Periodo de recupero de la inversión (PRI)

Introduction

Within the wider context o f the ongoing training debate it is important to consider the effect that the traditional VET system has had upon skill formation and competitiveness in the small businesses sector. The issue o f training in the small business sector o f the British economy has largely been neglected by academic researchers and human resource planning, development and management specialists who, until recently, were content to suggest solutions which were more relevant to the business strategies o f larger firms. Expedient attem pts to down-scale and forcibly fit large-scale training strategies to resource-starved small businesses have resulted in a relative paucity o f material focusing specifically upon the human resource needs o f smaller firms (Vickerstaff, 1992:3, Holme, 1992:16). The comparative academic and professional neglect that affected the small business sector in Britain was further compounded by the economic policies o f successive governments which tended to be

biased towards large companies and multinationals (Vickerstaff, 1992) It is sometimes argued that, as a result, small business owner-managers are generally sceptical o f government involvement in industry and would prefer to be left to their own devices (Matlay, 1994).

Pettigrew et at., (1990:4) in a comprehensive review of the literature on training in Britain claim that it is distinguished by a lack o f specialised research to ascertain the importance (or otherwise) o f human resource issues to small business strategies In another influential report prepared for the Employment Department, Hendry et at., (1991:2) further argue that in the growing field o f small business research "... the human resource dimension, including the training o f employees, has been largely neglected, aside from a preoccupation with the skills o f owner-managers at start-up and during early growth”. Such claims are perhaps surprising in view o f the recent publication o f the largest study on training funding, activity and attitudes undertaken in Britain (Training Agency, 1989a). A detailed examination o f the four reports arising from this study, however, reveals a number o f important shortcomings, such as an overly-narrow definition o f ‘training’, a clear partiality towards quantitative methods o f data collection and analysis, as well as obvious size and sectoral biases in the selection o f research samples

Owner-Managers Relative Lack of Education and Training

In Britain, it was the Bolton Report o f the Committee o f Inquiry on Small Firms (1971) that first identified small business owner-managers’ relative lack o f education and training. It found that the majority o f small business ‘chief executives’ have not undergone any formal management education Furthermore, in the manufacturing sector, only 21 per cent o f managers held a degree or professional qualification and a ftirther 8 per cent were qualified accountants, in the m otor and retail trades none o f the managers were educated to degree level and only 4 per cent and 1 per cent respectively, held accountancy qualifications (Bolton Committee, 1971:8-9). In contrast, there was a large disparity between these figures and the finding o f Hall et at., (1969) who showed that in the 500 largest firms in Britain just over 40 per cent o f chief executives were holders o f university degrees and a further 20 per cent were qualified accountants. The conclusion reached by most commentators at the time was that larger firms grew more rapidly and expanded more successfully because their managers were better educated and qualified than their counterparts in the small business sector (Bums and Dewhurst, 1992)

The Bolton Committee also attempted to provide an explanation for these apparent educational and training shortages by attributing them tentatively to the social origins and family traditions o f owner-managers as well as to ‘antipathetic’ attitudes exhibited by school, college and university representatives towards small firms (Bolton Committee, 1971:24-25). Even though the Bolton Committee offered no evidence to back up such claims, three important links have clearly been established in this

authoritative report: firstly, that social origins and family traditions were significant to owner-managers’ education and training levels, secondly, that educational representatives tended to instil negative attitudes towards industry in general and small businesses in particular; and thirdly, that size (in terms o f turnover, employee numbers or capital employed) affected considerably the provision o f training in the small business sector. However weak and unsubstantiated these claims might have been at the time, their influence upon the contemporary VET debate in the small business sector has been considerable (see, for example, Storey, 1994, Storey and Westhead, 1995).

It is important to note, at this stage, that a large proportion o f the small firms in the Bolton research sample were family businesses. Over 85 per cent o f firms in the manufacturing sector were managed by one or two individuals, while in the non­ manufacturing sector this proportion rose to 89 per cent. Most o f these firms were established long before the time o f the survey and were owned by first, second or third generation members o f the same family. Furthermore, almost two-thirds were managed by teams o f mixed generation owner-managers. The mean age o f these small business ‘managing directors’ was 54 years (Bolton Committee, 1971:6-8), broadly the same as that o f chief executives of larger firms. Significantly, however, the Bolton Committee was reluctant to generalise any o f its findings, claiming that the human and social factors affecting small firms were: “...in fact, as varied and individual as the men who founded them” (ibid. 22). Unfortunately, later research focusing on the small business sector tended to ignore this caveat and as a result a great deal o f the available literature must be treated with caution (Storey, 1994, Matlay, 1993).

In Stanworth and Gray’s (1991) view, the skill needs o f small business managers identified by the Bolton Committee (1971) have remained essentially unchanged in the decades that followed the publication o f the report. In a further study, Gray (1993) compares the management skills found as lacking in small businesses over two decades ago with the findings o f subsequent research. Problems with raising and using finance, obtaining and applying information, cost identification and control were at the top o f the Bolton Committee’s list and appear to have remained firmly there throughout the intervening years. Thus, "... problems concerning staff - organisation, delegation, personnel management - and marketing, still feature as major problems and the way they are dealt with distinguishes growth-oriented firms from the bulk o f self-employed and small firm owners” (Gray, 1993:1) The fact that the owner-managers’ skills position has changed or improved so little over the past two decades (despite a great deal o f effort and huge amounts o f public money spent on designing and promoting training courses for small businesses) has been confirmed by a number o f authoritative studies (see for example, IFF, 1992a, 1992b, Stanworth and Gray, 1991, CBI, 1986)

Training Strategies and Their Role in Reducing Skills Shortages

In the 1980s a number o f influential studies - such as Curran (1986), Mangham and Silver (1986), Handy (1987), Constable and McCormick (1987) and, notably, the Training Agency (1989a) have repeatedly exposed the relative weakness o f training

provision in British firms. As Storey (1989:4) points out, human resource issues have come to represent one o f the most controversial signifiers in managerial debate in the 1980’s”. The small business sector, in particular, was criticised for its conspicuous lack o f human resource development strategies. Furthermore, as this apparent weakness became progressively blamed for the relative decline in Britain’s economic performance, the attention o f academics and policy makers increasingly focused upon the potential role that education and training could play in improving the competitive edge o f small businesses (Senker, 1992). At the same time the main thrust o f public policy was increasingly directed not only at training per se but also at such related issues as management competence, quality standards and national vocational qualifications, all o f which were basically systems-based and had been originally developed for larger firms To what extent these were desirable, or indeed suitable for small firm strategies is yet to be convincingly established (Storey, 1994, Holme, 1992).

It is often stated that small firms which focus on the development o f their human resources appear to be less adversely affected by skills shortages than companies that emphasise the exploitation o f their employees. The level o f training that benefits a workforce is considered, by definition, to be directly relevant to the human resource strategies adopted by small business owner-managers (Abbott, 1994:70, Mullins, 1993:579) These, in turn, are seen to have a significant influence upon the competitiveness o f small firms (see for example, Goss, 1991; Jones and Goss, 1990, 1991) Two inter-related factors appear to influence the small business owner- manager’s perception o f skills shortages and related recruitment difficulties: firstly, the

changing nature o f the labour market, and secondly, the diversity o f training strategies that affect a workforce

Rapid technological changes and the internationalisation o f markets have resulted in a significant shift o f emphasis towards flexible working practices (Hawkins and Barclay, 1989). Small firms that are unwilling or unable to offer their workforce opportunities to develop, update or widen their skills are in danger o f falling behind in the race to satisfy the increasingly distinct and personalised needs o f customers in local, national and international markets. In addition, as employment conditions are likely to worsen in firms that have lost their competitive edge, these employers could find themselves increasingly avoided by progressive workseekers who “...in an attempt to maximise the probability o f their future employability, no longer appear to be driven by an almost exclusive urge to ‘chase the money’ but seek employers who will offer them wider experience, increased responsibility and status, and an opportunity to develop both hard and soft skills” (Jones and Goss, 1991:24). Thus, employees in smaller firms, who were traditionally limited in their career choices by the lack o f an internal labour market, increasingly seek to widen their horizons through a deliberate strategy o f training and skill acquisition (see Atkinson and Storey, 1994)

The relevance of training strategies to a small firm’s ability to attract and retain suitable labour is not as clear cut as some observers would like us to believe Although most commentators arc willing to acknowledge the relative inability o f small business owner-managers to offer their employees formal training and extended career paths, some argue that such apparent disadvantages arc counter-balanced by the inherent

flexibility and wide range o f tasks or responsibilities which are characteristic o f smaller firms. However, medium-sized and large companies, in their quest for competitive advantage, have increasingly adopted flexible working practices Furthermore, these are supported by a tradition o f induction as well as other methods o f formal training (Coffee and Scase, 1995; Hendry el a!., 1995). Indeed, Blackburn and Hankinson (1989) have found that higher levels o f formal training amongst their sample o f small firms accounted not only for increased productivity and cost reductions but also for lower labour turnover rates.

Jones and Goss (1991:25) propose a typology o f firms based upon the level o f training provision that they have found in a research sample o f 53 small businesses. Accordingly, ‘proactive’ (i.e high training) small firms are those that have developed a strategic approach to skill shortages, based upon perceived and expected changes in both labour and product markets The authors claim that this type o f firm has developed written training policies which encompass a strategic mix o f formal training, retraining and skills updating programmes Much o f their training strategy, however, is focused upon supervisory and management development. In contrast ‘reactive’ (i.e. low training) small firms have a tendency to respond to immediate pressures rather than rely on strategically planned training programmes. These firms aim to cope with changes in labour and product markets by relying upon short term tactics based on survival and cost reduction strategies rather than depending upon human resource development plans Provision o f training in such firms is apparently erratic, overwhelmingly informal, and is comprised mainly o f brief, unplanned, on-the-job

instruction Usually this is carried out by untrained, firm-based ‘trainers’ or by the owner-managers themselves

Using a sample o f 44 small employers from North Yorkshire, Johnson and Gubbins (1991:8) arrived at a similar training typology. In their experience, small firms either take a ‘reactive’ view o f training or adopt a ‘contingency’ approach. In both typologies the ‘reactive’ strategy is the most commonly found approach and by definition it indicates low training levels and a significant lack o f strategic human resource development. By contrast, the ‘contingency’ approach to training relies significantly on higher training levels as well as human resource planning, development and management Furthermore, ‘proactive’ or ‘contingency’ training strategies are seldom encountered in the small business sector, apparently being adopted only by a minority o f growing small firms (Johnson and Gubbins, 1991:2; Jones and Goss, 1991:24). In the case o f larger businesses, however, the reverse appears to be the norm the majority o f firms adopt a ‘contingency human resource approach’ geared towards a strategic responsiveness to market changes and uncertainty (Pettigrew el a/.,

1990:29)

The ‘Training in Britain' Survey: Implications for Small Businesses

The Training Agency’s study 'Training in Britain' (1989a) received a great deal o f publicity at a time when the negative effects o f skill shortages (and related issues) upon micro- and macro-level competitiveness have been highlighted by a period

o f exceptionally rapid economic growth. The contributing researchers were commissioned by the Training Agency (previously the Manpower Services Commission) to develop new research methods for the study o f skill shortages, to provide a better understanding o f employers’ attitudes to training, to quantify their training activities, and to draw up a comprehensive list o f benefits accruing to providing firms (Training Agency, 1989b,c,d) At the time o f its publication the study was hailed as the most extensive and detailed survey o f funding, activity and attitudes to training ever undertaken in this country

Arguably, however, the impact o f the ‘ Training in Britain’ research study upon the continuing debate on VET has been limited by inherent methodological shortcomings as well as by the effects - upon the local labour markets in particular and the economy in general - o f the worst and most prolonged recession in Britain since the Great Depression o f the late 1920s. Unfortunately, it seems that most o f the findings and recommendations o f this study have apparently been either ignored or forgotten by policy-makers, academics and employers Yet some of the data that resulted from the research carried out for the study make interesting reading. For example, 56 percent o f the employers interviewed for the ‘Employers ’ Activities' (Training Agency, 1989b 9) claimed that increased competitiveness prompted them to train their workforce. Furthermore, over the 1986/87 period, the 17.8 million employees covered by the survey received 125.4 million days o f training, averaging just over 7 training days per employee Training, however, was concentrated on 48 percent o f the workforce (representing an average of 14.5 days o f training per employee) while the balance o f 52 percent o f the labour force was deprived o f any

training There was an almost equal divide between ott'-the-job and on-the-job training provision, computed at 64 7 and 60 7 million days training respectively

Although 24 percent of firms employing between 10 and 24 workers were non­ providers, the balance o f 76 percent of providing firms trained as high a proportion o f their workforce as their larger counterparts (Training Agency, 1989b:24-27). In addition, the density o f training in providing firms was higher in small firms (those employing up to 99 workers) than in larger firms As a proportion o f the total sample, however, training density appeared to be directly proportional to the size of establishment, with firms o f over 10,000 workers training the largest proportion of their workforce T he intensity o f off-the-job training also falls with enterprise size, smaller firms exhibiting a clear predilection for on-the-job training Geographically, some differences in training intensity were also noted: results for North of F.ngland (47 percent), Wales (45 percent) and West Midlands (44 percent) showed that almost half the number o f employees received training as compared with less than 40 percent in all other regions

In the analysis of the data resulting from this survey several methodological difficulties can be noted Firstly, an overly narrow definition o f training has been employed by the authors Although they claim that their definition is ‘as comprehensive as possible’ in fact it was deliberately limited to : the process o f acquiring the knowledge and skills related to work requirements by formal, structured or guided means” (Training Agency, 1989b: 13-14) As such, induction, supervision, motivational meetings and learning by experience were specifically excluded Secondly, the research

sample is not clearly set out and the design o f the four detailed reports is rather contusing Ultimately, the multitude o f figures, tables and annexes fail to clarity the extent, composition and weighting o f the research sample. Thirdly, for the small business researcher, this study is typical o f most large scale, quantitative investigations: there is an obvious bias towards larger enterprises. For example, from the sample o f 20 firms used in the ''Employers Perspectives on Human Resources’ (Training Agency, 1989c: 10) only two businesses fall within the European Community formal definition o f small businesses (employing 48 and 60 workers respectively). A further five businesses employed between 116 and 750 individuals while the balance o f 13 firms had between 1,059 and 75,000 workers on their payroll

M ost authors who provide a definition o f ‘training’ appear to converge on the concept o f knowledge and skill acquisition as it relates to work-place requirements. For example Abbott (1994:72) defines training as “... any process aimed at knowledge and skill acquisition relevant to work tasks” . Few studies, however, adopt such a narrow definition as that employed by the Training Agency (1989b). Curran et a l , (1991:170) outline three main types o f training: informal on-the-job training, formal in- house training and external training. In their view, the main difference between informal and formal training provided on the premises o f a firm relates to the nature of activity in which an individual is engaged at the time o f provision. Hence ‘informal on- the-job’ training takes place while an individual is actually ‘at w ork’ while ‘formal in-