Learning and training: Enhancing small business success

The report Learning and training: Enhancing small business success addresses some of the issues surrounding small business participation in training and other learning activities, and the relationship between participation and business success.

This project surveyed 181 businesses employing fewer than 20 people in the construction, manufacturing, property and business services, and retail industries in three metropolitan and three non-metropolitan locations. As well as information relating to formal training, the project sought information about learning from the suppliers and customers of small business, and the various networks of small business people. Information was collected by telephone interviews with owners or managers. The study is cross-sectional and it compares businesses at a point in time.

Indicators of success were developed based on a review of the literature relating to small business goals and on previous studies of the relationship between education and training and small business success.The indicators, which consider business survival, financial growth, the business environment and the non-financial goals of owners, were used to place the businesses into successful (95 businesses), neutral (46) or unsuccessful (40) categories.

Training includes courses, structured on-the-job training, seminars and meetings arranged by the business or others, and learning from mentors or consultants. Training, as defined here, does not necessarily lead to an accredited qualification. Learning is learning from print and electronic media, and incidental or ad hoc learning from customers, suppliers, and business and social networks.

Almost one-third of the sample had had someone attend a relevant course in the preceding 12 months, over a third had undertaken on-the-jobtraining, 30 per cent had learnt from a consultant or mentor and over 60 per cent had attended a business-related meeting or seminar. Businesses with employees or partners with post-school qualifications were the group most likely to have participated in a course.

Those who had participated in courses, seminars and meetings or on-the-job training were more likely to have planned learning activities for the next 12 months. Greater participation in training by those with experience of post-school education is consistent with studies which have found that lack of confidence and familiarity with training and training settings are barriers to participation.

Small businesses with younger employees were more likely to participate in courses and on-the-job training; 70 per cent of the small businesses employing people under 25 had participated.

Informal learning sources were found to be useful by 82 per cent.Suppliers were the most frequently cited source, especially for learning about technical or production-related issues.

Small businesses with partners or employees with post-school qualifications were more likely to engage in ongoing learning activities, especially courses and learning from consultants and mentors, suggesting a relationship between an orientation to training and learning and success.

There appears to be a relationship between success and learning on the job; that is, learning undertaken in recent times and that achieved as aresult of trial and error or experience gained when establishing a business. No other category of ongoing learning activity was utilised more (or less) by successful businesses.

Informal learning was heavily utilised by most businesses, whether the business was successful or not.

One explanation for the apparent link between qualified personnel, participation in structured learning activities and business success is that the small business managers whose natural attributes make them good managers are the same people who enjoy formal education and training and therefore gain post-school qualifications. This explanation assumes that the skills of 'management' cannot be 'taught' or 'learnt' through education and training, a position strongly refuted by the Karpin report into management education in Australia. This report recommended increased participation in management education by managers at all levels (Industry Taskforce on Leadership and Management Skills 1995).

A further, and perhaps more likely, explanation for the apparent link between qualified personnel, participation in structured learning activities and business success is that businesses are more likely to have a training or learning orientation because they have better qualified personnel. These managers are aware of a greater number of ways of doing things, and perhaps, as a result of training or education,are better informed when it comes to allocating resources, and therefore implement new practices with greater success. It is probable that these managers are more likely to use learning and training as a strategy for achieving success because it is effective. If there is a link between business success and education and training, as measured byqualifications, there appears to be a case for investment in education and training.

There are mixed attitudes to formal training. Some managers see benefits and are active participants. Another group is not averse to training but is busy working in the business. They do not give training a high enough priority to find out what is available, or to take themselves or staff away from the job. A third, smaller group of businesses expressed negative attitudes to training, mainly because of a perception of poor quality and low relevance or high cost.

Businesses with owner/managers and/or employees with post-school qualifications were more likely to be successful. Ongoing learning and training in order to improve efficiency and deal with change was associated with successful small businesses. Because a relationship exists between on-the-job training and successful businesses,participation in accredited training that includes an on-the-job component could be expected to be related to business success. There is an argument, therefore, that small businesses should contribute to the cost of on-the-job training.

Recommendation 1:
A learning and training culture where small business willingly invests in relevant training should be developed by promoting the benefits of learning on the job, ongoing learning, learning to improve efficiency and learning to deal with change. Education and training that includes an on-the-job component and leads to formal qualifications should be given special emphasis.

Employees were more likely to undertake training than were the small business owners themselves. Reports such as Karpin suggest that businesses of all sizes would benefit from more management training.

Recommendation 2:
The benefits of learning and training for owners and managers of small businesses should be a focus of the promotion of a learning and training culture.

Small businesses are familiar with learning from suppliers, trade and industry associations, others in the industry and professionals such as accountants. Some businesses have a negative attitude to training.

Recommendation 3:
A learning culture should be promoted through a co-ordinated strategy which uses all available and appropriate avenues--suppliers, trade and industry associations, others in the industry and professionals who interact with small businesses, such as financial advisers and government bodies. The awareness campaign should take into account that many small businesses regard external factors such as competitors and government policies, rather than skills, as the primary determinants of their success, and others do not believe the returns to training are worth the investment.

While on-the-job training is associated with successful businesses, a substantial demand for training that is relevant and flexible and preferably on the job has been identified.

Recommendation 4:
Policy-makers and training providers must continue to work with organisations representing small business to find ways of involving small business in policy development in relation to learning and design of training. For example, consideration should be given to providing industry-specific business management programs as an alternative to provision from a central small business department in a TAFE institute. Known and familiar learning sources should be used to market learning and training opportunities to small business.

Location and time absent from the job to train were perceived as barriers to training for many businesses, particularly in non-metropolitan areas. Small business prefers the style of informal learning and likes the short duration and easy accessibility of seminars.

Recommendation 5:
Design of learning and training for small business should consider cost, time and location of the activity. Providers using more structured approaches to training should incorporate features of seminars and informal learning where possible. On-the-job training presents fewer barriers to participation and should be encouraged as the preferred method of learning. Resources for training in non-metropolitan areas need to be increased so that a wider range of opportunities is available.

Easy access to relevant learning and training for small business is a challenge for the Australian training system, which is currently investigating ways of involving the diverse small business sector.Interventions in informal learning and non-accredited training are left to government departments responsible for small business or development,and trade and industry bodies. The low rate of participation in training, especially by owners, and the preference for informal learning methods as revealed in this study are consistent with a picture of small business owners suspicious of more formalised training and unaware that training policy could be relevant. Small businesses tend to prefer to learn using practices such as on-the-job learning and training from suppliers and seminars run by known, usually industry, organisations. In theory, this fits well with the national vocational education and training strategy. In practice, large numbers of small businesses are not taking advantage of the formal training system to have skills recognised, nor to guide them in learning or training choices.

Recommendations 6 to 11 cover are as less crucial to the outcomes of the research and analysis undertaken within the project, but are,nevertheless, considered important to future policy directions relating to the provision of learning/training opportunities for small business.

Recommendation 6:
Policy-makers and training providers should build on the established relationship between small business and their suppliers to create innovative learning/training opportunities. Care should be taken to avoid conflicts of interest between suppliers and small business customers.

Recommendation 7:
Models of structured learning and training from other disciplines, particularly agriculture, should be trialled with small business. Upskilling of professionals in small businesses and others who work with small business should be a priority.

Recommendation 8:
A co-ordinated strategy which recognises and highlights the broad range of skills held by small business should be developed. Such a strategy should be implemented by the government, the training sector and industry. Further investigation is needed into appropriate ways of recognising high-quality skills in small businesses, especially the management skills of owner/managers. An appropriate recognition system could be used by those needing to assess the quality of a business, as well as by government when purchasing goods and services.

Recommendation 9:
The current, high level of interest in learning about computers and the internet should be maximised by provision of learning opportunities and training programs targetting small business.

Recommendation 10:
Further research is needed into the effectiveness of the various learning methodologies for small businesses which take into account their defining features such as industry, skill requirements, location and business size.

Recommendation 11:
Further research which analyses how small businesses make learning and training decisions is needed. This should lead to the development of guidelines for small business on when to undertake training and how to choose the training most appropriate to their needs.