Training as a Strategic HRM Tool to Foster Employee Development in SMEs

Training as a Strategic HRM Tool to Foster Employee Development in SMEs

Ramnath Dixit, Vinita Sinha
DOI: 10.4018/978-1-7998-7436-2.ch030
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This chapter aims to highlight the relevance of training and development for employees in SME organizations, and how it can positively impact workplace performance and ensure survival of the organization in the current competitive environment. Over the past few decades, small and medium enterprises (SMEs) have witnessed a paradigm shift in their approach towards human resource management (HRM). With the objective of being globally competitive and to retain talented workforce, the SME sector has been focusing on training their personnel on diverse areas. It is in this context that training and development has emerged as a strategic HRM tool for organizations to foster their employee development initiatives. The chapter concludes with insightful recommendations to strengthen human capital in SME organizations by harnessing training interventions effectively.
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Small and Medium Enterprises (SMEs) has witnessed exponential growth in the past few decades. Numerous studies suggest that SMEs act as engines of economic growth, both in developing and developed nations (Golhar & Deshpande, 1997; Ivy, 1997). A report by (The World Bank, 2015) suggests that SMEs contribute approximately half the national income in developing economies. SMEs perform a pivotal function by ensuring sustainable development and enabling employment, income and prosperity (Wright, Roper, Hart & Carter, 2015). Similar sentiments are echoed by (Vuong & Rajagopal, 2017) who posit that SMEs contribute towards economic growth globally through job creation, poverty alleviation and encouraging innovation. Empirical investigations conducted by researchers (Galang & Osman, 2014) comprising organizations in Malaysia and Philippines reveals that SMEs with a strategic human resource management approach perform better towards human resource outcomes. This meteoric rise in the SME sector has also led to an influx of human capital in these organizations. However, SMEs often confront HRM issues related to employee performance as well as inadequacy in terms of employee training (Long, Ajagb & Kowang, 2014) as well as talent retention (Cardon & Stevens, 2004). Thus, decision-makers in the human resource domain are focusing on strengthening their workforce potential by leveraging training and development as a strategic tool. The advent of training interventions in the SME space in still in its infancy and therefore, requires continual nurturing and strengthening to facilitate the accomplishment of business objectives through its human resources. Training thus becomes an organizational necessity and no more an exclusive prerogative of the larger corporations. However, for SMEs to reap full potential of its training interventions, they must view trainings as a strategic tool and not just as a “good-to-have” tool. In this context, it is pertinent for SMEs to broaden their perspective and envision their employees as business partners. This chapter attempts to emphasize on the following key dimensions to foster employee development in SMEs through maintenance of a strategic perspective towards training:

  • 1.

    Developing a holistic training strategy in alignment with organizational goals

  • 2.

    Building a sustainable training ecosystem in SMEs

  • 3.

    Identifying critical employee challenges that can be addressed through training

  • 4.

    Addressing organizational bottlenecks in SMEs, impacting training interventions

Key Terms in this Chapter

Training Investments: The amount of money and resources spent by the organization on training programs, training infrastructure and other allied items related to employee training.

Telementoring: A method of learning through distance mode using e-mails or video conferencing techniques to facilitate interaction between a “mentor” and a “mentee.”

Feedforward: Feedforward is a management exercise that focuses on future course of recommended action(s) to be taken, to achieve desired results or workplace performance.

Training Intervention: A training intervention is a sequence of training programs aimed at delivering knowledge and skills to employees over a specific time duration.

Small and Medium Enterprises (SMEs): Small and medium enterprises (SMEs) are independent entities which usually employ less than 50 employees; however, the number may vary as per the governing norms of the respective country.

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