.

In most cases, HR functions within SMEs tend to focus on the administrative rather than the strategic level. As there is no one-size-fits-all approach when it comes to how to manage people, here are some key factors to consider when trying to improve HR practices.

Talent Recruitment

The first step in acquiring talent is for SMEs to identify which roles are the most important and what skills will help them stay competitive. Understanding the HR challenges faced in the organisational life stages of the business could also provide important insights for SMEs to support the changing needs of the business.

Apart from qualifications and skills, look for applicants whose, attitudes and behaviours are aligned with the company’s vision and mission. Employees who are proactive and can be committed to high- performance standards could prove to be more valuable than highly skilled but unmotivated employees, especially during the early stages of the business.

Social media is a cost-effective way to advertise job vacancies and share information about the company to potential applicants. Small businesses can also use flexible staffing options like part-time workers or freelancers and create a talent pipeline as they grow.

Talent Assessment

Talent assessment should look at more than just employee performance. It should also consider the employees' attitudes, commitment, and alignment with company values.  Employees should also be evaluated based on their personal growth and development.

A broad assessment strategy attracts diverse talent and enhances the company's pool of potential hires. This can help businesses avoid limiting their choices and letting much-needed talent go to competitors instead. Stepping away from a pure performance-based evaluation can also show potential employees that an organisation is willing to invest in their individual developments and raise their assessment of the company image as a potential long-term employer.

A systemic assessment with clearly defined criteria could prove it to be unbiased and measurable. Regular feedback also helps improve assessments and employee development. Ultimately, an effective talent assessment ensures talented employees can be identified, nurtured, and placed in key roles that enhance the competitive advantage of the business.

Talent Development

Nurturing and developing talent plays a crucial role in achieving HR goals and sustaining business growth. The objective is to help employees develop the skills and knowledge required to achieve both their goals and the company’s. Job satisfaction and loyalty increase when employees are assisted to reach their full potential. During the early stages of the business, SMEs should focus on training versatile employees who can handle different job roles.

Providing challenging tasks along with mentoring and coaching can foster learning and teamwork.

SME owners should lead by managing and working alongside employees and understanding their needs and behaviours. This will help with motivation and communication to support employee growth and retain talent.

Talent Retention

Employee engagement is key to retaining talent, as those who find meaning in their work would naturally be more competent, committed and contributing. Highly engaged employees can boost team satisfaction and performance, as well as motivate other people to work harder.

SMEs could motivate employees by including them in decision-making processes and strategic business planning, which can lead to greater work enthusiasm. Business owners can also motivate employees by providing job security and non-financial incentives like recognition and flexible work arrangements. However, studies have shown that cash incentives are more important for high-growth companies than low-growth ones.

A company with a strong organisational culture in place keeps its employees engaged. Building a company culture that values fairness and teamwork encourages loyalty and innovation. SMEs and small business owners should also connect with their workforce through empathetic leaders and clearly communicating company objectives. Furthermore, SMEs could incorporate Corporate Social Responsibility initiatives into their HR policies, as this could boost the company’s reputation and positively affect employee pride.

By focusing on positive employee experiences, SMEs can build a strong, loyal team that stays for the long term. Whether formal or informal these HR practices should be implemented consistently. Consistent practices will provide employees with a goal to look forward to within their work, and certain business banking tools are equipped to take a load off your plate and make the implementation much easier. These talent practices will show employees that their contribution is a valued and appreciated asset to the business.

After all, managing human resources remains one of the world’s most valuable assets, even through the ups and downs of economic conditions.