Challenges of training and development of workforce in SMEs

Unlike the large firms SMEs face a big challenge in training their staff. However, a good planning will help meet this challenge successfully.

SMEs employ over 80% of the workforce across geographies. At the same time they face enormous business challenges including their difficulty in scaling up, investing in innovation and research and maintaining growth. One of the reasons for these, is the lack of development of the human resources. Finding and hiring talent for SMEs itself is a big challenge. However, developing them to deliver the long term vision of the leadership is an even bigger one.

SMEs, given their size and other business challenges face many issues related to human resource development. The problems come from number of factors including the size of the workforce, the (lack of) maturity of the HR function and (limitations in) execution of development plans.

The size of the organisation poses very simple operational issues. Large companies can afford to release their staff for training programmes given the support mechanism available (absence of an employee can be covered up by the others in the department), the less dependency on individuals (given the strength of the processes) and predictable and planned business operations. SMEs do not have these advantages. Given the small number of staff, releasing even one person for a training programme can hamper the day to day operations. Similarly given the small size organising and conducting an in-house training programme would be difficult, where typically around 20 participants would be ideal.

The lack of HR function is another contributing factor to the efforts in training employees in SMEs. HR function when available in SMEs are mostly operational in nature which takes care of the basics such as payroll, statutory compliances, benefits administration and others. They may lack either the bandwidth or the capability to take care of the higher order activities of human resourceurces development such as as capabilities assessment, identification of gaps in capabilities of the workforce vis a vis that required as per the business plan and planning for the fulfillment of the gaps.

The leadership often understands the need for the human resources development and would like to focus on it. However, they are constrained in executing their development intentions. This could be due to factors such as lack of dedicated personnel for human resource development, as we saw earlier, priority of the immediate business goals taking over the priorities of the long term, inability to adequately invest in the development effort or being able to inculcate the spirit of human resource development in the second line. Thus the intention of the leadership remains unfulfilled to the detriment of the organisation.

In the next posting we will examine some ideas by which SMEs could manage these challenges.