Leading the Way:  Investing in Management Development for SME Productivity and Growth

Last week, the Expert Group on Future Skills Needs published their Leading the Way Report which focuses on Management Development for SME Productivity and Growth in Ireland. The SFA was actively involved in the creation of this report and the 7 key findings are set out below: 

  1. Attitudes to management development and making it a priority  

Managers recognise management and leadership development as a top priority, in particular for their management teams, if less so for themselves. However, the commitment of resources lags behind, with fewer than half of the firms surveyed for this study reporting a dedicated budget for management development. Time is identified as the biggest barrier to training; but negative perceptions and concerns about relevance have also been found to be important.  

  1. Valuing formal approaches to management development  

SMEs report a high reliance on informal manager learning and strategising practices, especially in smaller firms. However, formal learning and strategising are linked with better outcomes for firms. In this study, firms with better innovation outcomes and better management scores were found to conduct more formal training and to use more formal approaches to strategising.  

  1.  The importance of learning from external sources  

Better outcomes for the business are also associated with the use of more external data and networking opportunities. In smaller businesses, knowledge transfer is more likely to be concentrated inside the firm. When done well, this can lead to organisational learning. However, more radical innovation normally requires a broader base of knowledge sources – including customers, suppliers and networks, for example. Smaller firms also rely less on data from these external sources to underpin decision making.  

  1.  Deriving value from available training opportunities  

The study has identified a large capacity for delivering management-related training and development in Ireland. However, there is some concern that SMEs are not fully exploiting this resource as they could. One reason, given by many, is that they find the training offer confusing and not sufficiently coherent. This points to a need to join up the offer at an operational level so that synergies can be realised and the training that is available is more accessible. 

  1.  The centrality of HRM and talent management  

Hiring the right people and promoting the right people to the right roles is critical to successful growth. An owner that can rely on and trust the management team to do their job can focus attention towards more strategic activities. The study shows a need for improvement in HRM practices concerning dealing with underperformance and hiring practices. Also, not unrelated, is the weakness in performance monitoring that can lead to a failure to recognise or deal with underperformance in a timely manner. Although very small firms may not have a dedicated HR manager, learning and adopting good practices for managing people improves engagement, job satisfaction and ultimately return on investment.  

  1.  Using available data to improve productivity  

Survey respondents in general feel confident about their digital literacy, but further questioning on this suggests that this is within the context of standard communication tools such as email or social media. Most firms do not use advanced analytics and data monitoring to assist in decision making. However, firms that did report high intensity in the use of data and advanced analytics also demonstrated significantly better management practice scores and also improvements in innovation and innovation outcomes. This finding compliments other international studies suggesting that data driven decision making (DDD) improves productivity outcomes. Maintaining momentum and following through on programmes of improvement was also recognised as an issue, showing that it is not enough to do management training. This must be monitored and maintained to support a culture of continuous improvement within management teams.  

  1.  A focus on resilience, growth and internationalisation  

As firms grow and reach different stages in their development their management development needs will change. Implementation plans therefore need to be cognisant of variations across firm size. The timing of this study during Covid 19 also brings resilience to the centre. Resilience is important for SMEs, in particular Irish SMEs that are more exposed in a globally outward-looking economy. Despite such a global outlook, exporting and the international presence of Irish SMEs is weak relative to other countries. The findings do indicate however that many companies that are not currently internationalising are interested in exporting, and supports need to help them realise such ambitions. 


The full report can be downloaded here

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In this issue
SFA Fortnightly Update
SFA in the media
Brexit – The VAT consequences!
Budget 2021: HR update for employers
Brexit HR considerations
Results of the SFA Summer Business Sentiment Survey  
Leading the Way:  Investing in Management Development for SME Productivity and Growth
Free Business Support Programme - get a personal business Mentor
Webinar with Ed Sibley, Deputy Governor of the Central Bank of Ireland
GDPR two years on – A webinar with the Data Protection Commission