One step back, two step forward – L&D in SMEs

The World Bank stipulates that in the coming 15 years, the total number of jobs needed would be around 600 million that would be needed to absorb an expanding global workforce. Small and medium enterprises create 4 out of 5 new employment opportunities, along with most formal jobs in emerging markets existing with SMEs.Despite this, more than 50% of SMEs lack access to finance, which hinders their growth. And this growth is directly related to the learning and development of employees. With many SMEs attempting to scale-up, challenges related to training new employees and updating exiting product knowledge of employees forms a crucial challenge.

Unlike large firms, SMEs with limited financial resources and insufficient managerial infrastructure tend to have less formal foundation for L&D and leadership development programs. Increasing competition and the need to build competitive edge has made capability building as a key business agenda. Chandrakant Salunkhe, Founder& MD, SME Chamber of India states, “there is a need to build technical, functional and managerial skills in the SME sector to build competitiveness, add productivity, and value addition in uncertain market circumstance.”

Employee performance depends on various factors, but the most decisive factor is training on the job. Employees who have on-the-job learning experience have better performances, which in turn also creates higher loyalty, trust and motivation for employees to stay in the organization. Any training investment by an organization increases its employability, remuneration potential and is perceived as a benefit which has a huge impact on the ROI. The organizational benefits of training and development interventions culminate in increased productivity, particularly in areas such as sales, customer services and IT, improvement in retention rate, and higher levels of personal job satisfaction.If training is more focused on helping to improve the performance of employees in their jobs, development refers to preparing them to fill other positions in the organization and increasing their ability to fit into jobs that will be created in the future.

For training investments to actually lead to such employees and organizational benefits, there need to be few fundamental building blocks: 

• Clarify& assign roles to each stakeholder. For any learning initiative to be successful, there are three main stakeholders that need to buy-in and act upon the learning effort. These are founder-director and HR leader, who provide the alignment between the vision, the organization objectives and the learning initiative and set the measures of ROI; the managers who lead in identifying the gaps in knowledge and assign the right intervention and support for development; the learners, who are responsible for the learning outcome and need to proactively act upon the application of learning.
  
  
• Link learning to organizational goals & business priorities. Learning and development is not an independent effort, it needs to be aligned to the goals of the organization and the individuals. The process of learning needs to come from the goals, monitoring employees to achieve those goals, making adjustments to achieve them more effectively and efficiently, sharing feedback with the employees, evaluating employee performances and rewarding performance. HR processes need to be interlinked and the design and implementation of performance management systems need to include aligning individual performance expectations with organizational goals, clarifying roles, responsibilities and expectations for all employees and creating a clear line of sight so that employees at all levels understand how their individual jobs and objectives support achievement of the agency’s overall strategic or departmental objectives. It also includes using core competencies as the basis for defining the skills and the behaviors required of people in specific jobs; linking pay to individual and agency performance; making meaningful distinctions in job performance; and creating safeguards to enhance the credibility and transparency of employee performance review.
  
  
• Design for win-win. Organizations that develop a good training design according to the need of the employees as well as of the organization always get good results. A training design plays a very vital role in the employee as well as organizational performance. A bad training design is nothing but the loss of time and money, whereas on-the-job training helps employees to attain knowledge in a better way and that is cost-effective and time saving. It is beneficial for organizations to give their employees on-the-job training so that their employees learn in a practical way. Delivery style is also a crucial component of Training and Development. Although there has been enough debate on what is the right mix between formal, informal and on the job – every organization needs to find the right mix that suits their culture, their maturity and budgets. The opportunity today is to leverage the power of technology that offers tremendous opportunities, from using technology across the learning intervention (pre and post learning programs) or using technology as a medium to impart learning itself.
  
  
• Personalizing learning journeys. Learning is an individual journey.Self-assessment is the first step towards performance-improvement. In designing a training and development programs, human resource development specialists need to be adept at performing training needs assessments in organizations. This is a critical activity to determine the level of training needed and once this determination is made, other technical activities of training should include instructional systems design, which comprise systematic development of instructional specifications by using learning and instructional theory to ensure the quality of instructions to trainees. Instructional systems designs address behavioral objectives, which is a clear and unambiguous description of the educational expectations. This aspect of training pays close attention to performance, conditions, and criteria.
  
  

For SMEs, 'training and development' is crucial as it aids in deciding what staffing needs organizations have and whether to use independent contractors or hire employees or to fill needs of recruiting and training the best employees, while ensuring they are high performers. 

What are the key things organizations should keep in mind while starting the Performance Management Systems?

When to start doing “formal” performance reviews? How to structure talent conversations and link that to growth for the individual and the organizations? Do these questions haunt you? In the virtual conference on SME Talent organized by People Matters, Shyamala Deshpande, Consultant and accomplished HR practitioner, explores how to build performance management systems when you are small organizations prepping to scale-up.

The key takeaways from the session: 

Crack the thought process

Before finalizing the right performance management system, you should ask the right questions.

• Why do we need to have a performance management system in place?
  
  
• When is the right time to get one?
  
  
• Who will drive the project?
  
  
• What kinds of tools are required for the system?
  
  
• How should the system be measured?
  
  

Prepare the Balance Scorecard Strategy

The BSC is a framework to translate the vision and strategy into operational terms. And makes strategy everybody’s job. 

The BCS supports strategic changes through:

Prepare the Performance Management Cycle

• Goal Setting: Job description/KRA & KPI sheet, Set KPI with Supervisor

• Appraisal Management: Appraisal form, appraisal meeting, feedback

• Performance Review: Employee development

Created from insights shared during the Video Broadcast on “Unique talent challenges for SME's – an Indian Perspective” organized as part of the SME Talent Week

What really creates value for both employers and employees are leadership programs that stick

Studies indicate that companies invest USD31 billion globally in leadership programs every year. But the efficacy of such leadership programs is often called into question both in terms of ROI for the business and their impact on employees. While the programs themselves may be powerful, often what they teach isn’t applied on the job consistently or over time.  What really creates value for both employers and employees are leadership programs that stick. Here are the three main levers that can increase the tenaciousness of your investments:

Get executive support: Make sure any program that is launched is visibly and actively supported by executives in the company. The most effective way to do this is to align the programs with critical organizational goals and make sure that leaders themselves have the capacity to reinforce the skills that the program is focusing on. 

Design for simplicity: Often models and techniques taught in leadership programs are over-designed and overly complicated that don’t get adopted or used. Design learning models and techniques that are simple yet effective and help build competence and confidence. 

Focus on the main goal - application of learning: The goal of L&D programs is not just to impart great lessons but to ensure that such learning is applied and practiced on the job. L&D professionals should build post-training opportunities to apply and refine the skills learned in the training. Create application and reinforcement opportunities, regular touch points, and multiple levels of support as part of your leadership training design. 

In the end, increase the effectiveness of your leadership development program by focusing on those things that will make the training “stick”.

A webinar on topic ‘Identifying leaders early - Your tips and tricks’ conducted during People Matters SME Week, presented by Sundara Rajan, Founder& Director of Thomas Assessments, highlighted the need for organizations to identify leaders early in their lifecycle, how talent leaders can equip themselves to be proactive and the high potential traits of leaders

Due to commoditization of global economy, the business environment is getting hyper-competitive.  The most affected amongst them are small medium enterprises as they face skill shortages and fall short of meeting customer expectations. Adding to it, insufficient infrastructure and human resource capabilities make it difficult from them to attract and groom talent. They also lack second –line, which further limits their business growth. It is because of this reason that SMEs require good leaders to steer their organization towards profits and growth. 

Potential is defined as higher probability of success and a person with potential is one who can grow to maximize and optimize their talent. In work context – it involves current and future roles. As per research conducted by Harvard Business Review 98% of companies took the initiative of purposefully identifying HIPOs early in their careers. They put in time and effort to groom them, so that they can take on larger responsibilities. Apart from potential, assessing the personality and identifying personality traits of leaders becomes crucial. HPTI (High Potential Trait Indicator) is a normative psychometric tool which measures personality and potential of individuals. MacRae and Furnham created HPTI by using quantitative and qualitative methods and identified 6 factors that indicate future leadership potential.

The six traits* 

• Conscientiousness - It is most important of all traits. It is a combination of self-discipline, an organized approach, ability to control impulses.
  
  
• Adjustment - It indicates how individuals react emotionally to stress, external events and pressures of workplace and still achieves results.
  
  
• Curiosity - It reflects an individual’s approach to innovation. People with high curiosity like novelty and try to avoid monotony in their lives.
  
  
• Risk approach - It indicates how an individual deals with challenges.
  
  
• Ambiguity acceptance - It indicates a reaction to complexity and contradictory information.
  
  
• Competitiveness - It indicates relative desire to win. 

*(In descending order of importance)