#CulturePH - Study: Is the “Great Resignation” affecting SMEs, too?

Businesses now face another difficulty as the global economy recovers from the pandemic: the "Great Resignation," a term coined in 2021 to characterize the pattern of millions of employees quitting their employment around the globe.

Resignation, for example, was the main cause of unemployment in the Philippines in 2021. The Department of Labor and Employment (DOLE) reported in its Mission: Rebooting Economic Activities through Community Engagement (RACE) program study that 85,045 of the more than 2.39 million unemployed people left their jobs in the past year.

The labor turnover rate, which measures the disparity between hiring (accession) and the rate of job termination or resignation (separation), has suggested negative growth in employment in Metro Manila, the nation's capital, for the first half of 2021.

The Philippine Statistics Authority (PSA) recorded a labor turnover rate of -3.1% in the first quarter of last year in its Labor Turnover Survey. At -1.2% in the second quarter, it kept declining. For every 1,000 people working in enterprises, these figures correspond to reductions of 31 workers in the first quarter and 12 workers in the second.

How is this trend affecting SMEs?

The Great Resignation is presently having an effect on small and medium-sized firms (SMEs) in the Asia Pacific and Japan (APJ) region, according to a report published by SAP SE (NYSE: SAP).

1,363 SME owners and decision-makers in eight countries in the region, including Australia, India, Indonesia, Japan, Korea, New Zealand, Singapore, and Thailand, were polled for the report, "Transformational Talent: The Impact of the Great Resignation on Digital Transformation in APJ's SMEs."

The Great Resignation and other workforce unpredictability, according to nine out of ten (91%) SME respondents in APJ, have had a direct impact on their plans for digital transformation. These strategies are essential given that 69% of SME respondents believe that the next year will determine whether or not their company survives.

Meanwhile, four in ten (40%) respondents agreed that more employees are resigning now than just 12 months ago, while almost two-thirds (64%) of SME respondents said they are not finding it easy to cope with the impact of the Great Resignation.

The talent crunch is impacting organizations’ ability to transform their businesses digitally. According to the study, the lack of skilled talents also ranks as the top challenge to achieving successful transformation for SMEs across APJ. It topped traditional obstacles, such as cyber security, lack of budget, and lack of understanding of available digital solutions. 

“This study shows how the “Great Resignation” can be an existential challenge to organizations. At SAP, we believe that having the right people is important to ensuring digital transformation success. As part of retention efforts, SMEs must invest in talent as much as they invest in innovation to thrive amid these uncertain times,” said Rudy Abrahams, Vice President, Head of SAP SuccessFactors, South East Asia and interim Managing Director SAP Philippines.

How are SMEs mitigating the effects of the Great Resignation?

SMEs around APJ are investing in their staff to offset the consequences of the Great Resignation and improve their organizations' capacity to undertake digital transformation.

In order to assure talent retention over the following 12 months, survey respondents reported that they are strengthening financial incentives (43%) and implementing flexible working arrangements (43%) To retain important personnel, 40% of SME respondents stated they would offer opportunities for upskilling.

More than two-thirds (68%) of respondents noted that upskilling to support digital transformation is urgent, leading to 72% of SMEs who will focus on digital training throughout this year. SMEs in the region also place a strong emphasis on training.

SMEs in the area are optimistic despite these obstacles. After successfully navigating major obstacles over the previous two years, they are aiming beyond resilience. Nearly half (49%) of those surveyed claim that their company is very or completely resilient to the pandemic's effects. However, 4% of people think they are not resilient.

The optimism regarding their potential for growth is a product of their confidence in their abilities. 81% of those polled expressed confidence in their ability to progress over the following 12 months in varying degrees.

“The Small and Medium-sized Enterprise (SME) sector accounts for over 97% of all businesses and employs over 50% of the workforce in the region according to Asia Pacific Economic Cooperation. By harnessing their growth potentials and optimism and combining it with innovations that help foster talents and a strong partner ecosystem, we can help ensure their success in the years to come,” said Abrahams.  

The full report of the Transformational Talent study is available on this link.

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