Employee training in small and medium-sized enterprises

Employees from 61% of small and medium-sized enterprises (SMEs) participated in different training courses during the last year. Various types of training are preferred in different companies. These are among the findings of a 2005 study investigating the main characteristics of employee training in SMEs.

A study, Development patterns of Estonian small and medium-sized enterprises (376Kb pdf; in Estonian), was carried out in June-July 2005 by the opinion poll firm Saar Poll. The survey investigates the situation and further development plans of small and medium-sized enterprises (SMEs), and identifies factors that influence SME development positively and negatively. The questions related to the companies’ business and legal environment, availability of human resources and training of employees, investment and availability of financial resources, etc. See below for details on methodology.

According to the survey results, on average, SMEs in Estonia have up to nine employees (in 81% of cases). Their turnover is up to EEK 30 million (€1 = EEK 15.65): 15% of SMEs had turnover up to EEK 250,000, 43% had turnover between EEK 250,000 and EEK 3 million, 29% between EEK 3 million and EEK 30 million and only 7% of SMEs had turnover higher than EEK 30 million. The companies are usually profitable (73%) and most of the SMEs are funded by Estonian capital (89%). According to the Statistical Office of Estonia, in 2004, there were 39,623 enterprises in Estonia overall; the average enterprise had 10.5 employees, and average turnover was EEK 10.5 million.

Scope of employee training

Employees from three out of five SMEs (61%) participated in different training courses during the last 12 months. In nearly one fifth of the enterprises (19%), all employees participated in training, while in 37% of the enterprises no one participated in training (see Figure 1). Compared with 2001, the number of SMEs that have provided training for their employees has increased: in that year, 58% of SMEs offered some kind of training to their employees. However, the proportion of companies providing training to all employees has declined (25% in 2001).

Figure 1: Proportion of employees who received training over the last 12 months

Source: Development patterns of Estonian small and medium-sized enterprises, 2005, p. 36

Analysis reveals that new enterprises (established in 2003-2005) form 51% of the total number of SMEs. These new companies and also SMEs in rural areas provide less training (56%) to their employees than the average. SMEs in manufacturing also offer less training (51%) than average. On the other hand, SMEs in transport and communication (68%) and in the business, hotels and restaurants sector (67%) are more likely than average to offer training.

During the coming year, 36% of SMEs have definite plans to train their employees and only 16% have no plans in this regard. These results are comparable with those from 2001.

Different types and areas of training

The majority of SMEs (76% of SMEs used this possibility at least once) send their workforce to various courses outside the enterprise. In 64% of SMEs, employers offer internal training using either teachers from within the company (43%) or inviting external trainers (21%) (see Figure 2).

Figure 2: Types of training (% of enterprises that have trained their employees)

Source: Development patterns of Estonian small and medium-sized enterprises, 2005, p. 38

Internal training and on-the-job training is more widespread among larger enterprises and in SMEs active in manufacturing and wholesale. A number of wholesale enterprises (30%) provide training abroad to their employees. Employers from transport and the social sectors offer different courses provided by universities. SMEs based on foreign capital follow noticeably different patterns, more often using different types of training.

In the majority of cases, the training is to upgrade professional skills (69%); less training is provided in financial management and accounting (36%), customer service (29%) and marketing (27%). In other aspects - information technology, teamwork, management, language courses, etc - even less training is offered. The larger the company is, the greater the possibility that it has trained its employees in different fields. For example, among enterprises with more than 50 employees, more than a third had trained their employees in the area of quality management, while, among smaller firms, only a few enterprises trained their employees in this field.

Obstacles to training

The most significant obstacles in training employees are the high costs, replacement problems while an employee is on training, and also difficulties in finding appropriate trainers or courses (see Figure 3). Some employers find that it is cheaper to employ already well-trained or skilled employees than to provide training to existing employees, mainly due to the high costs involved.

Figure 3: Obstacles to training

Source: Development patterns of Estonian small and medium-sized enterprises, 2005, p. 39

Finding a temporary replacement for an employee or finding the appropriate course or trainer are the main problems for larger companies. Smaller enterprises in general see fewer obstacles to training their employees. About one third of employers do not find any obstacles for training. Although the high costs and scarcity of resources were cited as the main concern by many employers, only 6% of SMEs had availed of training subsidies.

About the study

This survey, carried out in June-July 2005 by Saar Poll, used the theoretical and methodological background bases provided within the framework of the Phare project - ‘Technical assistance for the preparation of the SME survey’. The 2005 survey is a continuation of a similar survey carried out in 2002.

The sample consisted of four groups of varying company size (0, 1-9, 10-49 and 50-249 employees) and seven fields of activity groups (NACE 1-7); a quota sample technique was used. In all, 2,000 enterprises were interviewed, and interviews were mainly conducted with either managers or owners of the company.