Talent Considerations for Singaporean SMEs as They Expand Overseas
Though there are challenges for SMEs that are expanding into the region and expatriating talent, preparation is the key to success.
Why is it important for Singaporean small and medium-sized enterprises (SMEs) to expand in the region?
Despite being a mature economy, Singapore is relatively small, with limited prospects for SMEs to significantly grow revenue organically. In order for SMEs to grow beyond the constraints of Singapore’s small domestic economy, they therefore need to look at fast-growing overseas markets to expand and grow their revenues.
What challenges will companies face as they continue to expand into other markets? What challenges will be unique for SMEs?
Cost is a big concern. Expanding overseas requires a lot of investment – from setting up operations, to recruiting staff locally or sending a team from Singapore to provide oversight. Often enough, SMEs do not have sufficient capital to cover such costs, so this may require working with partners in the host location in the form of joint ventures, which has its own set of risks, as well as rewards.
Sending staff from Singapore can be an expensive undertaking; the additional salary and benefits provided can sometimes represent a significant increase to the employee’s pre-departure salary. Salary aside, other basic additions such as housing assistance, home leave travel and medical insurance, as well as additional tax liabilities can amount to an increase in the employee’s pre-assignment package.
They will also need the support of a committed management, coupled with a viable business plan, and a sound talent management plan to plug the talent gaps between Singapore and the host location.
What are the trends in Singapore’s mobility landscape? What are the challenges?
Companies in Singapore have access to an educated and skilled domestic workforce, but many rely too on global employee mobility in order to thrive. An important constituent of Singapore’s progress in recent years has been the arrival of global talent from outside of Singapore’s borders, and this is likely to continue into the foreseeable future. Furthermore, this talent will need to be in Singapore for a longer period than in the past.
Previously, most companies in Singapore only employed expatriate talent at a senior management level, and did so for relatively short periods of 3 years, on average, before replacing the repatriated with new talent.
However, foreign talent now fills all levels of seniority and the need for such talent has become more permanent. As such, the salaries and benefits packages that employers provide to their expatriate talent need to be more varied. The main challenge for employers is, therefore, managing employee equity and designing the correct compensation and benefits packages to reflect the foreign employee’s seniority and expected length of stay in Singapore.
Where are the emerging opportunities, both in Asia and in regions beyond Asia?
Opportunities depend largely on the industry. There are growth opportunities for many industries in fast-developing markets in the region such as China, India, Indonesia, Myanmar and Philippines, but competition in these markets is increasingly intense. Singaporean companies looking to expand to China, for instance, have to contend with other MNCs as well as locally-headquartered companies.
Outside of the region, we have seen large numbers of companies expand their operations in other developed markets such as North America and Europe. Expansion into frontier markets such as Africa and South America has stalled in recent years owing to higher risks associated with doing business there, in comparison to more established markets in Asia – in particular, those mentioned above, as well as in Europe and North America.
How can companies best prepare their employees for overseas assignments, especially in new markets or in new roles?
If a company has existing operations in the host location, with employees presently assigned in the host location, the best preparation is to establish some form of mentorship scheme; employees who are about to be assigned can learn from colleagues who are already present in the assignment location. Our 2016 Managing Mobility Survey shows that over half of employers practice this.
Other options include pre-assignment visits to the host location so the employee feels comfortable with the host location before they leave, pre-assignment briefings as well as language and cultural tuition where necessary.
A key drawback with short-term and commuter assignments is a lack of integration, as well as increased stress and fatigue for the employee versus long-term assignments.
There are expatriates who prefer short-term or commuter assignments over long-term expatriation. What are the benefits of long-term roles over shorter term / commuter ones?
A key drawback with short-term and commuter assignments is a lack of integration, as well as increased stress and fatigue for the employee versus long-term assignments. For example, if an employee commutes regularly between the home and host location, (e.g. Monday to Friday in the assignment location and then returns home at weekend), this can place strain on the employee’s relationship with their family in the home location. There might also be productivity-related issues as the employee is likely to be travelling between home and the host location on Monday morning and returning on Friday afternoon.
Similarly, during short-term assignments, employees generally do not fully relinquish their home location responsibilities. As a result, they end up working longer hours in order to balance responsibilities in both the home and host location. This can lead to high levels of stress and fatigue which can be amplified if the employee has to manage personal relationships in the home location at the same time.