fbpx
updated 8:50 PM UTC, Oct 9, 2019
HOT NEWS
Employment and Labour on tabling of Amended Employment Equity Bill
National and Regional Economically Active Population - QLFS Q2 2019
What is the difference between purpose and meaning?
Why is the focus on the human element important now?
Amendment to EEA Regulations: New format for EEA4
Separation of disciplinary enquiries into two parts
Protection of Personal Information Policy
Influenza Vaccine Consent Form
The difference between a work practice and a term and condition of employment
Disconnected from global trends? The right of employees to digitally disconnect
A+ A A-

Encouraging Training & Development Activities in SME’s: Some Lessons from UK Research

Encouraging Training & Development Activities in SME’s: Some Lessons from UK Research*

By Steve Johnson who can be contacted at

1. Summary

This article reviews some recent research that has been undertaken in the United Kingdom (UK) into training and development activities in Small and Medium Sized Enterprises (SMEs), and outlines some lessons that could be valuable for organisations in South Africa that are trying to encourage and assist SMEs to engage more effectively in skill development activities.

Despite a range of statistical evidence to the contrary, UK research has revealed that many SMEs do in fact engage in many forms of skill development activities, albeit largely informal, in house and often not leading to formal qualifications. Indeed there are many examples of good practice to be found among SMEs, some of which are presented in this paper.

It is important that government and other organisations recognise the factors that inhibit training and development in SMEs and build upon the positive practice that does exist in many SMEs, as well as linking skill development initiatives more effectively with business development policies. This article sets out some of the key lessons for policy that have emerged from a recent review of research into skills issues in SMEs (Johnson, 2002).

The policy background that forms the context for this article is the so-called ‘lifelong learning agenda’. The desire to improve the level of skills, training and associated qualifications has long been a component of UK economic and labour market policies. Since the election of the Labour Government in 1997 there have been a number of key changes in labour market and skills policies, not least a shift in emphasis towards workplace learning, signalled most clearly by the establishment of Sector Skills Councils (SSCs) and the Sector Skills Development Agency (SSDA).

 

2.SME’s and the lifelong learning agenda in the uk

Given the well-documented increase in the importance of SMEs within the UK economy, it is clearly important to consider the activities of SMEs in relation to learning and skills development. If policy makers are to succeed in ensuring that the skill needs of the economy are met, they need to persuade and/or incentivise SMEs as well as larger employers to invest in their people, while also convincing individuals to invest in their own learning.

The National Skills Task Force Final Report (2000), and the subsequent response from the Secretary of State (Department for Education and Employment, 2000) both recognise the key role played by SMEs in the learning and training system. These documents suggest that there are a number of problems associated with engaging SMEs in the national skills agenda. Among the problems identified were:

# Low levels of off-the-job training by SMEs, in comparison with larger organisations

# Lack of internal capacity, and sometimes motivation, to provide learning opportunities for their staff

# A "disturbingly high proportion … of owner-managers who had low or no qualifications" (National Skills Task Force 2000: para. 4.23)

# Very low proportions of small businesses involved in Investors in People.

 

The report suggests that one of the three main priorities for the national skills agenda should be:

"Support for small employers, to widen the availability of learning for the adult workforce and to help small firms adopt up to date working practices with the skilled workforce they require in order to be successful" (National Skills Task Force 2000:10).

The argument of this article is that the chances of success of policies to promote lifelong learning, in the UK as well as in other countries, will be increased if a number of key points are recognised about learning within SMEs. These are:

There is a danger that statistical evidence about training in SMEs might be misinterpreted. Great care should be taken to ensure that the statistics do indeed reflect the underlying reality of SMEs.

The role and importance of informal learning in SMEs needs to be recognised and appreciated.

It is important to understand and appreciate the reasons why some SMEs do not undertake formal training. ‘Preaching’ to SME owner/managers about the business and wider benefits of training should be avoided. Training and learning initiatives need to be introduced in the context of business support and not ‘sold’ as stand alone packages.

3. statistical evidence on training and learning in UK SME’s

Reliable national statistical evidence that compares the training and learning activities of businesses of differing sizes is hard to come by. The latest available national survey that includes all sizes of businesses appears to confirm what many colleges, Higher Education institutions and other training providers report from practical experience – SMEs are significantly less likely than larger employers to provide or finance training for their employees. Table 1 presents some of the ‘headline’ information.

Table 1:

Selected indicators of training activity by size of employer, 1999

 

 

 

 

TOTAL

1-4

5-24

25-99

100-199

200-499

500+

% offering ‘learning opportunities’ at the workplace

45

37

59

72

84

91

96

% providing ‘off the job training’

34

25

47

72

82

89

91

% with training plan

32

22

52

69

80

89

89

% with training budget

25

16

38

62

79

88

94

% of those providing off-job training offering training leading to formal qualifications

43

34

48

57

67

85

90

% providing on-the-job training

58

49

77

85

88

94

94

% providing any type of training

68

58

87

95

97

99

99

 

Source: Adapted from IFF Research (2000), passim

 

On the face of it, the information presented in Table 1 paints a fairly bleak picture of learning and training activities in SMEs. The largest employers are around three times more likely to provide ‘learning opportunities’ at the workplace, or to provide off-the-job training, than are micro businesses with fewer than 5 employees. Smaller employers are far less likely than their larger counterparts to have a formal plan for training, or to have a budget specifically allocated to training activities. Those smaller employers that do provide some off-the-job training are less likely than average to offer training leading to formal qualifications.

However, a widening of the definition to include training that is conducted on the job suggests a less clear-cut conclusion. Combining the figures for off the job and on-the-job training, it appears that employers with more than 100 workers are 1.7 times more likely than micro businesses (with 1-4 employees) to be involved in training. Indeed, the difference between small businesses in the 5-24 category and larger employers is fairly small.

This brief examination of the latest evidence from a government-sponsored survey (IFF Research, 2000) reveals a number of important issues that should be borne in mind by those who are attempting to promote lifelong learning in SMEs:

The extent to which there is a ‘problem’ of limited training activity in SMEs depends upon the definitions and measures that are used. Generally speaking, the more formal and/or quantitative the measure, the more negative is the picture painted of training in SMEs. Conversely, where the definition is broadened to include more informal learning activities, learning that takes place on the job and that does not necessarily lead to formal qualifications, the gap between SMEs and larger employers reduces.

Using a broad definition of training activity, the gap between micro businesses and small businesses is as significant as, if not greater than, that between small businesses and medium/large organisations. This suggests that it is important for policy makers and education/training providers not to treat SMEs as a homogeneous group.

4. recognising the existence of good practice in SME’s

While it is clear that there is much to do to improve the quantity and quality of skill development activity in UK SMEs, it should be noted that large numbers of SMEs do undertake training activities. For example, according to the estimates of the 1999 survey (IFF Research, 2000):

Approximately 492,000 employers with 25 or fewer employees provided off-the-job training for at least one of their employees, of which 193,000 were providing training leading to a formal qualification.

Over 900,000 employers in the same category had provided some form of on-the-job training and almost 190,000 were offering recognised vocational qualifications.

It is true that these figures represent smaller than average proportions of the total population of small firms. However, they do serve to illustrate that there is a group of small employers that is large in absolute terms, that is undertaking training and learning activities of the type advocated by the National Skills Task Force and others. On a more qualitative basis, the National Training Awards illustrate that there are some small employers that are exemplary in their training and learning activities (see boxes).

The arguments presented above suggest that care needs to be taken in drawing general conclusions from evidence that is not totally unambiguous and relies on definitions of training that are more relevant to large organisations than to smaller employers. A much more sophisticated picture needs to be built of the variations in training/learning activities between different types of employer, if appropriate policy responses are to be devised.

5. What inhibits skill development activity in SME’s?

This question has been the subject of much debate and research in the UK over recent years, the most recent studies having been undertaken by Kitching and Blackburn (2002) and Hughes, Keddie, Webb and Corney (2002). Both reports are available through the Internet, and make very useful reading for all who are interested in promoting skill development in SMEs, whether in the UK or elsewhere.

An overview of the relevant research (see Johnson, 2002, 289-293) suggests a number of factors that are identified consistently. These include:

# Limited ‘drivers’ for training: There is considerable evidence to suggest that, on average, SMEs are less likely than larger organisations to experience business changes – such as new technology or high levels of recruitment – that give rise to training needs.

# Ignorance of available provision: All survey evidence suggests that SMEs are less well informed than larger employers about the types of initiatives that might be available to assist them with training activities. However, this is not a complete explanation; even where SMEs are aware of programmes, they have a relatively low propensity to take them up. This suggests that the programmes have limited relevance to SMEs and/or SMEs are wary of support offered by government-related agencies.

# Preference for informal training: This is of central significance and has been highlighted in the most recent research findings. Indeed, many have argued that informality is the most rational approach for most small businesses and indeed can be a major strength. This is not to argue that small businesses – particularly those that want to grow – should not be encouraged to adopt more formal approaches. It merely emphasises the need for support agencies to recognise the value of the informal approach and to build on this, rather then encouraging SMEs to reject them completely.

# Ignorance of the benefits of training: SMEs are often unconvinced that skill development will lead to business benefits. Despite the types of examples set out in this article, many SMEs believe the benefit to be marginal, if at all. Research into the impact of EU-supported training initiatives (Devins and Johnson 2002) has demonstrated some positive impacts of training, but these are relatively limited. One lesson is that, while it is important to emphasise the link between skill development and business success, this should not be over-played.

6. Conclusions and implications

This article has attempted to summarise a large and growing body of research evidence from the UK, and has highlighted a number of factors that are relevant to the situation in South Africa, with its large and diverse SME population and a policy desire to improve levels of skill development in SMEs.

This review has demonstrated that it is very dangerous to generalise about training and skill development activities in SMEs. The overall picture of low levels of training in SMEs masks a wide range of approaches, from the inadequate to the exemplary.

It is important to recognise the existence of good practice in some SMEs and to build on this. It is also vital to avoid a situation where SME owner/managers feel that public authorities are preaching at them and telling them how to run their businesses. Support agencies need to recognise the value of informal approaches to learning in the SME sector, and develop programmes and approaches that build on – rather than replace – such activities.

Finally, it should be recognised that improved skill development can lead to better business performance of some SMEs under some circumstances. In particular, skill development initiatives need to be linked to wider programmes to help SMEs to improve their performance. This means much closer working between skill development agencies and business development organisations. The UK is attempting to learn these lessons and it is to be hoped that South Africa can benefit from that experience

LIST OF WORKS CONSULTED

Devins, D and Johnson, S. 2002 Training and development activities in SMEs: some findings from an evaluation of the ESF Objective 4 programme in Britain International Small Business Journal, vol. 21(2).

Department for Education and Employment 2000 Opportunity for all: skills for the new economy. Nottingham: DfEE.

Hughes, M., Keddie, V., Webb, P. &Corney, M. 2002. Working towards skills: perspectives on workforce development in SMEs. London: Learning and Skills Development Agency. www.lsda.org.uk

IFF Research 2000 Learning and training at work 1999. Research Report RR202., Nottingham: Department for Education and Employment

Johnson, S. 2002 Lifelong Learning and SMEs: issues for research and policy. Journal of Small Business and Enterprise Development, 9 ( 2),p 285-295.

Johnson, S., Campbell, M. & Devins, D. 2000 Learning pays: the bottom line Sheffield, National Advisory Council on Education and Training Targets

Kitching, J. and Blackburn, R. 2002. The nature of training and motivation to train in small firms. Research Report RR330. Nottingham Department for Education and Skills. www.dfes.gov.uk

National Skills Task Force 2000 Skills for all: proposals for a National Skills Agenda. Nottingham :Department for Education and Enterprise.

---------------------------------------------------

GOOD PRACTICE IN SMEs: TWO EXAMPLES

---------------------------------------------------

The case studies set out in these boxes describe the activities of two small UK organisations that have won a National Training Award (NTA) in the past few years. The case studies are drawn from a study of NTA winners, conducted by the Policy Research Institute (Johnson et al, 2000), the main purpose of which was to investigate the relationship between business performance and good practice in training.

# Café Spice Namaste

Café Spice Namaste (CSN) is an Indian/Asian/Oriental restaurant situated in London, employing around 30 people. CSN recognised very early on in their development that customer service is a key element in the success of the business, in the light of the need to attract repeat business and business based upon recommendations. While the standard of the food and the ambience of the restaurant are attractive to the core clientele, CSN anticipated difficulties in the area of customer service, due to the limited language skills of the ‘front line’ staff. This was the main factor that prompted CSN to introduce the English language training programme that won the NTA.

The core of the training activities undertaken by CSN revolves around the provision of English language courses for new and existing staff. Rather than send staff on general courses, which were not seen as being relevant to the specific needs of the business, CSN decided to invite an English language tutor to run courses in a room located above the restaurant.

 

It is difficult to identify a direct relationship between the financial performance of the business and investment in training, but the following facts suggest a positive relationship:

Indicators of customer satisfaction and loyalty improved dramatically. This improvement is related not only to the improved use and understanding of the English language by staff, but also to high levels of staff loyalty and commitment. Turnover increased from £350,000 in 1991 to around £2 million in 2000.

Staff morale in the business is very high, a view confirmed in discussion with two members of staff. There is a high level of commitment to learning among the workforce, many of who started with little or no formal training and limited command of the English language. Members of staff also enjoy better financial rewards than previously. Finally, the owner/managers are confident about the future of the business due to the fact that they have a trained and loyal workforce.

# Lloyds TSB IFA

Lloyds TSB IFA is a small division of the Lloyds TSB Group, providing independent financial advice for private clients and those involved with offshore banking. The division employs around 180 people. The key event that prompted the organisation to examine and change its training and development practices was the merger of Lloyds and TSB in December 1996.

The newly-appointed head of training and development felt that it was essential to introduce a development programme that was aimed at facilitating the required culture change, and wanted to avoid an approach that sees training as an ‘organisational band aid’. He has a background in education and in organisational development, and saw the need to ‘realise the energy of the staff and achieve extraordinary things from ordinary people’.

The core of the training and development programme that won the NTA was entitled Developing High Performance Teams (DHPT). Two versions of this programme were run, the first for managers, and the second for the entire workforce. A ‘Coaching Manager’ programme was implemented in 1998 and 1999, targeted on those junior members of staff that had exhibited leadership potential during the DHPT programme.

There was a danger, in 1996, that the organisation would not survive the restructuring that took place subsequent to the merger of Lloyds and TSB. The fact that LTSB IFA has survived and prospered can be related largely, if not exclusively, to the success of the DHPT and related training and development programmes. Key indicators of the impact of training and development include:

Reduction in labour turnover from 22.3% per annum in 1996 to 5.9% in 1998. Significantly improved ‘conversion rate’ of identified client needs to completed sales. Increase in income from £13.2 million in 1995 to 24.2 million in 1998. Reduced costs associated with this income, resulting in an improvement in the ‘efficiency ratio’ from 83.5% to 36% over the same period. Significant improvements in results from the staff attitude survey. Improved efficiency of the organisation. Individual teams are more likely to hit their targets.

*Reprinted by permission of the author


Warning: count(): Parameter must be an array or an object that implements Countable in /home/gwdhmoih/public_html/templates/gk_news2/html/com_k2/templates/default/item.php on line 176
Gary Watkins

Gary Watkins

Managing Director

BA LLB

C: +27 (0)82 416 7712

T: +27 (0)10 035 4185 (Office)

F: +27 (0)86 689 7862

Website: www.workinfo.com
Login to post comments

HR Associations