A new study by SAP has found that nine in ten (91%) small and medium-sized enterprises (SMEs) in Asia Pacific and Japan (APJ) say workforce volatility, including the great resignation, has directly impacted their digital transformation plans.
This is critical, given 69% of SMEs say digital transformation is very important to their organisation’s survival over the next year, the tech firm said in a statement.
It added that these insights have been revealed in new SME research released which explores the impact of the great resignation on APJ SMEs.
Titled ‘Transformational Talent: The impact of the Great Resignation on Digital Transformation in APJ’s SMEs’, the company commissioned Dynata to survey 1,363 small and medium business owners and decision-makers across eight countries in the region, namely Australia, India, Indonesia, Japan, Korea, New Zealand, Singapore, Thailand.
As the world economy recovers from the pandemic, businesses now face another challenge – the ‘great resignation’. Coined in 2021, the phrase refers to a worldwide trend of millions of employees across the world leaving their jobs.
SAP’s research found the great resignation is real and impacting SMEs in APJ today.
It said four in ten (40%) respondents agreed that more employees are resigning now compared to just 12 months ago, while almost two-thirds (64%) of SMEs said they aren’t finding it easy to cope with the impact of the great resignation.
The talent crunch is impacting organisation’s ability to digitally transform their businesses.
In fact, lack of skilled talent ranks as the top challenge to achieve successful transformation for SMEs across Asia Pacific and Japan in traditional obstacles such as cyber security, lack of budgets, and lack of understanding about available digital solutions, SAP said.
According to Paul Marriott, president, SAP Asia Pacific and Japan, the study reveals how the great resignation can be seen as an existential threat to many organisations.
“Digital transformation is a fundamental way SMEs not only build resilience, but how they create agile, innovative paths to growth.
“But without the right people, any transformation will struggle. Investment in talent must match investment in innovation to ensure SMEs in APJ both survive – and thrive,” said Marriott.
SAP said SMEs across APJ are investing in their workforce to mitigate the effects of the great resignation and to bolster their organisations’ ability to deliver digital transformation.
Survey respondents said they were investing in improving financial incentives and introducing flexible working arrangements (43% each) to boost talent retention over the next 12 months.
Beyond those strategies, SMEs are also focusing on training with four in ten (40%) SMEs saying they would provide upskilling opportunities to retain key talent in the next 12 months, the survey indicated.
Findings from the survey also showed that the focus on training can’t come too soon with more than two-thirds (68%) of SMEs saying upskilling to support digital transformation is urgent, leading to 72% of SMEs who will focus on digital training throughout this year.
“The great resignation has often been misconstrued as employees leaving to pursue their purpose, but that’s not the whole story.
“Talent requires the right remuneration, flexibility, and a clearly communicated progression journey, therefore prioritising upskilling and career progression, and supporting it with access to the right technology and partners is proven to be a win-win for employees and for SMEs,” he said.
Having managed significant challenges over the past two years, SMEs across Asia Pacific and Japan are looking beyond a focus on resilience.
Almost half (49%) of APJ SMEs claimed their organisation is highly or fully resilient in weathering the pandemic’s impact with just 4% believing they are not resilient at all, the research highlighted.
That confidence in their ability has resulted in a feeling of optimism about their growth prospects, with 81% of SMEs saying they are moderately, very, or extremely confident in their growth over the next 12 month, the survey indicated.
That mindset can only be a positive thing for the region, said Marriott.
“Our small- and medium-sized businesses are a bellwether for the wider economy, making up 97% of businesses in Asia and employing 50% of the workforce.
“Therefore, I firmly believe that when SMEs thrive, economies grow, and Asia prospers,” he said.