Training Strategies for Small and Medium Business - Research Paper Example

Contents Introduction 2 Literature Review 3 Training Activities 3 Internal environment of SMEs 4 Research on SME training activities 4 Implications 5 Conclusion 6 References 8 Introduction Training and development activities are one of the basic and fundamental pillars of human resource management. It is very critical to evaluate an organization’s present training demands as well as previous activities pertaining to training. The evolution of training from simple enhancement of specific skills to strategic knowledge transfer is a significant step in the overall organization management (Stewart & Beaver, 2004). The SMEs play a significant role in the national economy and in the employees of society. SMEs account for more than 90 percent of all companies of Europe and more than 70 percent of all private-sector jobs. Micro enterprises represent the biggest share of SMEs, which represent 92 percent of all European companies and 30 percent of the private-sector jobs. It can be seen that majority of employment opportunities come from these small businesses. They are also the strong hold of the national economy. Thus, it becomes the responsibility of the organization to engage in activities, which will help in overall growth and development of the enterprises. The influence of internal and external forces is much more pronounced in SMEs compared to bigger companies (Davies & Chun, 2002). These include customer markets, business infrastructure and company characteristics. However, in case of small companies the influence of business managers is much more than bigger organizations. Similarly, the distribution of finances, external shareholder categories and investor management are different in small and bigger enterprises (Burns, 2001). Small enterprises work as a much closer environment. Thus, it can be said that the policies and marketing campaigns followed by bigger organization might not work for SMEs brand building The purpose of research study is to evaluate the training strategies for SMEs. The first objective of the study is to identify the existing gap between corporate structure of SMEs and the involvement of training activities in it. SMEs have a critical role in any economy. Factors such as technology innovation, job standards and development aspirations of employees have created a gap between expectations from employees and customer and available resources to fulfill them (Conference board of Canada, 2009). The next objective of the study is to evaluate the relationship between SMEs and training activities. SMEs are basically small budgeted enterprises running on meager profits. Most of the SMEs do not have the luxury of hiring expensive training consultants. Thus, majority of the training programs, if any are provided by the in-house mangers. Unlike bigger organizations where employees undergo training programs which can stretch for almost a year, most of the SMEs rely on on-the-job training methods. Such huge differences in the training activities in SMEs make it an interesting subject to explore. The study of training activities in SME sector is very little. This can be contributed to the fact that no proper survey or data collection has been done taking SMEs as target segment. Also, the SME business is scattered among sectors and industries making it further difficult to gain exact information about their training activities (Carter & Jones-Evans, 2000). The ultimate objective of this study is to identify few strategies of training, which can be applied to most of the SME companies. This will require ample of primary and secondary research which in turn might open up new avenues on this topic of interest. Literature Review Training Activities Training and Development activities in an organization are a sequence of opportunities and development that are modified to alter the behavior of employees, with the objective of achieving organizational goals. Training of staff and employees is an activity, which can impact the overall efficiency, profitability and effectiveness of an organization. Training programmers in organizations play crucial roles in positively influencing the overall performance of the organizations. In addition, training is also imperative in developing and implementing strategies that an organization wants to pursue. There has been a widespread resurgence in this sector. In the last few decades, this small sector has seen many structural changes in the economic environment, most of which have been in favor of these SMEs. Advancements in technology have decreased the obstacles and lowered the business operation barriers. With the advent of downsizing, smaller organizations are now able to grab niche market opportunities (Wilkinson, 2000). There has also been a steady shift in low capital requirements favoring further expansion of SME business. Also, economic recession and high levels of unemployment have forced many individuals to shift towards self-employment activities. Through most of these SMEs are aware of the training needs, various surveys have revealed that there is a wide gap between overall awareness of management of the training needs and work-force development and actually committing to training. Internal environment of SMEs The problems faced by SMEs are varied. Most of the end products from SMEs are limited to low technology equipment and goods, agricultural food products or low end deliverables. Usually, there is little or no innovations and negligible R&D activity. Even if some companies are connected to global innovation, the effect is minimal and most of the times domestic services are not affected. Any strategy of competitiveness is achieved by cost cutting strategies in other departments. Complacency in business has resulted in decrease in any scope of innovation and advancement in SMEs in the current business environment (Matlay, 2002). Lower budget is other factor, which restricts any developmental activities in SMEs. For overall success of an organization, it is important to have skilled employees and workers. Low technology involvement, customer lag, low budgets do not allow the business to undergo sufficient and effective training programs (Boter & Lundström, 2005). Research on SME training activities The academic interest on SME training and development activities is as neglected as the training itself. There is limited information on statistical information of SME training. Most of the research studies are fragmented and small scaled. As a result of this, the critical evaluation of training strategies in SMEs is highly underrated (Cotterill, 2004). It is very clear that training and development activities play an important role in overall growth and effectiveness of an organization. However, there is a lack of research in SME sectors and training strategies. As a result, most of the research findings in this topic fail to demonstrate any connection between provision of training strategies and performance of the organization. The above literature review has opened up many insights about training strategies in SMEs. The minute segregation of SMEs in various sectors and categories makes it difficult to define any one particular training strategy that will fit all. Majority of employees from these SMEs occupy diverse backgrounds. Some SMEs are exclusively dominated by employees of a particular community. In other cases, there is a complex mix of experience and educational background of employees working in these organizations. Thus, it can be concluded that defining one particular strategy will be difficult. However, the study can evaluate some training strategies, which have a track record of brining positive change in SMEs. The various implications of literature review are explained in the next section. Implications Literature review focused on the view that as a result of the increasing competition, changing business environment, SMEs need training activities more than ever. However, there are few misconceptions about SME training. They have majorly arrived as a result of strict internal environment of SMEs. As discussed earlier, SMEs work in a very tight business environment. As most of the managers are engrossed in profit making and making ends meet, training and related development activities are easily neglected. These misconceptions have made managers look away when it comes to proving training facilities to small organizations. The first misconception among business managers is that SMEs lack resources required for training and learning purposes. It is true that SMEs do not have high budgets to spend on training activities alone. But it is also true that the available resources are equipped to provide them with necessary training, except in few cases such as technological up-gradation. By addressing the exact business issues, most of the training facilities can be provided. The second myth surrounding SMEs is that they do not have time for learning and training at all (Vinten, 2000). This is one of the reasons whey majorities of SMEs shy away from training activities. Low profit margin and extreme pressure might be the reason for the total ignorance of training activities. SME training is all about ensuring that each employee of the firm is trained exactly when the training is required. SMEs work in a fragmented manner handling various functions at a time. Thus, providing training to the employees in need can not only increase their overall skills and efficiency, but also boost confidence and faith in the enterprise. Another major resistance comes while hiring an external consultant. It has been seen that many times, employees are not sure of their gain when an external consultant is hired for training programs. Hiring an external consultant might be expensive but proper research and tactic can help in delivering what the SME wants. This can be done by evaluating the specific needs of the organization as well as its employees before hiring consultants. Conclusion The benefits of training to SMEs are innumerable. Training helps the employees to balance their personal life as well as work life in an efficient manner, which helps in reducing stress. These programs help in improving psychological and physical health of employees, thus bringing down the rate of absenteeism. Training programs help in boosting employee morale, thereby increasing job satisfaction and employee productivity and employee commitment towards goals for the organizations. Apart from this, it also helps in improving the communication between all management levels thus minimizing employee conflict at different levels. Overall training programs helps in the enhancement of management efficiency. The internal environment of SMEs has been the subject matter of various discussions. With the increasing competition, aspirations among employees to be at par with their counterparts from bigger organizations, easy availability of technological advancements and thrive to achieve more and pressure among SME employees have also increased. As a result, the need for training and development strategies has increased. Critics argue that majority of business managers from these enterprises are not as committed to providing training as they are expected. Various reasons have been found out which results in these behaviors by managers. Few of the reasons highlighted were lack of budget, lack of time, lack of motivation among managers etc. However, critical evaluation from various real life cases has demonstrated that most of these organizations do not need expensive training programs or consultants. With the proper utilization of available resources and providing training exactly where required can be few of the key success strategies to successful business. Critical research on training strategies of SMEs has been limited. According to most of the research critics, this area of training has been neglected for a long time. However, with the increase in SMEs in most of the nations and their increasing influence on the overall economy, the subject has been gaining attention. Developing economies such as China and India are observing a vast increase in self-employment activities as well as establishment of SMEs. Future research studies on training strategies can be developed across various developing regions. However, this study has opened up scope for further research topics. One of the topics is evaluation of training activities on the basis of business function, geographical influence as well as extent of international influence. The study was majorly focused on evaluation of training activities across SMEs. From the literature review as well as subsequent analysis, it has been found that most of these SMEs are clustered into smaller segmentation. Thus, it is very difficult to identify single strategy that will fit all SMEs. However, through a detailed analysis of organization and its present condition, it is possible to identify the immediate training activities. A successful pursuit of these training activities will help the SMEs increasing its size, expanding its customer and client base and better administration of business activities. References Boter, H., & Lundström, A. (2005). SME perspectives on business support services: The role of company size, industry and location. Journal of Small Business and Enterprise Development, 12, 244-258. Burns, P. (2001). Entrepreneurship and Small Business. Basingstoke: Palgrave Publishers Ltd. Carter, S., & Jones-Evans, D. (2000). Enterprise and small business: Principles, practice and policy. Harlow: Pearson Education Ltd. Conference board of Canada. (2009). Workplace learning: Small and medium sized enterprise. Retrieved from http://www.ccl-cca.ca/pdfs/OtherReports/CBofC-WorkplaceLearning-SME-OverviewReport.pdf Cotterill, R. (2004). Best practice guidance on training for small and medium sized enterprises. Retrieved from http://www.epsc.org/data/files/PRISM/Training%20Guidance%20Rev%201.pdf Davies, G., & Chun, R. (2002). Gaps between the internal and external perceptions of the corporate brand. Corporate Reputation Review, 5(2/3), 144-158. Matlay, H. (2002). Training and HRM strategies in small, family-owned businesses: An empirical overview. London: Routledge. Stewart, J., & Beaver, G. (2004). HRD in small organizations: Research and practice. London: Routledge. Vinten, G. (2000). Training in small- and medium-sized enterprises. Industrial and Commercial Training, 32(1), pp. 9 - 14. Wilkinson, F. (2000). Human resource management and business objectives and strategies in small and medium sized businesses. Cambridge: ESRC Centre for business research. Read More