Boosting productivity can help SMEs address many of the issues they face in today’s challenging business environment.
Faced with rising business costs and a tight labour market, Singapore companies must find innovative ways to improve their productivity and achieve sustainable growth. Yet, it isn’t always a breeze to get started or obtain funds to support such changes.
Recognising the challenges that many SMEs face, government agencies such as SPRING offers a range of schemes to support companies in their efforts to enhance operations and raise productivity.
Cashing in on productivity
One such scheme is the Productivity and Innovation Credit (PIC), which provides businesses with a 400 per cent tax deduction for productivity and innovation-related investments. One in two SMEs with an annual turnover of $10 million or less has used the scheme since it was introduced two years ago.
Incentives for smaller SMEs that may not be able to implement productivity improvements due to resource constraints have also been beefed up. The PIC scheme, for example, was enhanced in 2012 to allow companies to convert their qualifying expenditure into a non-taxable cash payout.
Grants such as SPRING Singapore’s Innovation and Capability Voucher (ICV) scheme have been well received by SMEs because they are easy to apply for and simple to use. The ICV provides SMEs with a $5,000 voucher to upgrade their capabilities in technology innovation, productivity, human resources and financial management. More than 1,000 vouchers have been given out since the scheme was launched in June last year, with 9 in 10 vouchers given to SMEs with annual revenues of $10 million or less.
Investing in training
Besides broad-based programmes to boost productivity, the government has also introduced industry-specific initiatives to support manpower-intensive sectors that may be feeling the labour crunch more.
New programmes to train consultants to implement productivity improvements in the retail and food services industries over the next three years will be rolled out by SPRING Singapore and the Workforce Development Agency (WDA).
Developed by the Japan Productivity Centre, the Productivity Consultancy Training Programme will equip consultants with skills such as consultancy ethics and productivity implementation.
Overcoming labour shortage
SPRING has also helped retail and F&B businesses to cope with the labour shortfall through its Part-Time Pool Programme. Under this scheme, retail and F&B businesses can hire from a common pool of trained part-timers formed by SPRING, the WDA and the National Trades Union Congress. This provides businesses with another option to cope with seasonal traffic increases without having to hire more fulltime staff.
Mindset change
To achieve sustainable productivity growth, SMEs must focus on long-term initiatives, which include upgrading the skill of their employees; redesigning and automating their operations; and innovating to offer a differentiated customer experience.
An example of a company that has invested in workforce development is Han’s, a café and confectionery chain. Besides recording a 20 per cent increase in sales per employee over the past five years, the group also shared its profits with its staff and increased their salaries by 28 per cent.
Meanwhile, technology innovation has enabled Jumbo Restaurant to improve productivity and create a unique customer experience. Besides its self-help queue management system, which cut waiting time by 85 per cent, the restaurant also has a wireless system which allows customers to place their orders, thus saving around eight man-hours per day in order taking.
Speaking at the Food Services Productivity Conference held in November 2012, SPRING’s Chief Executive, Mr Png Cheong Boon, noted, “In today’s economic environment, companies can no longer operate the way they used to. They must be willing to make that mindset change and SPRING will stand ready to help facilitate that transformation.”
Reproduced with permission from SPRINGnews January 2013 Issue. Published by SPRING Singapore.