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How can Malaysian SMEs overcome their HR challenges?

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Small and medium-sized enterprises (SMEs) are independently-owned organisations that are usually labour intensive and operate on very tight budgets. Such constraints require them to ensure constant evolution and progress to keep up with ever-changing industry demands, as well as stay relevant and competitive.

Unfortunately, the ongoing pandemic has thrown a spanner in the operations of many Malaysian SMEs, with two out of three expressing little hope for profit recovery in 2021 due to prolonged movement control curbs.

The importance of Human Resource Management

Nevertheless, as crucial as business recovery and profitability are to SMEs, it is not the only factor in ensuring smooth operations and sustainability. When businesses place too much emphasis on expansion and de-prioritise human resource management (HRM), they risk negatively impacting their growth. Poor HRM practices result in businesses struggling to hire, manage and retain staff resulting in an increase in long-term costs.

The ability to hire and retain employees, manage conflict effectively, and adhere to government policies and legislation pertaining to HRM are important skill sets SMEs need to ensure smooth operations and continued growth.

Hiring the right employees

Hiring new employees is a major time commitment for many businesses, with the entire process taking an average of 24 days, according to a 2017 study by Glassdoor. This duration is even longer when hiring for more specialised positions.

Some SMEs are guilty of putting up job descriptions which are too generic, poorly written or unclear. These tend to attract non-qualified candidates, which result in staff requiring additional time to sift out the more relevant resumes.

Conducting interviews effectively

Moreover, interviews which are conducted poorly or in a hurried manner to quickly meet a manpower gap can result in bad hires that put a strain on company resources. These problems result in a recruitment process that stretches longer than required, and takes resources away from more pertinent tasks such as employee training and welfare.

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Managing office conflict

Poor conflict management skills are an issue as well, and a major cause of workplace stress. If left unresolved, it leads to long term health issues, and increased cases of absenteeism.

Frequent and unresolved conflict also results in the business earning a reputation for a toxic workplace culture. It causes SMEs to face challenges in retaining quality employees, resulting in a high turnover rate.

Tax filing and legislation

Managing payroll and tax filing is another tedious and time-consuming process for SMEs as there is a high propensity for error.

While processing payroll accurately and in a timely manner provides employees with the peace of mind and confidence to carry out their work tasks efficiently; ensuring that taxes are filed properly guarantees that SMEs do not run the likelihood of submitting late returns or being accused of tax evasion. Adopting payroll software that is compliant with local legislation can help businesses and HR professionals to minimise the likelihood of errors and give them a peace of mind.

However, proper bookkeeping is critical to ensure that SMEs do not run into accountability issues during audit checks. It is also important that staff keep themselves updated on human resource legislation and labour laws to reduce any penalties for non-compliance, an avoidable financial burden.

Malaysian SMEs struggling with these HRM issues can benefit from sending their staff for relevant training and knowledge sharing courses that tap into subsidies from the Human Resource Development Fund (HRDF).

Utilising the Human Resource Development Fund

The HRDF collects mandatory levies from Malaysian employers in the manufacturing and service sectors that can then be utilised for comprehensive training programmes, with the intention of developing a savvy and competent workforce. It is compulsory for Malaysian-registered businesses that have 10 or more Malaysian employees to register with HRDF.

Employers that are registered with HRDF and make their levy payments are eligible to apply for training grants. These grants can be used to defray all or a major percentage of training attended by their employees, so long as training is carried out in the area directly beneficial to employees.

The levy payable by employers ranges from 0.5% to 1% of the monthly wages of the employee. Employers who fail to pay their levies on time risk a fine of up to RM 20,000 or two-years imprisonment.

How Sage Payroll can help

We understand that SMEs may be unsure about the applicable levy payment to HRDF. This is where Sage Payroll comes in as a solution to assist with calculating the required levy contributions. Access Payroll is a secured, reliable and highly trusted payroll system that helps employees ensure that they are fully compliant with government legislations.

With the HRDF allowing staff to expand their professional knowledge and Sage Payroll taking care of levy calculations, SME owners can be put at ease knowing their work processes are well taken care of.

Ensure HRDF compliance with Sage Payroll

Process payroll knowing that your payments are correct, secure and compliant with local legislation.

Discover More

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