Employees in an SME tend to miss out on skill enhancement, sometimes because of their sheer indispensability to the organisation. Abhijit Bhattacharya,
professor at the Institute of Management says that there is need, therefore, for SME training to be bit-sized and customised

By smartly exploiting the opportunities created by the process of globalisation, a large number of Indian small and medium enterprises (SMEs) have been able to sharply increase their businesses, either as original equipment manufacturers or component suppliers or business and knowledge processes outsourcing (KPO) partners for multinational corporations (MNCs) as well as large Indian companies. In a world where technology and business models are changing very fast, sustainability and growth of the Indian SME segment in the coming days will primarily depend upon SMEs’ access to education and skill upgradation. The government has a major responsibility in providing such access as the private sector cannot be relied upon for this — hi-tech knowledge and skill generation is a timeconsuming process and the return on private investment may be less than the optimum level thanks to knowledge spill-over, high rate of technology obsolescence and some other factors.

Education and skills occur in many types and on many levels and hence, improved

access to training at all levels is important for SME development. Moreover, in a volatile and dynamic world, better educated workers provide the flexibility needed to switch production between sectors and branches, and to restore external balance through innovation, retraining and relocation. Here we have to acknowledge that the critical role of the business schools in this process is generally missing in India today. These schools are mostly staffed with experts to focus on functional approaches (like finance, human resource development, etc). But the application of these approaches to small businesses has become the most neglected field of academic study and teaching in business schools.

Customisation of training programmes

The Industrial Policy Resolution of 1956, with its SME focus, is largely responsible for making India a pioneering nation among the developing countries in the field of SME development. A huge network of financial, academic and training institutions, functioning both in the public and private sectors has been created in the country, which has ensured an impressive growth of the Indian SME sector so far. But to meet the present challenges of the changing environment, there is an urgent need for serious introspection of India’s SME development strategy, including training and education.

International studies have shown that management development in SMEs tends to be based upon individual employment relationships and a focus on cost, short-termism and “bottom line” considerations. It also may not be an exaggeration to say that most of the training programmes for SME workers in India, which are predominantly government inspired, driven and funded, are ineffective because training needs are never identified on the basis of serious research and the designers of the programmes also often fail to listen to small businesses’ call for flexible delivery. A firm with four to five staff members cannot probably release employees for several days to attend an SME training programme.

As Norman Mackel, education and training chairman for the Federation of Small Businesses, UK, mentioned, the “courses need to be bitsize and targeted at solving specific problems.” The need of the hour is to make India’s SME training programmes research-based and innovative. The current level of technology does provide an opportunity to meet the diverse interests of micro-businesses and deliver customised management and leadership skills to SMEs. E-learning technology, where India has made a big leap forward, can be explored to offer bit-size training programmes. The European Union has already invested on several projects of this nature.

The task of increasing the effectiveness of SME training programmes is further complicated by the difference of perception regarding such programmes among training providers and training receivers. The government and the SME training institutions are interested in chasing SMEs to develop workforce, but the firms are more interested in recruiting a “final product.” Small business units often do not want to invest in skill development because they fear poaching and financial constraints. There is a strong tendency among SMEs for jobs to be created and maintained via the use of temporary contracts.

To remove the barriers to skill development among SMEs, therefore, there is a need for partnership between owners of SMEs, education and training providers and policy makers.

Skill building for strategic performance

For sustainability and growth in a dynamic environment SMEs, among other factors, must also possess the capability to constantly modify their long-term business

development strategy. Entrepreneurs have to understand the cost involved in implementing a strategic plan and the skills to develop a viable control mechanism for such plans. Many training organisations and consultants offer business performance improvement programmes, like Balanced Scorecard, Six Sigma, Lean Sigma, etc, for large organisations. These programmes can be very effectively customised for small business units, equipping them with the knowledge and techniques to measure and control long-term performance improvement programmes. ISO certification programmes are quite popular among Indian SMEs, though for many small businesses, getting a certificate becomes the sole motivating factor. As a result, such certification only adds to mere paperwork and administrative costs, without significant performance gain.

Training on innovation management

In the 21st century, continuous innovation will provide the competitive edge to SMEs in the marketplace. Hence, there is a great need to design training programmes for SMEs on the management of innovation. It is generally accepted that SMEs are the major drivers of innovation, primarily due to the unique ability of the entrepreneurs to see connections and their creative urge to challenge existing businesses with disruptive ideas. Natural advantages of smallness, such as adaptability, low cost of due diligence and lean organisational structures, further facilitate the process of converting the creative potential of entrepreneurs for viable businesses.

Industries like fashion and industrial design, video and educational games, crafts and other similar activities have huge growth potential in a knowledge- and creativity-driven economy and India is blessed with a good number of world famous designers and artists. The success of innovation management by an SME will depend upon how the employees of the firm, who may often have to work in a distributed environment, are able to collaborate over the network. This calls for designing training programmes on effective online collaboration among employees for such creative SMEs.

Major Government-run SME and SSI Training Institutes in India

National Entrepreneurship Development Institutes

• National Institute for Entrepreneurship and Small Business Development (NIESBUD), NOIDA
• National Institute of Micro, Small and Medium Enterprises (NIMSME), Hyderabad
• Indian Institute of Entrepreneurship (IIE), Guwahati

Others

• MSME Development Institutes (Gangtok, Jaipur, Chennai, Patna, Kolkata, Guwahati, Mumbai)
• Tool Rooms (training and consultancy for tool and die markers)
• Central Footwear Training Centres, Agra and Chennai
• Fragrance and Flavour Development Centre, Kannauj
• Process-cum-Product Development Centre, Agra
• Electronics Service and Training Centre, Ram Nagar
• Institute for Design of Electrical Measuring Instruments, Mumbai
• EDI SME Centre, Indian Institute of Foreign Trade

This entry was posted on Friday, July 31st, 2009 at 4:47 am and is filed under Building Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or ask a question.