Management Training in SMEs - OECD

1 Management Training in SMEsORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENTORGANISATION FOR ECONOMIC CO-OPERATIONAND DEVELOPMENTP ursuant to Article I of the Convention signed in Paris on 14th December 1960, and which cameinto force on 30th September 1961, the Organisation for Economic Co-operation and Development(OECD) shall promote policies designed:- to achieve the highest sustainable economic growth and employment and a rising standardof living in Member countries, while maintaining financial stability, and thus to contributeto the development of the world economy;- to contribute to sound economic expansion in Member as well as non-member countries inthe process of economic development; and- to contribute to the expansion of world trade on a multilateral, non-discriminatory basis inaccordance with international original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France,Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, Turkey, the United Kingdom and the United States.

2 The following countriesbecame Members subsequently through accession at the dates indicated hereafter: Japan (28th April1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996),Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14thDecember 2000). The Commission of the European Communities takes part in the work of the OECD(Article 13 of the OECD Convention).Publi en fran ais sous le titreLa Formation des dirigeants de PME OECD 2002 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should beobtained through the Centre fran ais d exploitation du droit de copie (CFC), 20, rue des Grands-Augustins,75006 Paris, France, tel.

3 (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United the United States permission should be obtained through the Copyright Clearance Center, Customer Service,(508) 750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: All otherapplications for permission to reproduce or translate all or part of this book should be made to OECDP ublications, 2, rue Andr -Pascal, 75775 Paris Cedex 16, OECD Working Party on smes has carried out this research project on Management trainingin smes . The study finds that managerial weakness may lie at the heart of small firm , smes are less likely to obtain Management Training than larger firms due to financialconstraints, information gaps and other factors.

4 Governments are now attempting to enhance SMEmanagement Training to foster more high-growth firms, but need to carefully evaluate the impact ofthese programmes and identify best report is divided into two main parts: a synthesis report and Management Training casestudies on Canada, Finland, Germany, Japan, the United Kingdom and the United States. The namesof the experts who participated in this project and drafted the country studies are listed in the OECD would like to extend its thanks to the French authorities, who generously sponsored report was prepared by the OECD Secretariat in co-operation with Prof. David Storey of theWarwick Business School, United Kingdom. It is published on the responsibility of the Secretary-General of the OF CONTENTSMANAGEMENT Training IN smes : SYNTHESIS REPORT.

5 5 Chapter 1 CANADA .. 29 Chapter 2 41 Chapter 3 GERMANY .. 75 Chapter 4 139 Chapter 5 UNITED KINGDOM .. 163 Chapter 6 UNITED 1755 Management Training IN smes : SYNTHESIS REPORTS ummaryUpgrading the skills of all types of workers, including managers, is central to firm performance inknowledge-based economies. The quality of Management is particularly important for small andmedium- sized enterprises ( smes ), which must be able to adapt quickly to evolving markets andchanging circumstances, but which often have limited resources. Such constraints also put limits ontheir ability to engage in Training , even though studies indicate that there is a positive correlationbetween the degree of Management Training and the bottom-line performance of an SME.

6 There ispreliminary evidence that formal Management Training can reduce the failure rates of small firms,which are far more likely to fail than larger firms, particularly in the early years. These are the findingsof case studies of Management Training in six OECD countries: Canada, Finland, Germany, Japan, theUnited Kingdom and the United a variety of reasons, smaller firms are less likely than larger enterprises to provide externaltraining to all grades of workers, including managers. In addition to financial constraints, informationgaps make smaller firms less aware of the benefits they would obtain from Management Training andfew see Training as a strategic tool. Due to higher turnover in managerial staff, small firms may notrealise the same benefits from Training investments as larger firms.

7 And since Training providers mustgroup a number of smes together to realise scale economies, such generic Training may be of morelimited value to a small firm than to a larger firm receiving more targeted these reasons, and to realise the social benefits from high-performance smes , many OECD governments have implemented programmes to enhance SME Management Training . These must begeared to the profile of Training provision in various countries, which highlight a prominent role forgovernment/industry partnerships in Germany, for schools and universities in Finland and for theprivate sector in the United States. Although publicly supported Training programmes are often ratedby the trainees, there is little empirical assessment of the impact of Management Training schemes onfirm performance.

8 A first recommendation for governments is to engage more systematically inprogramme evaluation. Other recommendations for Management Training best practice emergingfrom the case studies are: Differentiate between Training for start-ups and counselling for established smes . Teach Management skills such as flexibility and teamwork needed in the current businessenvironment. Target Training to specific groups of managers, such as new entrepreneurs or exporters. Provide Training at local levels and reasonable times for small -firm managers. Make greater use of electronic delivery of Training through the Internet. Foster entrepreneurship through the general educational report synthesises case studies of Management Training for small and medium -sizedenterprises ( smes ) in six countries: Canada, Finland, Germany, Japan, the United Kingdom and theUnited States.

9 It attempts to present an overview of existing programmes for SME managers and tohighlight what appear to be the most effective approaches to Management Training in small firms. Tothe extent possible, the report examines inputs to Management Training , outputs from managementtraining and the need for government policy of what constitutes Management Training are not uniform across countries or acrossacademic studies and evaluations (see Annex). In this report, Management Training is defined astraining in managerial skills for managers of smes . More specifically, it is Group-taught formallearning, external to the firm, provided for owners and managers of independent enterprises with500 (or 250) employees or fewer, and at least partly funded by the organisation.

10 This definition isfairly narrow and excludes: i) business start-up Training provided for individuals whether or not theyare employed; ii) Training provided to workers not classified as managers, even if it contains elementsof Management such as staff supervision; iii) Training provided to a manager which is not managerialtraining, upgrading of computer skills; and iv) on-the-job managerial Management Training discussed here is provided by external bodies. Only taught, as opposedto self, learning is included. Hence a manager in a small firm undertaking a distance Training course,such as an MBA, where the company makes no contribution to the fees/expenses, is excluded. It alsoexcludes any self-learning or general educational upgrading which managers might undertake in theirprivate time.