Despite two recent reports highlighting the positive relationship between increased sales staff numbers and business growth in SMEs, South African companies are simply not hiring. Commenting on the factors contributing to the staffing and hiring difficulties facing the sector, Catherine Wijnberg, small business specialist and founder of the SME growth accelerator, Fetola, says: “At first glance, it is hard to understand why SMEs are so reluctant to hire sales people when the business case for doing so is sound and unemployment so rampant. Discussions with SME owners however, quickly reveal the many reasons for their unwillingness to appoint new staff. A primary concern seems to be that SA’s labour laws are inflexible and make it all but impossible for firms to dismiss underperformers without a lengthy and costly process. In addition, the recruitment process itself is time consuming and often expensive. Many business owners also consider the appointment of additional staff as too great a business risk – if a scope of work changes or a project has to be delayed, for example, things can quickly add up to crippling staff costs.”
Wijnberg’s comments follow her review of the 2014 SBP SME Growth Index, which finds employment growth among SMEs to have remained modest in 2013, with only a third of survey respondents hiring staff. Of the balance, some 48% maintained constant staff numbers and 18% reduced staff.
The second study, preliminary findings on the 2014 SME Survey by World Wide Worx (WWW), revealed a high correlation between employing sales representatives and a growth in actual sales. Despite this, the survey finds that only 4.5% of local SMEs choose to make use of sales reps. Instead, they are opting for sales tools proven to be much less effective, such as ‘networking’ (preferred by 28.9% of respondents); online advertising (by 26%); word of mouth (23.4%); and print ads (12.3%).
The findings suggest that SMEs are not hiring because SA’s labour context is complex and solutions will require time, which is why some enterprising SME owners are turning to fast and flexible alternatives, like internships for example. Wijnberg explains, “As an industry, we welcome the creation of an effective SME Ministry and the Small Business Development Minister’s suggestion that smaller companies be exempt from some labour laws as well as government’s support programmes designed to create an enabling environment.
“As every SME owner knows, however, none of these will catalyse growth – or help to address unemployment – in the short term.. One solution which we are seeing increasingly being utilized by SMEs is the hiring of qualified graduates on an internship basis, allowing them to expand and explore new opportunities without the risks associated with taking on new permanent staff.”
Wijnberg built her own business by drawing on the skills of interns. This inspired her to start Fetola’s Graduate Asset Program (GAP), which enables businesses to harness graduate talent cost-effectively via internships using a free purpose-built matching platform.
Wijnberg explains that among the benefits to hosting interns are flexible resourcing in line with business needs and the ability to identify staff for permanent appointment as the business grows. Fresh ideas and cultural diversity, with which to open doors to new markets, also make interns particularly attractive to business owners with entrepreneurial ventures and Africa interests. The fact that BEE points can be earned for skills, enterprise and socio-economic development, and benefits claimed via the youth employment tax incentive, further promotes the internship advantage, she adds. “In challenging economic times, SMEs need to use all the tools at their disposal to maintain a competitive advantage. I have seen first-hand how using capable graduate interns has helped grow my business, and led to me employing almost 50% of them on a permanent basis after their internship had ended. I feel this is a really viable solution, not just for businesses who need affordable skills at low risk, but also in terms of the huge unemployment challenges we face as a nation.”
Catherine Wijnberg started Fetola because she loves business and is passionate about helping others reach their full potential. Her vision is to make a difference across Southern Africa by growing the small business sector- for it is here that jobs are created, future success is cultivated and women, youth and rural communities can create self-empowered futures. Catherine has a long history as an entrepreneur, having owned and operated businesses in five different sectors. Self-styled “enterprise activist”Catherine is qualified with a Masters degree in Agriculture and an MBA, and tells it how it is.