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Training in small- and medium-sized enterprises

Gerald Vinten

The author

Gerald Vinten is Deputy Dean and Professor of Management, Southampton Business School, UK.

Keywords

SMEs, Training, Management education,

Human resource management, Business strategy, Performance management

Abstract

The small and medium enterprise (SME) sector is receiving increasing recognition and, as part of this, its human resources needs is a comparatively neglected area. This study of 300 companies consisted of a comprehensive investigation of all aspects of human resources. The focus here is on the training and development aspects. Evidence from the survey itself and the detailed case studies is presented. This shows that training is by no means neglected, although it tends to be hands on rather than theoretical. It is related to both countering competition and the corporate strategy of companies. Management education is a less certain area, and may depend on whether those in charge of companies have themselves been through management education. Suppliers are not invariably in touch with sector needs.

Electronic access

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Introduction

The Institute of Personnel and Development (IPD) launched a major initiative, ``Managing People: The Changing Frontiers, to investigate the key issues facing personnel management. The IPD has recognised the importance of small- and medium-sized enterprises (SMEs) in terms of their contribution to the economy and as a source of innovation in people management.

As part of the ``Changing Frontiers initiative, a study of people management in organisations employing between 20 and 200 people was commissioned from the Professional Development Foundation. Over 300 companies co-operated in the research. In this article we concentrate on those findings which relate to training and development.

The training organisation

The majority of companies (90 per cent) conducted a wide variety of training, both on and off the job, formal and informal depending on the issue to be addressed. A minority (15 per cent), usually working in very specialised areas, conducted on-the-job training primarily because there was a lack of external provision, while others use this type of training for unskilled staff to enable them to undertake a particular practical task. A small proportion of companies (10 per cent) had in-house training centres. In the smaller companies the main emphasis was towards ``hands-on rather than ``theoretical training.

The majority considered training to be central to their success and critical for the future. Training is variously used to ensure that the skills base in the company meets the skills needed to achieve their goals, to achieve company aims, to meet identified skills shortages, and to maintain quality. In a large number of companies (81 per cent) the respondents emphasised the importance of the strategic role of training. Some reported that training was crucial as their staff were their product, while others reported that it is essential to train continually and thus improve. Only a minority did not feel that training had much strategic significance

The principal trend emerging was that training was seen as part of the company strategy, a significant number suggesting that it was impossible to avoid incorporating training into the organisations strategic aims. Others reported that training needs were written into the annual operating plan, or objective-setting process. A proportion suggested that training supported their company aims because it was one way of supporting their staff.

There was a diverse set of responses to questions on the use of external/consultancy support. Some reported that they would benefit from external help in the area of management and senior management training; others felt that there were no areas in which they might benefit from external support. A proportion felt that the question of suitable sources of external support was not applicable to their business.

In summary, it is clear that there needs to be more research into the links between HRM, and particularly its training component, and business success in the SME sector. There is

increasing interest in the importance of training within the SME sector, in relation to critical areas such as skill shortages and recruitment problems as well as the development of staff and the adaptability of the firm as a whole. However, the studies and examples cited above do indicate that if the training can be made relevant to SMEs diverse needs and be delivered on site in a flexible form, the potential impact on the success of the organisation, particularly at key stages in growth, is likely to be high

Case studies of effective companies

Examples have been chosen of the training regime of effective companies to illustrate a number of the key themes from the research.

Independent companies with large parent companies

Case study plusmn; Encom

Encom is a cable and telephone company based in Docklands in East London. It operates as a separate business, but is owned by major shareholders in the same industries. It has grown very rapidly over two years from a staff of 45 to its current size of just under 500.

The company provides a good example of a proactive management style, in which the values of a ``company of the future are a fundamental part of how it seeks to operate. The company does not claim to be there yet, but is committed daily to finding ways to improve based on feedback from customers, its community and

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