SMEs’ Changing Organisational Landscape: Strategising the Workplace of the Future

By Ambika Zutshi, Asha Thomas, Tapan Sarker and John Mendy

The varied challenges brought by the COVID-19 pandemic have left many SMEs floundering. Here are solutions they can leverage to grow and innovate.

All of us are having to operate under a ‘new normal’ in a post-COVID-19 pandemic peak. On the one hand, as business organisations have been trying to move towards normal operational and financial capability post the 2007/08 global crash, the outbreak of the pandemic in 2019/20 has provided many new challenges and opportunities. Dealing with the challenges will enhance business organisational and operational efficiency and effectiveness and enable staff and Human Resource Management to innovatively think outside the box. As the lifeblood of regional and national economies worldwide, Small and Medium Enterprises (SMEs) are pivotal in spearheading innovative strategies of how Human Resource professionals and staff can mitigate against the challenges whilst maximising the opportunities from now onwards.

The following are some of the key global challenges that are being experienced by SMEs at varying degrees:

Supply chain issues: COVID-19 exposed the good, bad and ugly of supply chain networks and the traditional global interconnectivity that business organisations such as SMEs were previously reliant on. Whilst having few key suppliers was keenly encouraged in the past as a sign of strong relationships between organisations, the breakdown of one of the localised supply chain networks interlinking businesses wreaked havoc globally. This was the experience of SMEs which had limited resources to pay above-market prices to secure raw materials and products.^{1, 2, 3}

Inflation: The high inflation levels at the start of 2022 resulted in the skyrocketing of prices and lower real wage growth.⁴ Inflation triggered a domino effect as SMEs had to increase the prices that consumers/clients paid for goods and services. Additionally, banks increased interest rates and costs of living soared. Consequently, consumers tightened their belts and reduced non-essential spending. Hospitality and retail, which bore the brunt of the pandemic lockdowns, are being hit financially again as consumers reduce their spending.

Labour shortages: Everyone was ecstatic with the opening of borders from late 2021 into 2022 as that would imply freer movement of goods and, more importantly, people. However, this has not been the case across countries and sectors because of a combination of reasons including an increased emphasis on work-life balance and employee well-being during the pandemic.⁵ Other reasons involve change of careers and/or work location preferences, the slow pace of the reopening and full operational functioning of departments leading to delays in visa processing, and lack of flights because of inadequate staff training and development during the pandemic.⁶

Moratorium period of loans with banks and financial providers: During the peak of the COVID-19 pandemic, most businesses globally had been provided a lifeline of paused return of loan repayments. Such a lifeline ended during the latter part of 2021 and early 2022. Coupled with high inflation, supply chain, and labour disruptions, SMEs are struggling to survive.⁷

ESG requirements: The European Union was the first to introduce and mandate environmental, social, and governance (ESG) requirements for companies across all sectors.⁸ Despite its timeliness during the pre-pandemic period and its welcome across the world, the costs associated with their implementation in 2022 and beyond needs further conversation among parties, including business owners, governments, Human Resources and staff to avoid putting additional challenges on already resource-pressurised SMEs and reducing it to another tick-box exercise.

The above-mentioned challenges pose a picture of doom and gloom for SMEs; nonetheless, the new normal, post-pandemic also provides opportunities as follows:

Operate in hybrid mode: Everyone has become accustomed to making transactions and operating online. If a business, including SMEs, wishes to survive, operating and offering a hybrid mode will need to be a part of the new organisational DNA. Doing so will ensure that businesses do not lose existing customers who prefer online platforms and may attract new customers globally as they will not be restricted by geographic or time differences constraints.⁹

Adopt new Human Resource policies to retain staff: There has been widespread pain felt across businesses to attract and retain staff globally.¹⁰ SMEs should now be at the forefront of offering flexible working arrangements for their employees so that they can fit workplace/space and work times with their other commitments.¹¹ Employees have had a taste of flexibility during lockdowns and are expecting more.¹² Whist flexibility cannot be easily offered across all sectors, businesses could consider splitting a full-time role into possibly two part-time ones. This option may increase initial recruitment and selection costs; nonetheless, it provides greater flexibility and performativity to staff and efficiencies to businesses. Jointly, organisations and staff will be able to map out essential roles and tasks, completion and support mechanisms, and the outsourcing of non-direct value-adding tasks and roles.

Collaborate with other businesses: SMEs should increasingly strive to collaborate with other businesses to reduce their overhead costs and increase purchasing power which will provide them with economies of scale.^{13, 14} For example, if a café opens for breakfast and lunch, it could rent (or share rent) of its premises with a restaurant which is generally only open for dinner. This arrangement provides SMEs with a win-win and assists in sharing of fixed costs (e.g., premises rent, council rates).

Collaborate with educational institutions to address/resolve some of their issues: SMEs can hire students by setting up internships or work-integrated learning courses and develop contemporary, real business problem-solving programmes for new starters.¹⁵ This will benefit businesses in sourcing staff who will be able to do research and find alternatives to their current challenges, and students will gain new insights and experiences into resolving real business problems. In some cases, the same students may be retained as employees, which saves recruitment and selection, induction, training and development costs for the SMEs.¹⁶

About the Authors

Associate Professor Ambika Zutshi holds a Bachelor of Environmental Sciences, Master of Environmental Management and Doctor of Philosophy. Her current research is focused on corporate social responsibility, business ethics, higher education, supply chain management, and stakeholder relationships. She has nearly 100 publications in journals and book chapters. Ambika is currently an Australasian Associate Editor of The European Business Review, Emerald; an editorial board member of the International Journal of Consumer Studies; and the Editorial Advisory Board of Management of Environmental Quality.

Asha Thomas, PhD is an Assistant Professor at Wroclaw University of Science and Technology (WUST), Poland. She completed her PhD in Management and Quality Sciences with a specialisation in Knowledge Management (KM) and Innovation from Delhi Technological University (DTU). Her areas of research interest include knowledge management, open innovation, big data, grass-root innovation, and SMEs. She has about 12 years of experience in teaching and over three years of experience in the IT and Telecom industries. She has several research papers published in top journals, including the Tourism Management Perspectives, Journal of Knowledge Management, Knowledge Management Research & Practice, Journal of Intellectual Capital, European Journal of Innovation Management, Management Decision, Kybernetes and many more.

Tapan Sarker is a Professor in Finance. His research expertise lies in the domain of business strategy for sustainability, sustainable finance, and the political economy of sustainable development, among others. He has led several projects worth over $2.5 million funded by both Government and industry. His interdisciplinary research expertise is in the areas of sustainable and green finance, public financial management, financing for the SDGs, business responses to climate change, and circular economy. In addition to being published in top academic journals, his research has been cited by various government and international organisations including the Australian Senate, NSW parliamentary committee, the Asian Development Bank, G20, and the UN ESCAP.

John Mendy is a Senior Lecturer and Associate Editor at Lincoln International Business School, UK. He has authored lots of articles on SMEs in developed and emerging economy contexts. He is a Senior Fellow of the HEA, UK, a chartered member of CIPD, UK and co-track chair of Organisational Transformation, Change and Development, British Academy of Management.

References

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