SMEs should offer stake in firms to lure strong hires

Mr Devadas Krishnadas lamented the fact that young people in Singapore are not hungry to create value but prefer the easier path of "accessing" value ("Why a safe job is risky business for Singapore"; July 24) - and it is not difficult to understand why.

Creating value, such as in building up a company from scratch, is tough, high-risk, low-paying (at least at first), fraught with huge challenges, and has a high chance of failure.

Accessing value, as in working for the Government or a large corporation, is safe and comfortable, with good compensation and ample opportunities for advancement along a well-trodden career path.

He is right that Singapore's over-reliance on multinationals poses a systemic economic risk.

Although the foreign direct investment strategy had served Singapore well when it was a Third World nation hungry for any kind of jobs, the benefits of such a strategy are now less certain in the complex and globalised economy in which Singapore competes.

While calling for a mindset change among the young, Mr Krishnadas must have realised that his prospective hire was merely behaving pragmatically.

Why would she trade a comfortable, well-paid job in a big corporation for a hard slog in a low-paying small and medium-sized enterprise just to be able to create value for the SME?

But if she has an entrepreneurial mindset, she might just do that, provided that she has a stake in the company.

Company equity is a powerful motivator. It is the currency for start-ups in Silicon Valley and other entrepreneurial hot spots.

Singapore aspires to be an entrepreneurial hub and, thus far, developments have been positive ("Growing band of tech start-up millionaires"; Feb 22).

We now see many bright young graduates from our universities forgoing lucrative careers with the McKinseys and IBMs of the world for a chance to build a start-up.

This is a good development for the nation, as a robust economy should have both large corporations for stability and resilience as well as numerous fast-growing start-ups, for agility, dynamism and renewal.

SMEs seeking top talent can learn from the start-up world by giving equity to key employees.

If Mr Krishnadas had done that, the outcome of his interview may well have turned out differently.

Francis Yeoh (Dr)

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A version of this article appeared in the print edition of The Straits Times on August 03, 2015, with the headline SMEs should offer stake in firms to lure strong hires. Subscribe