Second article in a three-part series on where and how small firms are finding staff
This article, the second in a series on human resources management in small firms, addresses the topic of employee training and is based on an original survey of more than 350 small businesses (less than 100 employees) in the Halifax area. The survey excluded workplaces that were in the not-for-profit sector or were branch facilities of larger organizations.
The businesses participating in the study were quite small, with 63 per cent having 10 or fewer employees, 30 per cent having 11 to 50 employees, and seven per cent having between 50 and 100 staff. About 11 per cent of the firms were unionized; 20 per cent were in manufacturing, 41 per cent in the retail or wholesale trade sector and 39 per cent in other business services. To read the other articles in the series, click on the "Related articles" link below.
At most small businesses, the responsibility for training falls on the owner or CEO, new research shows.
In almost three-quarters of the businesses in the study, primary responsibility for training falls to the business owner, chief executive officer or the company president. The owner of the business assumes primary responsibility for training in about 34 per cent of firms. And in an additional 38 per cent of small firms, the chief executive officer or company president is responsible for training-related activities. In about 28 per cent of firms, responsibility for training is in the hands of a manager or another individual.
This finding should be examined in more detail to determine whether the people making training decisions have the background to assess training needs, select the appropriate programs, and evaluate whether the firm is receiving good value for its investment in training. If poor training decisions are being made, employers will naturally be reluctant to invest resources in employee training.
Formal training
How many small Canadian firms offer formal training for employees? What factors are most important when small businesses decide to select a training program? What types of training programs are most common in small firms?
Survey participants were asked about formal training, with slightly fewer than 29 per cent of firms indicating that a formal training program existed. Additional analysis was conducted to see if any factors distinguished firms with or without a formal training program. It was found that:
•The presence of formal training was related to the size of the business. Only about 23 per cent of businesses with 10 or fewer employees had a formal training program while 63 per cent of firms in the 51 to 100 employee category had such a program. This finding was not unexpected and shows that as firms become larger, they may be more likely to formalize employee training. Moreover, the presence of an employee with responsibility for human resource issues (such as training) was strongly associated with the size of the business.
•Respondents were asked questions addressing HR strategy, such as the extent to which the HR function is involved in strategic decision-making within the organization and the extent to which the firm aligns business and HR management strategies. Having a formal training program was strongly related to a more developed human resource strategy.
•Firms with formal training were also more likely to have other human resource management practices such as an employee grievance procedure, an orientation program for new employees, information sharing, an employee recognition program and problem-solving work groups. This finding is important because there is a strong body of research indicating that “bundles” or systems of human resource management practices are related to enhanced firm performance.
Small firms may discover that introducing a single human resource practice has minimal impact on increasing performance. When a set of programs are bundled together, there may be a “synergy” effect if the individual programs complement each other. For instance, it is not enough to simply introduce work teams without providing related programs such as employee training and information sharing.
Training decisions
What criteria do small firms use to decide training needs? Respondents were asked to indicate how frequently a particular factor was used (using a six-point scale with 1 indicating that the factor was never used and 6 indicating frequent use). The results indicated that the factor most important in determining training needs was the supervisor’s judgment (average score of 4.7), followed by the use of performance appraisal data and an analysis of the particular position (with both of these factors having average scores of about 3.5). There was little reliance on using test results to decide training needs. However, the findings indicated that larger businesses were more likely to conduct training needs assessments compared with very small firms.
Assuming a small business is considering a particular training program, what factors are important in the selection of such a program? The most important factor, not surprisingly, was the subject matter of the training. However, small businesses also rated program cost, duration and location of the training program as fairly important factors. There was little relationship between the size of the business and the use of specific factors in training program selection.
Types of training
The study also probed which types of training programs small firms are using. Participants were asked to consider a number of training alternatives and indicate how frequently each was used using a six-point scale (1 represents never used; 6 represents frequent use). A summary of the results, provided in the graph below, reveals the extremely high importance of on-the-job training (average score of 5.4).
Only three per cent of participants reported never using on-the-job training.
A number of firms also focus on customer service training, workplace safety training and coaching (with all of these types of training having average scores above 3.5). Larger firms reported greater use of seminars (both on- and off-site) and workplace safety training relative to smaller businesses.
There are numerous studies indicating that employee training is very important if a business wants to be a high performance workplace. However, it is critical that small firms carefully assess training needs prior to embarking on a training program. While there are human resources management consulting services available to small firms, the “payoff” from investing in human resources is often indirect. Moreover, small businesses may be reluctant to invest heavily in employee training if it is having trouble retaining top employees.
The first article in this series, which looks at small firms and recruitment is available at www.hrreporter.com. Select “Search” and enter article #2651.
Terry H. Wagar is a professor of industrial relations at Saint Mary’s University in Halifax and Lynn Langrock is an EMBA graduate of Saint Mary’s. Terry can be reached by e-mail at [email protected].
The businesses participating in the study were quite small, with 63 per cent having 10 or fewer employees, 30 per cent having 11 to 50 employees, and seven per cent having between 50 and 100 staff. About 11 per cent of the firms were unionized; 20 per cent were in manufacturing, 41 per cent in the retail or wholesale trade sector and 39 per cent in other business services. To read the other articles in the series, click on the "Related articles" link below.
At most small businesses, the responsibility for training falls on the owner or CEO, new research shows.
In almost three-quarters of the businesses in the study, primary responsibility for training falls to the business owner, chief executive officer or the company president. The owner of the business assumes primary responsibility for training in about 34 per cent of firms. And in an additional 38 per cent of small firms, the chief executive officer or company president is responsible for training-related activities. In about 28 per cent of firms, responsibility for training is in the hands of a manager or another individual.
This finding should be examined in more detail to determine whether the people making training decisions have the background to assess training needs, select the appropriate programs, and evaluate whether the firm is receiving good value for its investment in training. If poor training decisions are being made, employers will naturally be reluctant to invest resources in employee training.
Formal training
How many small Canadian firms offer formal training for employees? What factors are most important when small businesses decide to select a training program? What types of training programs are most common in small firms?
Survey participants were asked about formal training, with slightly fewer than 29 per cent of firms indicating that a formal training program existed. Additional analysis was conducted to see if any factors distinguished firms with or without a formal training program. It was found that:
•The presence of formal training was related to the size of the business. Only about 23 per cent of businesses with 10 or fewer employees had a formal training program while 63 per cent of firms in the 51 to 100 employee category had such a program. This finding was not unexpected and shows that as firms become larger, they may be more likely to formalize employee training. Moreover, the presence of an employee with responsibility for human resource issues (such as training) was strongly associated with the size of the business.
•Respondents were asked questions addressing HR strategy, such as the extent to which the HR function is involved in strategic decision-making within the organization and the extent to which the firm aligns business and HR management strategies. Having a formal training program was strongly related to a more developed human resource strategy.
•Firms with formal training were also more likely to have other human resource management practices such as an employee grievance procedure, an orientation program for new employees, information sharing, an employee recognition program and problem-solving work groups. This finding is important because there is a strong body of research indicating that “bundles” or systems of human resource management practices are related to enhanced firm performance.
Small firms may discover that introducing a single human resource practice has minimal impact on increasing performance. When a set of programs are bundled together, there may be a “synergy” effect if the individual programs complement each other. For instance, it is not enough to simply introduce work teams without providing related programs such as employee training and information sharing.
Training decisions
What criteria do small firms use to decide training needs? Respondents were asked to indicate how frequently a particular factor was used (using a six-point scale with 1 indicating that the factor was never used and 6 indicating frequent use). The results indicated that the factor most important in determining training needs was the supervisor’s judgment (average score of 4.7), followed by the use of performance appraisal data and an analysis of the particular position (with both of these factors having average scores of about 3.5). There was little reliance on using test results to decide training needs. However, the findings indicated that larger businesses were more likely to conduct training needs assessments compared with very small firms.
Assuming a small business is considering a particular training program, what factors are important in the selection of such a program? The most important factor, not surprisingly, was the subject matter of the training. However, small businesses also rated program cost, duration and location of the training program as fairly important factors. There was little relationship between the size of the business and the use of specific factors in training program selection.
Types of training
The study also probed which types of training programs small firms are using. Participants were asked to consider a number of training alternatives and indicate how frequently each was used using a six-point scale (1 represents never used; 6 represents frequent use). A summary of the results, provided in the graph below, reveals the extremely high importance of on-the-job training (average score of 5.4).
Only three per cent of participants reported never using on-the-job training.
A number of firms also focus on customer service training, workplace safety training and coaching (with all of these types of training having average scores above 3.5). Larger firms reported greater use of seminars (both on- and off-site) and workplace safety training relative to smaller businesses.
There are numerous studies indicating that employee training is very important if a business wants to be a high performance workplace. However, it is critical that small firms carefully assess training needs prior to embarking on a training program. While there are human resources management consulting services available to small firms, the “payoff” from investing in human resources is often indirect. Moreover, small businesses may be reluctant to invest heavily in employee training if it is having trouble retaining top employees.
The first article in this series, which looks at small firms and recruitment is available at www.hrreporter.com. Select “Search” and enter article #2651.
Terry H. Wagar is a professor of industrial relations at Saint Mary’s University in Halifax and Lynn Langrock is an EMBA graduate of Saint Mary’s. Terry can be reached by e-mail at [email protected].
