Competency Framework For Training SME’s - SME

Competency Framework For Training SMEs

SMEs account for 99% of registered companies. They employ 75% of the private sector workforce in the Kingdom of Bahrain and add almost 30% to the country’s GDP1. Similar statistics for SMEs exist in other countries where they make an integral contribution towards output and growth. This makes them a strategic priority for governmental development and supports both regionally and internationally2,3,4,5.

Government intervention in SMEs has 3 justifications:

  1. SMEs merit special support due to their contribution to the economy.
  2. SMEs face unique challenges unlike large enterprises, which merits intervention to create a more fair and competitive playing field.
  3. Training and upskilling SMEs have wide-reaching benefits across the economy which surpass those gained by the individual enterprise.

Training as an Intervention

One of the most prominent intervention methods to aid SMEs (along with financial support and access to expertise) is training. There is a disproportionately high need for training in SMEs. However, they are less likely to obtain it when compared with large enterprises due to:

  1. Higher costs to access training than large enterprises.
  2. Lack of awareness of their training needs and the benefits of training.
  3. A lack of expertise in sourcing and evaluating appropriate training programs.

According to the OECD, managerial weaknesses ‘lie at the heart of small firm failure’. In many cases, one can attribute SME failure to internal factors as opposed to market pressures. On the other hand, studies from Europe, Southeast Asia, the US, and Australia indicate a strong positive correlation between increased training and business performance. This includes improvements in revenues, profitability, employee relations, quality, productivity, business viability, and outlook4,6,7.

When considering training programs for SMEs, it is important to differentiate between the business cycle stage of the enterprise. The needs of startups differ significantly from those of established or growing SMEs. For example, startups may require generic support with components like formulating a business plan, market research, and financial and regulatory knowledge. As the business becomes more established and grows, its needs become more specific. Other important considerations include providing flexible training programs that consider the time constraints of SME managers and owners and utilize E-learning capabilities. Enterprises also benefit from having access to experts, mentors, and coaches, and from receiving practical tools for management and development.

Outcomes

This diagram summarizes the outcomes of such training programs adapted from a report by the world bank9. The expected outcomes can be divided into 3 categories. Outcomes for personal development have the “Mindsets” label. The managerial and technical abilities outcomes have the “capabilities” label. The outcome highlights the benefits to the economy and wider community through employment, economic growth, and expertise generation. It is crucial to monitor SMEs following their participation in training programs and evaluating the extent to which they have achieved each outcome. This evaluation contributes to the continuation and improvement of any training program.

Competency Framework

To be valid, training programs should depend on and align with a competency framework that defines competencies. Competencies collectively define the skills, abilities, and knowledge required to achieve stated outcomes. Such a framework needs to exist on a solid foundation of research and go through an iterative process of review, drafting, and development.

The European Entrepreneurship framework (EntreComp) outlines competencies adequate for developing the skills, abilities, and knowledge to develop the SME sector. Not only does it view the competency of entrepreneurship in the light of starting, maintaining, and growing SMEs, but also as a general competency for personal development, lifelong learning, and successful participation in society. EntreComp has gone through an extensive development process. It starts with a literature and case study review, followed by validation and revision steps conducted with experts and stakeholders in the field. The process resulted in a framework that includes 15 competencies divided into 3 areas as outlined in chart below10.

Competency Framework | SMEs

Summary

SMEs play a significant role in employment and economic development. The unique challenges faced by the sector justify governmental intervention. Access to training is one of the foundations of a successful intervention policy. It has a direct influence on improved business performance. SMEs have limited access to quality training programs due to cost limitations, poor awareness, and a lack of resources to adequately source training programs that meet their needs. Training programs need to differentiate between different stages of the business cycle and provide flexibility, practical tools, and access to experts. Successful training programs need to have objective and measurable outcomes and must be based on solid research-backed competency frameworks.

References

  1. New government initiatives support Bahrain’s small and medium-sized enterprises, (2018), Oxford Business Group.
  2. The State of SME’s in Qatar, (2020), Qatar Development Bank.
  3. Kingdom of Saudi Arabia National Report 2020-2021,(2021), The Entrepreneurship Monitor.
  4. Skills Training by Small and Medium-Sized Enterprises: Innovative Cases and the Consortium Approach in the Republic of Korea,(2016), ADBI.
  5. National SME Programme,(2022), United Arab Emirates
    https://u.ae/en/information-and-services/business/small-and-medium-enterprises/national-sme-programme.
  6. Management training in SME’s,(2002), OECD.
  7. Skills Development for Small Business,(2004), Parliament of Australia https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_Employment_and_Workplace_Relations/Completed_inquiries/2002-04/smallbus_employ/report/c05
  8. Education and training that meets the needs of small business: A systemic review of research,(2007), NCVER.
  9. Entrepreneurship Education and Training Programs around the World,(2014), The World Bank.
  10. EntreComp: The Entrepreneurship Competence Framework,(2016), European Commission.

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