Training Strategies for Small and Medium Sized Businesses: One Size Doesn’t Fit All

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Table of Contents

Abstract
Introduction
Literature Review
Implications of Literature
Conclusion
References

Abstract

This paper analyzes training strategies for small and medium size businesses (SMEs). The research focuses on the challenges that SMEs face in implementing different training approaches. It utilizes literature based on practical evidence and opinions from researches to understand the “state of art” in training and development within SMEs.

Analysis of literature reveals that size of business is a major factor in determining training strategies. Smaller firms rely on informal and on-the-job training arrangements while larger SMEs or organizations conduct structured training programs that are integrated with organizational strategy. The major findings indicate that training strategies vary across businesses regardless of size. Therefore, employers and managers should adopt training strategies that fit in their budget.

Introduction

The significant changes in global business and the advent of new methods of doing business have led to important changes in labour market. Companies are now focusing on improving the skills and knowledge of their employees in order to enhance efficiency. Training is important because it is among the major approach of enhancing the skills of workers. Other approaches include recruitment of skilled workforce and appraisals.

Companies should not only focus on training new staff but effort should also be on continuous professional development especially in instances of new changes. Training requirements mainly depend on size of a business. Smaller enterprises often perform their training activities through informal methods, with the main aim of gaining specific skills. On the contrary, larger firms view training as part of organizational strategy.

Such companies focus on a more structured training strategy with the aim of acquiring standard skills. Empirical studies explain the significance of training for companies. Nevertheless, few researchers focus on SMEs. The results regarding firm size and training are general, and mainly argue that small firms offer less training to their workers than medium sized and big firms.

In essence, different enterprises have different training approaches in spite of the size. Training programs that may appear efficient in large businesses may not work in small and medium sized organizations. It is important to implement different approaches depending on the business size.

Literature Review

The features of SMEs differ from those of larger businesses. Anoloui and Karami (2003) argue that large businesses have good opportunity of accessing international and local investment markets, while SMEs are sidelined because of higher costs of contracting smaller projects.

Likewise, the regulatory costs, a constrained level of international marketing, and difficulties in reaching out to policy makers work against the SME than the big business. Because high costs of doing business are one of the significant barriers to training and development, small businesses have various strategies of improving the skills of their employees.

The barrier of training costs hinders conducting and investment in development strategies. However, McLean (2006) states that it is not feasible to apply the same training strategies to all firms without considering size. He has further indicated that it is essential to have various training strategies for different businesses.

Similarly, Blanchard and Thacker (2010) support the notion of different training strategies because small and medium sized businesses prefer less formal training programs. Analoui & Karami (2003) affirm that SMEs avoid investing on training programs using their own resources in order to maximize profits.

From another perspective, lack of time and information contribute to preference to unstructured training or on-the-job training. Mullins (2005) argues that small firms find it difficult to manage the likely temporary reduction in workforce that often arises during training periods. This implies that such firms are unable to replace workers during training period, as it is the case for large firms. This leads to variations in training strategies within the small business enterprises.

A study by Shipton (2006) on small and medium sized businesses in United States elicited interesting facts about training and development. Apparently, employers prefer cost-effective training strategies. SMEs strive to provide development and training for their workers despite challenges indicated in the previous paragraphs. A good example is MultiAd. With its head office in Peoria, the company offers marketing solutions and has over 200 employees.

MultiAd has always relied on training as a method of improving productivity. However, similar to most small companies, the company prefers external sources for its workers training arrangements. The company often searches for training programs that can improve employees’ performance. Such programs incorporate subjects like performance management, teamwork, and business technology. In essence, MultiAd is registered with AAIM Employers’ Association to provide classroom-based training.

Similarly, MKTG Inc, a firm with over 200 employees and offers marketing services within New York City, Chicago, Los Angels, and San Francisco, has a human resource director who develops employee skills. Marlena Wilmot, the HR director indicates that she conducted a needs analysis and found that employees require continuous learning and development.

The company implemented a web-based application to facilitate training and sharing knowledge. Additionally, Ms. Wilmot offered face-to-face training on management skills. Although there were huge outlays of cash, the staff received interactive, customized training from the firm’s reliable resources (Shipton, 2006).

Furthermore, educated workers in small and medium sized business have higher chances of receiving training. Vinten (2005) found that Canadian employees who have university degrees are twice likely to enrol in training programs as their counterparts with diplomas.

Similarly, managers and professionals have high chances of getting essential training programs than sales staff and operational employees. The implication of this argument is that highly qualified workers often succeed in training, therefore reducing the risk associated with training (Blanchard & Thacker, 2010). From the review of literature, it is evident that training strategies vary according to organization sizes.

Implications of Literature

The research on training strategies in small and medium sized business depicts different views, but the basic idea is that one strategy does not apply to all organizations. Many people assume that training programs that are effective in larger firms can be useful to smaller businesses.

However, it is apparent that training in small businesses relies on the significance, accessibility, and the financial resources required. Besides, small enterprises conduct training sessions with the major aim of communicating skills and knowledge associated to work. The firms perform the exercise internally, and do not follow any structure. On the contrary, larger enterprises prefer external training sessions, in which employees can take a training leave (Analoui & Karami, 2003).

In most cases, SMEs rely on informal or on-the-job training programs. Business analysts claim that dependence on unstructured training programs hinders employee professional development and reduces the possibility of nurturing internal labour market. This implies that poor training within an organization increases external recruitment.

Thus, it can be assumed that there are several different factors regarding organizational structure within SMEs that influence training and development. The differences exist because of the size of business and reliance of internal training programs.

However, larger firms receive feasible performance improvements as they depend on external training procedures, which include strategies from successful organizations. In light of the intrinsic differences, it is appropriate to make the most of various training approaches for different business sizes (Mullins, 2005).

In addition, small and medium sized businesses face various challenges in developing employees’ skills. One of the major barriers is the culture of such firms that do not facilitate learning and development. Similarly, SMEs lack information regarding the importance of training and development of employees.

Moreover, high training costs and scarcity of effective training procedures are other barriers that SMEs face in the process of administering training programs (Blanchard & Thacker, 2010). Biased continuous professional development of new skills in small firms leads to confusion among employees concerning training strategies.

Most employers prefer to train highly qualified employees in order to reduce the risk associated with training. However, some large firms lack continuous training procedures. This implies that large businesses and small businesses have intrinsic differences, thus fostering the importance of implementing different training strategies.

Acquiring knowledge through distance learning is an efficient training approach for large firms because it is the best method of gaining excellent business knowledge. Managers believe that knowledge is the strongest source of power, and the organizations that are ranked at the top in business world, such as Apple, Google, and Southwest Airways are investing lots of money on knowledge because they know lack of it will cost them their fortunes (Shipton, 2006). However, SMEs prefer a more direct and personalized training that is conducted internally; on-the-job training is the other approach that works well for such firms.

A survey conducted in 6000 small firms in UK indicated that managers have different approaches of providing employees with essential work skills (. The study indicated that managers were keen on implementing training programs, but they suggested that such arrangements were not important aspects of the overall organizational strategy.

The results also showed that many managers experienced pressure from private trainers and state institutions to implement on learning and development. In essence, managers are the ones who make training decisions within SMEs. Despite the fact that some small businesses had implemented training and development, directors or managers devise the overall decision (McLean, 2006).

A research on medium sized enterprises indicated that HR managers played a central role in implementing training courses. Like the case of small firms, managers in this category did not consider training as an important feature of organizational strategy, but they were optimistic about the importance of such arrangements. The managers perceived training as an expense and a nonessential requirement.

This implies that medium-sized enterprises are not aware of the benefits of integrating training programs with organizational strategy. However, larger firms perceive training as an integral part of organizational plan and strategy and an important factor in enhancing growth (Etemad, 2004).

Lack of essential skill is a challenge that managers of small and medium sized enterprises face because it is evident that such businesses are unable to establish appropriate training approaches that can deal with the ever-changing business needs. In circumstances that the training programs are developed, managers tend to ignore them because of huge financial resources involved in training.

In light of business span of operation, the level of training is directly proportional to the size of the business. Previous studies also indicate that many small enterprises prefer a more structured training program than that of medium and large businesses. The research also found that small firms with less that 50 staff barely provided training sessions to employees.

In essence, small firms tend to facilitate informal training within the business premises as opposed to structured training (Vinten, 2000). The results showed that few small firms did not embrace the importance of training because training cost is a barrier. However, large enterprises implement training strategies related to human resources and organizational learning, of which training cost is not a challenge. Therefore, there is an indirect link between a business size and the level of training (Shipton, 2006).

The frequency of training is high in SMEs that make use of technology and innovation and quality enhancement strategies. Organizations that innovate, have top-notch technologies, believe in quality development, and have human resources plans are likely to enhance training than non-innovative firms (Blanchard & Thacker, 2010).

Another approach that enhances the amount of training in small enterprises is the market expansion tactic. Nevertheless, relying on cost reduction approach hinders small firms from obligating themselves in nurturing employees’ skills and abilities. Considering the fact that the training incident depends on the size of an organization, it is evident that employers and managers must apply training approaches depending on the size of their organizations.

The state of art in training and development stipulates that employers should not assume that approaches used in large enterprises could apply in the same way in small and medium sized businesses. The major reason is that large enterprises have enough financial resources to facilitate training and development while small enterprises face financial constraints in implementing training programs (Shipton, 2006).

From the notion that the level of training is associated to size of businesses, it can be argued that small businesses consider various strategies in deciding whether to train or not to train. On the other hand, large and medium sized enterprises sustain training arrangements despite the strategy devised in human resource department.

Another important observation is that job flexibility influences the rate of training in organizations. Flexibility and autonomy within a workforce facilitates training, as there is time and support from the management. Most employees in small enterprises have tight work schedules and therefore lack time to engage in training sessions as compared to their counterparts in larger organizations.

This observation explains why small businesses experience lower rate of training. Similarly, SMEs that provide incentive schemes are expected to implement training programs successfully. For large organizations, incentive schemes does not considerably influence training rate because there are well-structured procedures within organizational strategy.

Conclusion

The aim of this paper was to analyze the training strategies for small and medium sized enterprises. The results indicate that training approaches depend on size of firms, and there is no universal strategy for firms. Small businesses depend on informal and on-the-job training while big businesses conduct a more structured training method. In general, when small firms decide to invest in training, they perform it intensively like medium sized and large firms.

This implies that the main reason for less training in small firms is incidence as opposed to intensity. Intensity of training varies across organizations. The differences are attributed to challenges that small enterprises face. Cost is the main challenge for training because small firms focus on improving revenue and reducing cost.

Similarly, factors such as employee autonomy affect training programs in small firms because it is difficult to schedule time for training. Large firms use strategies based on human resource, cost control, and quality management; such strategies might not apply in small firms. Therefore, firms should implement training strategies that reflect their scope and size and the overall organizational objective.

References

Analoui, F. & Karami, A. (2003). Strategic management in small and medium enterprises. London: Thomson Learning.

Blanchard, P. N. & Thacker, J. W. (2010). Effective training: Systems, strategies, and practices (4th ed). Upper Saddle River, N.J: Prentice Hall.

Etemad, H. (2004). International entrepreneurship in small and medium sized enterprises. Orientation, environment and strategy. Cheltenham: Edward Elgar Publishing

McLean, G. N. (2006). Organizational development: Principles, process, performance. San Franscisco, CA: Berrett-Koehler Publishers, Inc.

Mullins, L. (2005). Management and organizational behavior (7th ed.). London: Pitman Publishing.

Shipton, H. (2006). Cohesion or confusion? Towards a typology for organizational learning research. International Journal of Management Reviews, 8(4), 233-552.

Vinten, G. (2000). Training in small- and medium-sized enterprises. Industrial and Commercial Training, 32(1), 9-14.

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