Dissertation topic:

An assessment of training in small

and medium enterprises
A case study of Hatil and the Mirpur SME Cluster

Research by: Safaat ullah

Student ID: 207030987

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Table of contents

Introduction 5
1.1 Background 5
1.1.1 Training 5
1.1.2 The importance of small business 5
1.1.3 The importance of training and skills development in small business 6
1.2 Research Problem 6
1.3 Research Question and objectives 7
1.3.1 Research Questions 7
1.3.2 Specific Research Objectives 7
1.4 Cases in focus 8
1.4.1 Hatil Complex Ltd. 8
1.4.2 The Mirpur SME Cluster: 8
1.5 Limitations of the Study 8
1.6 Conceptual Framework 9

Literature Review 10
2.1 Defining training: context of Human resource development 10
2.2 Barriers to training in small businesses 11
2.3 Determinants of effective training 11
2.3.1 Training program 12
2.3.2Training needs assessment 12
2.3.3 Organisational commitment to training 13
2.3.4 Flexibility of training 13
2.3.5 Self-efficacy 13
2.3.6 Supervisor support 13
2.3.7 Transfer of knowledge 14
2.3.8 Training motivation 14
2.4 Factors influencing the training and development approach 15
2.5 Training needs of small business 16
2.6 Training approach in small firms: formal or informal? The importance of informal, on-the-job training for
the small firm 17
2.7 National Vocational Qualifications 21
2.8 Furniture specific courses in training schools 21
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2.9 Action learning in SMEs: Learning through contextualized action and critical reflection 22
2.10 Mentoring 24
2.11 Evaluating the training-performance relationship 25

Methodology
3.1 Research Purpose 26
3.1.1 Exploratory research 26
3.1.2 Descriptive research 26
3.1.3 Explanatory Research 26
3.2 Research approach 27
3.2.1 Deductive vs Induction 27
3.2.2 Qualititative vs Quantitative 28
3.3 Research strategy 28
3.4 Data collection method 29
3.5 Sample selection 29
3.6 Quality standards 30
3.6.1 Validity 30
3.6.2 Reliability 30

Presentation and discussion of findings

4.1 Qualitative data 31
4.2 Quantitative Data 32
4.2.1 Questionnaire set one: Analysis of questionnaire for Mirpur SME cluster managers 32
4.2.2 Questionnaire set two: Analysis of questionnaire to Hatil and the Mirpur cluster for determining the
effect of formal training and informal training 37
4.2.3 Questionnaire set three: Analysis of questionnaire to Hatil for effective training 42
4.3 Discussion of findings 48

Conclusions and Recommendations

5.1 Conclusions 51
5.1.1 Research Question one: What training approach is appropriate for Bangladeshi small-medium
businesses? 51
5.1.2 Research Question two: What elements enable training to be effective in Bangladesh small-medium
businesses? 51
5.1.3 Research Objectives 53
5.2 Recommendation 54

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5.2.1 Implementing knowledge management: Potential positive impacts of knowledge management on
1training in SMEs 54

5.3 Managerial Implications 55

Bibliography 56

Appendices 62
Excerpts from the interview of Hatil Manager 62
Questionnaire for managers of Mirpur SME cluster 64
Questionnaire for Employees of Hatil and Mirpur SME cluster 65
Questionnaire for effective training to Hatil employees 67

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 Chapter 1
Introduction

1.1 Background

1.1.1 Training

The change in the nature and content of work (Howard, 1995) has impacted organizational choice of
human capital development programs. One of the most frequently encountered human capital
development interventions is training, defined as “a planned intervention that is designed to enhance
the determinants of individual job performance” (Campbell and Kuncel, 2001, p. 278). In order to
enhance job performance, the skills and behaviors learned and practiced during training have to be
transferred to the workplace, maintained over time and generalized across contexts (Holton and
Baldwin, 2003).

Training has become increasingly important as human capital, knowledge, and skills become
competitive assets or tools within organizations, with the presence of the globalization of markets,
increased diversity of the workforce, and the rapid entry of foreign investment into Third World
countries (Zakaria, 2000; Bhagat and Prien, 1996). Training expenditures in Europe are between 2
percent and 2.5 percent of total expenses (Marquardt et al., 2002). This show very clearly the
important role training plays in the success of the organization and growth in productivity. As
knowledge has become a key economic resource and a source of competitive advantage, effective
training is an effective tool to instill knowledge (Drucker, 1995).

1.1.2 The importance of small business

Globally the economic importance of small businesses is well documented, as is their contribution to
employment, especially growth oriented small businesses (Byrom et al., 2002; Frank and
Landström, 1997; Robertson, 2003; Storey, 2004). Small businesses represent approximately 99.8
per cent of all businesses active in the European Union, accounting for 68 per cent of total
employment and 63 per cent of all business turnover (Matlay, 2000). It has also been suggested that
encouraging small business ownership is a possible strategy to address the challenges of

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unemployment (Storey, 1994). In part, this means recognising the importance of training and skills
development.
1.1.3 The importance of training and skills development in small business

An educated and skilled labour force is considered to be essential to the success and growth of small
business (Cosh et al., 1998) and also crucial to gaining a competitive advantage in a global economy
(Huang, 2001). It has also been recognised for some time that training and education are effective
ways to reduce small business failure (Ibrahim and Soufani, 2002; Menzies and Gasse, 1999;
Menzies and Paradi, 1999). Additionally, entrepreneurship education and training are valuable tools
to enhance the managerial skill set of small business owners, considered essential for success and
growth of small- to medium-sized enterprises (Devins and Gold, 2000; Greenbank, 2000b).

Small businesses irrespective of size, service provided or product produced, are increasingly using
technology to enhance operational issues (Gibb, 1997; Sambrook, 2003; Smallbone, 1990; Vinten,
2000; Watson and Hogart, 1998). Traditionally, training assisted in facilitating the implementation
of strategy by providing employees with the necessary skills and the knowledge required to perform
their jobs (Fernald et al., 1999).

1.2 Research Problem

The contribution of small- and medium-size enterprises (SMEs) to a healthy economy has long been
recognised and capability development of small firms remains critical to economic prosperity
(Matlay, 1999). Training is important as it can enhance skills in small businesses and is effective in
reducing small business failure (Gibb, 1997; Ibrahim and Soufani, 2002; Robertson, 2003).
Evidence, however suggests that a range of influences mean that employees of SMEs are less likely
to take part in training than those working in large organisations (Westhead and Storey, 1997;
Marlow, 1998; Lange et al., 2000; Hill and Stewart, 2000).

Training policy and delivery systems fail to understand and address the needs of SMEs (Perren et
al., 1999). SME managers are thus making an informed choice and deciding not to invest in training
(Storey and Westhead, 1997, Storey, 2004). It is suggested that “one of the key reasons for low-
levels of UK productivity is the “long-tail” of badly-managed and under-performing small firms”
(Jones, 2003, p. 16). A study by Sarder (2001) on a small businesses identified low productivity

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and lack of skilled technicians and workers as a major blockage to small business growth in
Bangladesh.

Small business training and development can be complex and resource intensive (Billett, 2001;
Westhead and Storey, 1996). In fact, Billett (2001) has found that the real price of training is
higher in small firms than large businesses. The fact that most businesses, but especially small
businesses, are time poor (Beresford and Saunders, 2005; Billett, 2001; Gibb, 1997; Webster et
al., 2005) which leads to the widespread misconception that small business is too busy to train.

Little attention has been given to the effectiveness of training programs for these businesses (Huang,
2001) or to the study of other training and development practices (Chandler and McEvoy, 2000;
Heneman et al., 2000; Kotey and Sheridan, 2004).

Recent thinking on training in smaller firms suggests that informal training and informal learning
processes fits well with constraints under which small firms operate, and may be effective in
improving firm performance (Curran, 2000; Field, 1998; Rowden, 1995; Walton, 1999). Hence,
the traditional view that only formal training is ‘real’ training is increasingly being questioned. These
commentators argue that training models derived from large firm experiences and practice may be
fundamentally inappropriate for small firms, and research, theorising, and practice recommendations
regarding employee learning in small firms may be more fruitful if based on different assumptions.

1.3 Research Question and objectives

1.3.1 Research Questions

1. What training approach is appropriate for Bangladeshi small-medium businesses?

2. What elements enable training to be effective in Bangladesh small-medium

businesses?

1.3.2 Specific Research Objectives:

1. To analyse the factors that influence owner/managers decision of training approach

2. To determine the right mix of training practices

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 3. To learn options that would further enhance SME skill development

4. To find out the relationship between training and small business performance

1.4 Cases in focus

1.4.1 Hatil Complex Ltd.

Hatil Complex Ltd is a leading doors and furniture manufacturer in Bangladesh. Hatil has been
established in 1989 following the footsteps of H.A. Timber Industries Ltd. - a company running from
1966 with reputation in timber processing sector. They started business as a small enterprise looking
to meet the needs of lower-middle income earning consumers. With time Hatil started to grab a share
of the high income market. But this growth has been stagnated by the entrance of what is termed as
the “import market” who were able to provide quality and different products at prices lower prices.
This has haulted Hatil’s progress significantly over the last few years and thus despite being in
business for almost a couple of decades Hatil is struggling to grow as a company.

1.4.2 The Mirpur SME Cluster:

The furniture industry of Bangladesh can be segregated into various catagories, with one of the main
catagories being the Mirpur cluster of Small-Medium enterprises. Such is its significance that out of
a market size of 4 billion its share is more then 1 billion with more then 150 small businesses and at
least 2250 people being employed. It has also produced companies like Hatil who are now competing
in the larger market against the major importers. As much damage the importers have done to Hatil,
they have caused far more damage to the Mirpur cluster as they consist of enterprises who are
severly short on resource.

1.5 Limitations of the research:

A research on SMEs is always going to have its set of limitation and in a country like Bangladesh
where the majority businesses are small-medium scale businesses. These businesses vary from
industry to industry, from manufacturing to service providing SMEs. The research is limited to the
furniture industry which represents a minor percentage of the SME population. Also the sample of
the research is limited to workers in Dhaka, which again would is a bleak presentation of the worker
population of Bangladesh as majority of the skilled workers allotted the city when compared to the
rest of the country.

Structure of the dissertation

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1.6 Conceptual Framework

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 Critical evaluation in the literature not seen

Chapter Two

Literature Review

2.1 Defining training: context of Human resource development

Katz and Kahn (1978) contend that “Training is so general a word that it should be immediately
qualified”. The rationale for this statement is the view that there exists a close relationship between
training, education and development, both operationally and conceptually.

The Oxford English Dictionary definition of training defines it as a practical education in any
profession, art or craft. The HRM/D definitions do not differ significantly. It is generally defined as a
planned and systematic effort to modify or develop knowledge, skills and attitudes through learning
experiences, to achieve effective performance in an activity or a range of activities (Garavan et al.,
1995; Harrison, 1993; Reid et al., 1994). As an activity it appears to span many boundaries
including on- and off-the-job training, training for younger workers and adult training, formal and
informal training through work experience.

The most commonly used definition of training was provided by Nadler and Wiggs (1986):
“Training activities focus on learning the skills, knowledge, and attitudes required to initially
perform a job or task or improve upon the performance of current job or task”. There are four major
common characteristics in most of the definitions of training found in the literature:
• is a learning experience for both the individual as well as the organization;
• is a tool for behavioural and/or attitudinal change;
• is concerned with equipping and/or exposing personnel to a new set of knowledge and skills;
and

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 • productivity is undoubtedly the ultimate objective of any training system, and is achieved by
increasing the potential performance of individuals.

Training, then can be defined as a planned learning system aimed at attitude and/or behavioural
change by equipping individuals with desired knowledge and skills in order to maximize his/her
potential performance and, therefore, increase organization productivity.

2.2 Barriers to training in small business

The owner operators of small businesses often view training as something that happens out of
necessity and not as part of a continuous skills development process (Lange et al., 2000; Matlay,
2000; Vinten, 2000). Small businesses appear to be more willing to participate in training on the job
and/or more formal training where the direct link between cost and benefit is more visible. In
addition, there are some identified barriers to participating in formal training and these include:

 lack of resources, including time, money, and lack of suitably trained existing staff (Darch
and Lucas, 2002)

 lack of general management skills, which translates into fear of the unknown (Barry and
Milner, 2003, Darch and Lucas, 2002, Lewis, 2002, Walker et al., 2003)

 technology has not been embraced by all small businesses (Walker et al., 2003) and

 SMEs seldom engage in future planning and are therefore usually unable to anticipate future
skill needs (Greenbank, 2000a, Storey, 1994, 2004).

These barriers can be categorised into financial barriers, access and provision barriers, awareness
barriers and overall lack of technical and managerial skills (Storey, 2004; Storey and Westhead,
1997). Whereas some of the barriers are consistent with the difficulties of business ownership in
general, the issue of technical and managerial skills is changing, due to the changing work
environment and the growth in technology in general business practice.

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2.3 Determinants of effective training

Hatil realizes the need of training and realizes that with the company’s limited resources it cant risk
training interventions to be ineffective. Thus Hatil ensure that all those in the business related to
delivering training are equally committed and supportive. Over the years past experience with
employees have allowed Hatil to gain knowledge about what employees would need for training and
also has a perception of what new workers may require.

2.3.1 Training program

Good training permits participants to share real-world experiences and apply just-learned
skills rather than just to learn theory. The goal is not to put employees through training, but
for employees to learn and begin to apply the lessons learned (Shafer, 1998). Brennan and
Kaplan (2005) stated that if training offers the participants role models, they will be more
likely be able to apply what they have learned and act accordingly in the workplace. In order
for this concept to be carried out effectively and efficiently, they suggested that training
should be relevant to employee's jobs. If employees do not feel that training can be applied to
their own work situation, they will gain little benefit from it. Moreover, the training should be
engaging. It should be interesting. If participants do not pay attention, they will not learn,
much less remember, the information presented.

2.3.2 Training needs assessment

In the training and instructional design perspective, needs assessment is noted as one key to
effective training program (Holton et al., 2000). We relate the comparison between training
needs assessment to house construction made by Duggan (2005) to the diagnosis of a
disease. When we get sick, we need to find out first what the problem is so that we are able to
cure it effectively. It is the same in the case of an organization. Before deciding what type of
training should be offered, the organization needs to find out what needs to be trained to
avoid wasting time and money on training what should not be trained. Simply said, diagnosis
precedes treatment just as needs assessment precedes training. According to McGehee and
Thayer (1961), training needs assessment consists of three levels of analysis:

• organization analysis;
• operations, task, or work analysis; and
• individual analysis.

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Different kinds of employees have different kinds of functions to perform. McGehee and
Thayer (1961) also added that the most effective needs assessments address all three levels
of analysis. Rossett (1992), moreover, suggested that:

The purposes for conducting needs assessment include finding and disseminating information
about: 1) ideal performance, 2) actual performance, 3) how involving parties feel, 4) what is
causing the problem and 5) how to minimize gaps between ideal and actual performance
2.3.3 Organisational commitment to training
Effective training programmes require the dedicated support of top management (Motwani et
al., 1994). Organisations that commit effort and finances to training programmes and
employee development do so with the objective of a pay-off in terms of increased skill-sets,
increased motivation, increased knowledge transfer (Pate et al., 2000).

2.3.4 Flexibility of training

Every individual has a different style of learning and also has a different need; this is why
training needs to be flexible to satisfy every one of them. Gamerdinger (1997) noted that
because each individual has a different learning style, variation of training methods can
promote learning.

2.3.5 Self-efficacy
One finding to emerge from training research is the importance of self-efficacy for enhancing
effectiveness (Mathieu et al., 1993). Self-efficacy is an individual's behavior, belief in
his/her own ability to perform a task, and self-awareness of these abilities, all of which play a
key role in effective metacognition development (Gravill et al., 2002).

2.3.6 Supervisor support

In a number of organizations, we observe that immediate supervisors play a significant role in
their subordinates' training motivation (Facteau et al., 1995). Indeed, in a study involving
several organizations, Cohen (1990) found that trainees with more supportive supervisors
attended training programs with stronger beliefs in the programs' usefulness, which is an
important factor in employee motivation (Tharenou, 2001). Similar results were also found
by other researchers; (Facteau et al., 1995).

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2.3.7 Transfer of knowledge
Transfer of knowledge, according to, Ford and Weissbein (1997), Salas and Cannon-
Bowers (2000), is another key component of effective training. Baldwin and Ford (1988)
defined effective transfer of knowledge as the capacity of trainees to apply the knowledge,
skills and abilities gained from the training to their work practice. They also stated that
trainees are able to transfer new skills to their job when they:
• are confident in using new skills;
• are aware when it is appropriate to apply the new skills; and
• believe that the knowledge and skills they have learned from training are
helpful and needed in their workplace (Noe and Schmitt, 1986).

2.3.8 Training motivation

For training programs to be effective, participants should believe that participating in learning
would lead to desired rewards (Goldstein and Ford, 2002). Trainees with higher training
motivation would, therefore, believe that participation in the program and the subsequent
knowledge gain will lead to valued outcomes. It is logical to expect that individuals who are
highly motivated to attend the training program and to give due attention to the contents of
the training program. As a result, they are more likely to score higher points on the post-
training test (Mathieu et al., 1992).

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2.4 Factors influencing the training and development approach

Studies have identified that training support for SMEs needs to address specific challenges which
SME managers face if it is to be successful (Perren et al., 1999; Patton and Marlow, 2002; Cassell
et al., 2002). Previous research has suggested that a number of factors may influence the approach to
training in small firms including leadership roles, (Hannon, 1999) staff numbers, responsibilities and
previous experience of training (Westhead and Storey, 1997), situational factors such as production
techniques, market and industry conditions and product type (Cagliano and Spina, 2002; Corso et
al., 2003; Young et al., 2003). Theses studies, and a recent study by Jayawarna et al., (2007),
suggest that the influences on training approach adopted by SMEs are likely to be influenced by
specific firm characteristics, product factors and market conditions , and by the way responsibilities
and management roles were apportioned. In Hatil, the training approach and system has developed
from being non existent to being an effective system over the last couple of decades, where the
growth in number of employees, leading to new management roles and latest furniture designs have
all had an impact.

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2.5 Training needs of small business

The training needs of SMEs have been widely researched (Gibb, 1997; Storey, 2004; Storey and
Westhead, 1997) and the consistency of the findings provides a solid understanding that SMEs are
not committed to formal training or qualifications but seek opportunities for learning to address their
immediate business problems (Gray, 1994). According to Hatil general training isn’t applicable to
their needs. The company is however ready to take up training if training is provided of specific
skills such as liquor finishing, designing etc. Small businesses tend to focus on the informal transfer
of work skills and knowledge between individual employees, whilst large businesses tend to engage
in externally-provided training which leads to formal qualifications. This “formalised” learning is
often not appropriate or suited to small businesses as the approaches are linked to systems and jargon
which is of no perceived value to small business (Billett, 2001; Gibb, 1997). Small businesses'
preferences for training include:

• just-in-time modules presented in short chunks and to the point;

• relevant to the individual business and addressing specific business needs;

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 • training that is accompanied by support and advice;
• training that is affordable and readily available; and
• training that leads to recognisable business outcomes and solutions.

The primary method of learning by small businesses appears to be one of solving a problem
personally or when a crisis or problem occurs (Gibb, 1997; Greenbank, 2000a). Globally the debate
on key employability skills has been stimulated and led by employer groups and individual
employers and involves both formal and informal training to support skill development (Curtis and
McKenzie, 2001). It should be noted that small businesses are often not part of employer groups or
professional associations (Walker and Weigall, 2002) so the views of these groups are not
necessarily indicative of the real world of the small business operator. In contrast though, Hatil
belongs to the central association, the Bangladesh Furniture Industries Owners’ Association
(BAFIOA). Although for last 1-2 years the association has started taking initiatives, they seem to be
detached from a large number of manufacturers thus failing to address the problems of SMEs.

2.6 Training approach in small firms: formal or informal? The importance of informal, on-

the-job training for the small firm

Training can be formal or informal. According to Smith and Hayton (1999), informal training is
unplanned, not documented and largely unstructured. On the other hand, formal training occurs in an
off-the-job setting such as an educational institution. Small firms are less likely to provide formal
training for staff than larger ones (Storey, 2004; Matlay, 2004; Holden et al., 2006). Indeed, several
researchers found that in many small firms formal training does not take place at all (Gibb, 1997;
Westhead and Storey, 1997; Lane, 1994). Moreover, even if training takes place, it is reactive,
informal, short-term and almost exclusively directed at the solution of immediate work-related
problems rather than the development of employees (Hill and Stewart, 2000).

Training is often viewed as the vehicle for fostering learning, disregarding many other approaches
(Taylor and Thorpe, 2004). Consistent with this view, interest in learning in small firms has
focused on the provision or absence of “training” as the measure of “learning” (Field, 1998; Walton,
1999). In fact, most research into employee learning in small firms has involved “snapshot”

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quantitative surveys of employee participation in taught courses and structured on-the-job training
(Billett et al., 2003). Such research typically relies on definitions of training that are more relevant to
large organisations than to smaller organisations (Johnson, 2002). As Cardon and Stevens (2004,
p. 308) have noted,

“perhaps additional insights on employee skill development and learning could be gained if a
broader perspective on training is taken”.

Rowden (1995) in manufacturing organisations challenges the notion that little is done in the way of
training in successful SMEs. Rowden contends that interview participants had a narrow concept of
HRD, and did not view all the coaching, mentoring, on-the-job training and other forms of informal
learning that had been observed during the field based investigation as forms of HRD.

Gibb (1997) also looks beyond formal training in examining learning processes in small firms. He
conceptualises the small and medium size enterprise as an active learning organisation within a
stakeholder environment. Gibb argues that the predominant contextual learning mode in this
environment is that of: learning from peers; learning by doing; learning by feedback from customers
and suppliers; learning by copying; learning by experiment; learning by problem solving and
opportunity taking; and learning from making mistakes. This learning environment is continually
creating contextual knowledge through the process of the business striving to adapt, survive, and
grow. According to Gibb, this contrasts sharply with the largely de-contextualised (from the specific
problems/priorities of the firm) learning environment frequently provided by formal training.

Curran et al. (1997) argue that the importance of informal in-house training for small firms is
difficult to over-state, primarily because, for many, it is their only form of training. In Hatil, every
day bring about a new experience for its workers, which wouldn’t have been possible under a
educational or training institutions. Moreover, external training is often seen as second best because
of its cost and general nature. Curran et al. (1997, p. 97) highlight a number of other advantages:

• Informal training can be more easily integrated into the firm’s everyday activities, involving
the minimum loss of output or disruption of work teams.
• It can be undertaken in modules over short time periods and can be synchronised closely with
the firm’s production cycle.
• It can be more easily focused closely on the worker’s specific individual and work role needs.

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Much of the training literature is written from the perspective of large-scale organisations that posses
the necessary expertise and resources to invest in it, with the result that the “dominant perspective is
one of formalised, systems driven HRD provision rather than organic, informal HRD” (Garavan et
al., 1999, p. 170). Thus, formal systems appear limited and employees tend to learn from their
relationships with co-workers, team-mates and superiors (Hendry et al., 1995). As a result, the
concept of “tacit knowledge” is vital for understanding HRD in small firms (Hill and Stewart, 2000;
Abbott, 1994).

Tacit knowledge develops when “unconscious, inductive mental processes create a representation of
the structure of the environment showing the relationship between important variables” (Lubit,
2001, p. 166). Abbott (1994) emphasises the importance of tacit knowledge for the service sector,
where one learns primarily by experience the skills needed, for example, for dealing with difficult
customers:

… tacit skills encompass the ability to deal with unexpected or unusual situations for which there is
no prior frame of reference (Abbott, 1994, p. 72).

Despite the a fore mentioned benefits, it must also be acknowledged that informal in-house training
does have its disadvantages and may not always be the best course of action to take. Fundamentally,
there is the danger that, without supervision, improper work habits may be passed on from existing
employees to new recruits. In addition, the choice of trainer is a key determinant in the success of the
training effort. Trainers must be competent and interested in their work (Maher and Stafford,
2000). Harvey Jones (1994, p. 117), states that:

Our attitude to training is all too often exemplified in the selection of those we employ as training
managers.

SMEs thus consider training to be key to their success, but that training is more likely to be done on-
the-job using hands on methods which emphasise practical rather than theoretical elements (Vinten,
2000; Tregaskis and Brewster, 1998). Formal training is generally not suited to small firms for a
variety of reasons. These include

• the cost of such training,

• the opportunity cost of employees' time when they attend training off-the-job,

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 • the perceived lack of relevancy of much off-the-job training, because it usually does not
focus on firm-specific problems, priorities and work practices (Johnson, 2002; Gibb, 1997).

When small firms do engage in formal training, such training typically involves
• apprentice training
• supplier-sponsored training
• trade association organized training
• training required by regulatory bodies or larger customers (Johnson, 2002).

In Hatil training organizations were introduced to them by KATALYST a non government

organization (NGO) operating in the small business sector of Bangladesh.

Kinni (1994) suggests that one way of overcoming resistance is to train “just in time”. He argues that
if personnel are put through a training programme well in advance of the time they will require the
knowledge, their motivation will be considerably lower than if they can see immediate benefits. It is
therefore clear that educational establishments need to tailor the specific content of their offerings to
the needs of their local employers and then to communicate the benefits such training can provide in
terms of a tangible set of (immediate) advantages. In terms of the form such training might take,
some categories of training may be seen as essential, namely:

• employee competence in job roles;

• the development of good interpersonal skills;
• the cultivation among employees of a personal involvement with the business and the need to
“think like owners”;
• the development of appropriate skills in relation to modern technology;
• leadership.

Hatil has a contract with UCEP (Under Privileged Children’s’ Education Program) for training
employees. The contract was made because UCEP had the required expertise and experience and the
ability to provide skill development trainings to the workers (i.e. carpenters) on specific areas and
latest technology.

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The idea of emphasizing the immediate benefits of formal training can provide is not without support
in the literature and Hogarth-Scott and Jones (1993), in a postal survey of 180 small businesses
support the view that many entrepreneurs have a positive attitude to learning and no longer see it as a
one-off experience.

Indeed, there is now a growing acceptance that the traditional view of education is no longer valid.
The idea of completing one’s education at 16, 18, or 21 and then moving into employment is now
held by many to be outdated (Kinni, 1994). Many companies are now realizing that success depends
“on continuous, lifelong learning”.

Kinni(1994) argues that “no matter what size the budget, companies that invest wisely in the
education and training of employees are going to reap the largest returns”.

2.7 National Vocational Qualifications

Many organisations in the UK are using National Vocational Qualifications (NVQs) as a means for
developing their people, by relating the training programmes directly to their normal work. NVQs
are a system of training which lead to a nationally recognised award/accreditation. NVQs “comprise
units of competence at five levels, designed to be achieved within a tiered framework of standards,
assessment and verification” (Hales et al., 1996, p. 3). In effect they are assessments, which focus on
the attainment of competencies in the workplace, rather than merely providing examinations. They
are a relevant method for enabling businesses to achieve business objectives, through more effective
people development (Holyfield and Moloney, 1996). The benefits of participation in the NVQ
system, in terms of measurement, are that they provide organisations with a mechanism for
evaluating employees’ skills after the training has been completed (Weatherly and Du Toit, 2000).

NVQs have been accused of being over-bureaucratic and lacking in the necessary support from many
training providers (Johnson and Parker, 1998), both of which pose a potential financial risk to
small businesses (Joyce et al., 1995). Nevertheless, if these problems can be overcome, the
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advantages of the NVQ system are great as the standards relate directly to the training needs of the
sector and are flexible.

2.8 Furniture specific courses in training Schools

Many schools have started to run courses along with courses organized by a Swedish-Bangladeshi
joint venture. Apart from the UCEP, German-Bangladesh Technical is also offering courses in
carpentry and their students are being absorbed in the cluster manufacturing units. Hatil, like most
SMEs employ interior designers and students from Institute of Fine Arts of Dhaka University to
enhance and enrich their designs.

2.9 Action learning in SMEs: Learning through contextualised action and critical reflection

It has been well established in the literature that SMEs are action oriented and much of their learning,
therefore, is context-dependent and experientially based (Rae and Carswell, 2000). This reflects a
movement among researchers towards conceptualising SME development as a “process” (Cope,
2005) rather than a static input-output model, where development is conceptualised as something
given to individuals and assessed by before and after measures, SME learning is being conceived as
something, which occurs primarily through activities such as trial and error (Young and Sexton,
1997), problem solving (Deakins, 1996), discovery (Deakins and Freel, 1998), experimentation and
copying (Gibb, 1997), facing success and setbacks (Reuber and Fischer, 1993) and making
mistakes (Gibb, 1997). Such activities occur informally in the SME environment and consequently it
seems that much SME learning is occurring opportunistically and, incidentally often facilitated by
managers, supervisors and peers (Hughes et al., 2002). The SME learning environment it seems is
one where the importance of continually creating “subjective” contextual knowledge is emphasised,
rather than the “objective” largely de-contextualised learning environment provided by traditional
management development support systems provided by policy makers (Gibb, 1997).

26
While it is important to acknowledge that SMEs learn in a contextualised manner through action in
their own natural environment, Devins and Gold (2004, p. 246) draw attention to the problem that
although such learning “is often very meaningful and directly relevant to work issues, it is not
recognised explicitly as learning and occurs in an ad hoc and random manner”. As a consequence,
SMEs may move into the paradoxical situation of learning everyday practice, while failing to
acknowledge that learning has occurred and unable to recognise either the contribution of their
learning for work or the possible constraints. Such learning is unreflective and uncritical, and
consequently fails to move the organisation forward or keeps the organisation at a certain stage of
development without the means to take it further. Many small organisations may therefore remain
stuck in a cycle of “adaptive” learning rather than generative learning (Gibb, 1995).

Therefore, as Cope (2005) suggests, while much SME learning is action-oriented it is imperative that
SME owner-managers are not merely “doers”, rather, he suggests, they should be, “reflective
practitioners”. An integral part of being a “reflective practitioner” is the use of critical reflection to
help move the SME beyond the “adaptive” learning which takes place in naturally occurring non-
contrived learning occasions. As Cope (2003, p. 432) argues:

… facing, overcoming and reflecting on significant opportunities and problems” allows SMEs to
reach a higher-level learning, which affords them the capacity to “bring forward experience”.

Often deep forms of reflection are seen as triggered by the occurrence of “critical learning events”
(Cope and Watts, 2000; Sullivan, 2000; Taylor and Thorpe, 2004) or unexpected events, which
must be confronted and overcome leading to higher-level of learning. In theorising about action
learning McGill and Beaty (1995, p. 21) draw attention to the importance of critical experiences in
making sense of action through reflection:

We all learn through experience by thinking through past events … in times of crisis … reflection
becomes more important and also more difficult, it is at times like these we make powerful decisions
about our future.

Hatil, had an action-oriented style of self learning when opened up as a manufacturing firm. Being a
novice in furniture manufacturing and only having business administrative and managerial
knowledge through a masters degree the owner had to get actively involved in the production process
in order to gain knowledge about furniture manufacturing. Action learning also came into play in

26
order for the production manager to aquire basic managerial skills. As one would expect, in
Bangladesh, experts of carpentry or for that matter most manufacturing professions, wouldn’t have a
proper or for that matter basic educational background. Infact its only through learning by doing that
they acquire their carpentry skills. Thus its through action learning, managers of Hatil learn the
managerial compentencies they require.

2.10 Mentoring
Conventional training and development opportunities are often not tailored to the needs of small
businesses and can be too formal (Parker and Byrom, 2000). The purpose of mentoring is to learn
from the experience of others. As Pawson (2004 p. 91) suggests that

“it pays to use mentors who have ‘been there and done that’”.

Mentoring can also address the lack of time and resources many small business people have to
commit to formal training program. Mentoring sits on a continuum of support for small business,
forms of which are more or less suited for various needs in different contexts (Bisk, 2002; Hannon,
2001).

Mentoring can vary considerably in terms of duration of the relationship between mentor and
mentee, frequency of interaction and formality of the relationship (Hudson-Davis et al., 2002). The
purpose of formal mentoring is to capture, within an agreed framework, the power of the

26
conversations which given meaning or aid understanding of experiences, that occurs in informal
relationships (Devins and Gold, 2000; Sullivan, 2000). The role of a mentor is to help their mentee
explore options and ideas that they can then use to solve their own issues. For this to occur then
mentors should possess a range of qualities that enable them to act as a sounding board, challenge
assumptions and encourage wider thinking (Kent et al., 2003) in their mentees.

Studies point to the importance of carefully selecting and matching mentors and mentees
(Armstrong et al., 2002). Matching is this purposeful relationship that underpins whether any
momentum for behavioural and/or attitudinal change can be created in or for the mentee (Johnson et
al., 1999). Armstrong et al., (2002) focus on psychological elements such cognitive style or
similarity for matching. Also the nature of the interaction between mentor and mentee – their ability
to “get on” (Broome, 1996) – will affect the success or otherwise of the relationship (Pawson,
2004). Along with action learning mentoring is provided by Hatil to the managers so as to acquire
the managerial skills. Currently new workers are made to go through a mentoring process under
senior and more experienced workers.

2.11 Evaluating the training-performance relationship

The general assumption is that those businesses that pay more attention to training and development
will be more successful in the long run. Although this claim is widely established, evidence to show
that training and management development enhances SME performance is equivocal (Storey and
Westhead, 1994; Storey, 2004). Reviews, have shown that the empirical evidence for training
influence on firm performance is generally inconsistent and inconclusive (Morgan et al., 2002;
Heraty and Morley, 2003; Storey, 2004).

Those who provide a more positive link to the relationship found that training could facilitate a firm's
expansion (Cosh et al., 1998), existence (Marshall et al., 1995), profitability and productivity
(Betcherman et al., 1997) and competitive advantage (Huang, 2001; Smith and Whittaker, 1999).
Jennings and Banfield(1993, p. 3) claimed that “training can, and should be a powerful agent of
change, facilitating and enabling a company to grow, expand and develop its capabilities thus
enhancing profitability”. Huang (2001) suggests that firms with sophisticated training systems and

26
strong management support for training have effective training programmes and are more successful
in delivering training. For Hallier and Butts (1999, p. 82)

“organisational performance can be held back through a neglect of training activity”.

Cushion (1995; 1996) and Kerr and McDougall (1999) link the problem to the lack of effective
evaluation of training in SMEs. Issues such as short time horizons (Westhead and Storey, 1996),
lack of appropriate and holistic measures for SMEs (Hannon, 1999; Cushion, 1995; 1996) and the
difficulties in establishing causal links between training and performance (Storey, 1994) mitigate
against effective evaluation of training outcomes. Even those companies who do carry out
evaluations often use measures later considered ineffective (Schonewille, 2001). In Hatil, supervisor
report and employee performance appraisal are the two of the main aspects on which Hatil evaluates
the impact of training on performance. In literature the most common metric of evaluation is trainee
perceptions (Huang, 2001). Such assessments are ad-hoc, unsystematic, informal, and unstructured
evaluations of training programmes, which tend to be post-training appraisals rather than
approaching the evaluation of training programmes from their design stages (James and Roffe,
2000).

Chapter 3

Methodology

3.1 Research Purpose

3.1.1Exploratory research

Exploratory research is a valuable mean of findings out “what is happening; to seek new insights; to
ask questions and to assess phenomena in a new light’ (Robson 1993). This kind of research is a
particularly useful approach when the aim of the research is to clarify and define the nature of of a
problem and an understanding of it (Suanders, et al 2000).

26
Exploratory research is characterized by the flexibility regarding the methods applied. Instead
following formal procedures, the researcher has to open to new ideas and insights which may redirect
the exploration in an new direction. Consequently, the focus of the research may swift as the work
proceed and new knowledge is obtained (Malhotra, 1996).

A study with an exploratory purpose is intended to investigate a phenomenon that is little

understood, to identify categories of explanations and generate hypotheses and research questions for
further research.

3.1.2Descriptive research

A descriptive research is appropriate when the problem is well structured, when the researcher
knows what knowledge it aims to collect, and where there is no intend to look for the cause and
effects of the relationship (Weidersheim et al, 2000 ).

The objective with this kind of research is to describe something, such as a population or a
phenomenum. It seeks to anwer who, what, where and how questions. Consequntly, it doesn’t give
the explanatiom of the cause of findings. However, when solviong business problems is often enough
woth the information, obtained from describing a situation it is not required to know why things are
the way they are (Zikmund, 2000). This research is based on already existing theories and
hypothesis (Yin 1994).
3.1.3 Explanatory Research:
It is a study that establishes causal relationship between variables. The emphasis here is on studying
a situation or a problem in order to explain the relationships between variables (Saunders, et
al.,2003). Explanatory studies are designed to test whether one event causes another (Hair, Babin,
Money & Samouel, 2003). According to Yin (2003), the objective with this kind of research is to
analyse cause-effect relationship, explaining what cause produces what effects. Based on the above
literature the study could be said to be a explanatory research

3.2 Research approach

There are severals different ways of approaching a phenomenon, but also for a researcher to draw
conclusions, understand and explain. Research approach includes both a theoretical and
methodological approach. The theoretical approach can be either inductive or deductive, and
methodological approach is qualitative or quantitative (Zikmund, 2000).

26
3.2.1 Deductive vs Induction

The deductive approach implies that a conclusion is derived from known premise or something
known to be true. In this kind of research the researcher starts from a general rule and explains a
specific case (Zikmund, 2000).

When applying a deductive approach already established theories and literature are used as a
foundation for the research (Yin, 1994). Several hypotheses are constituted from existing theory and
are then tested in reality (Weidersheim et al., 2000)

On the other hand, inductions means generalization from conclusions derived from a specific case. It
implies that general conclusions are drawn from empirical findings (Yin, 1994) and can be described
as the logical process of establishing a general proposition on the basis of observation of particular
facts (Zikmund 2000).

A deductive method would be chosen for the research, since the research will start with a literature
review which will later be compared with findings, with the main idea already drawing from existing
theories.

3.2.2 Qualititative vs Quantitative

The purpose of qualitative research is to gain a deeper understanding and describie a problem.
Qualitative research implies soft data, such as atmosphere at work and is often represented in words
and observations. When conducting a qualitative research approach the aim is to interpret and
understand the phenomena by asking questions such as whom,, how and why. The gathering,
analysis and interpretations of the research cannot be quantified in the qualitative approach. The
questions are normally open-ended in the qualitative interviews and data gathering and no numerical
findings exist.

Quantitative research implies hard data, like information on profits gained and order size, and is
often presented as numbers that will determine the quantity or extent of some phenomena. The
purpose of this kind is to gather, analyze and measure statistical data. A wide sample selection is
normally used and the questions asked are generally not of complex nature and closed ended (Yin
26
1994). In most of exploratory research data collected is qualitative and on the other hand in
descriptive one data is quantitative.

In this study most of the data collected would be through questionnaires. All of this data would be
numerical and as a result the chances are that the research approach would be quantitative.

3.3 Research strategy:

According to Saunders, et. Al., (2000) research strategy is the general plan of how the researcher
will go when answering the research problem and questions, containing clear research objectives and
detailed information about the sources from where the information was collected. Commonly
disscused strategies are case studies, surveys, experimental and desktop research.

Case study is a technique that intensively investigates one or a few situations similar to the
researcher’s problem. This is beneficial when the researcher wishes to gain a deeper understanding
of the concept of the research (Robison, 1993). The information collection methods might differ
between case studies.

Surveys are usually associated with a deductive approach and they allow the collection of a large
amount of data from a sizeable population in a highly economical way. (saunders, et. Al., 2000).
Surveys is the best approach for gathering information when the problem area is already studied and
research problem is somewhat structured.

According to Kotler & Armstong (1994) the purpose of experimental research is tp explain cause
and affect relationship. It’s a technique in which individuals who are knowledgeable about particular
research problem are surveyed. The purpose with the experiment study is to help formulate the
problem and clarify concepts, rather than develop conclusive evidence (Zikmund, 2000). Sometimes
researchers finds it enough to solve the investigated problem through existing literatures and studies.
Researches that are made by existing literature and former studies are called desk top reasearches.

According to the mentioned description, the research strategy which best fits this research would be a
case study, as far as the research approach is deductive and quantitative, survey would be a best
choice.

26
3.4 Data collection method

Saunders, et. Al. (2000) explains that when gathering data and information to meet the objectives of
the research questions, there are two options to face, primary and secondary data. Kotler &
Armstrong (1994) declare that secondary data is information collected from former existing studies
and literatures, gathered for another purpose. They continue to explain that the main advantage of
this data compared to primary data is that it is fairly inexpensive. In this study the information can be
obtained from books, articles and research reports. Primary data is collected for a specific purpose by
the researcher and the information is gathered for instance through interviews, questionnaires and
observations (Weidersheim et. Al., 1997). Yin (1994) calls them source of evidence. A few
examples are: interviews, observation, literature study, etc.

To gather the primary data of the research interviews of Hatil’s manager would be carried out. After
having gained in depth understanding of the managers attitude towards the research problem,
questionnaires will be designed and distributed among the studied sample of managers and
employees

3.5 Sample selection

There are two major alternatves of how to select an appropriate sample: random (probability) and
non-random (non-probability) sampling. The random sampling gives every part of population and
equal probability of selection. The non-probability sampling includes a selection of a sample on
other basis than the random sampling, such as convenience and personal jugement (Zikmund,
2000).

A judgmental criteria has been used to select Hatil and Mirpur SME cluster. The cluster and the
company has been selected as their contribution to the success of the furniture stands out. As far as
selecting employees in Hatil is concerned a random sampling is used.

3.6 Quality standards

However, to only follow certain procedures to perform a good data analysis is not sufficient to create
a good research. The research also has to follow certain quality standards, in order to be seen as valid
and reliable. Therefore there are two major criteria for evaluating measurements, which are
reliability and validity.

26
3.6.1 Validity

According to Weidersheim-Paul & Erikssion (1991), validity can be defined as the ability of a
measuring instrument to measure what is intended to measure. Internal validity concerns the
accordance between a model’s concepts and the operational definitions of them. If the research is
valid, the researcher has done what s/he says s/he would do. To increase the internal validity the
researcher can, for instance, triangulate methods and data, and check that the presented data is well
linked to emerging theory.

3.6.2 Reliability

Reliability refers to the consistency of results when the research object has been repeatedly
measured. Reliability can be defined as the degree to which measures are free from error and
therefore yield consistent results. Thus, reliability is obtained when similar result are presented over
time and across situations (Zikmund, 2000). A measurement tool should give reliable and stable
results. Reliability is concerned with weather alternative researches would revel similar information
conducting a similar study (Saunders, et. Al., 2003).

Chapter Four
Presentation and discussion of findings
4.1 Qualitative data:

The training efforts of Hatil started ever since they started their operations. That was because of the
fact that there were very few skilled workers around to work with. Thus they had to take an approach
whereby the workers with knowledge and skill were training the unskilled workers; although they
were working at the same level. However according to the manager due to various reasons the needs
of the training had changed. These changes were needed because:

o Local manufacturers like Hatil has always had to face competition from the import
market
26
 i. The competition was initially restricted to price

ii. How technological changes and changes in consumer preferences had

increased this gap significantly.

o With limited financial resources Hatil was neither being able to recruit labour who
had the knowledge and skills required for such manufacturing.

Such factors meant that the skills of even the skilled workers became obsolete and thus according to
the manager there was a need for investing in formal training courses. However the option of
investing in formal training comes when there are facilities or institutions for training. Thus
according to the manager such an investment wasn’t possible due to the lack of institutions providing
training on furniture manufacturing. However things have started to change in the last five years and
currently there is UCEP an NGO who are arranging training courses based on the demand of Hatil.
Such an investment suggests that formal training does have a positive impact on SMEs. The manager
of Hatil agrees that formal training is effective however only when it is meeting a certain nessacitity.
Also the manager states that formal training is provided only to the senior employees in the company
who are already skilled at a certain level. These employees in turn become mentors for the junior
employees and acquire the skills under them. A similar mode of training on the job is applied when it
comes to training new recruits as has been going on since the start of Hatil’s operations.

However the factor that was noticeable was the fact that Hatil didn’t put in a lot of effort in
evaluating whther training was producing the desired improvement in performance. They were
simply relying on reports from the supervisor when in come to training on the job and simply the
report of the training institutions and the trainee’s feedback to evaluate formal training courses. It
thus highlights the inabilities of the SME’s to evaluate the relationship between training and
performance.

4.2 Quantitative Data

4.2.1 Questionnaire set one: Analysis of questionnaire for Mirpur SME cluster
managers

i. The need and importance of training

26
Response to this question confirmed the importance and need of training in small businesses. None
of the managers in the Mirpur cluster disagreed with the importance that has been attached to
training in small businesses while 98% of have agreed that there is a need for training given the
changes in the market situations. This reinsures the various literatures which have emphasized on the
need for training not only in small businesses but also in larger ones. The response is also in line with
the statement made by Hatil’s manager made that it was only the lack of availability of training
facilities and specific courses that kept them away from training.
ii. The use of informal training options

26
Response to this question highlights the literature that the importance and use of informal training
can’t be underestimated and that in order to understand the application of training in small businesses
the definition of training need to be view in a broader horizon. While 94% of the Cluster managers
agreed that on the job training has been used in entersprises, 93% of the managers agreed that
supervisors and mentors are also used in the process of learning. This highlights the fact that the
main mode of training for Cluster managers is that of informal on the job training through
supervisors or mentors.

iii. The use of formal training in small businesses

26
While the response to formal training may seem to have a high percentage of agreement on first
sight, a look at the questions will indicate excalty why is that so. A whopping 99% of the Cluster
managers have agreed that unless they facilitate specific needs training institutions are generally of
little value to small businesses. Also formal training institutions are only of use when it comes
acquiring a skill that is totally beyond the reach of the small businesses something with which again
99% of the respondants agreed to. This also reinforces what Hatil’s manager said about use of formal
training institutions for specific skills and knowledge.

iv. Influence that effect the training approach of small businesses

26
It is noticeable yet again that informal training is present in small businesses throughout their journey
as 100% respondents agreed that the use of informal training increases when the size of the firm also
increases. Although there were a few disagreements when it comes to the increase in formal training,
yet more 77% agreed that there the interventions of formal training increases as size and structure
increases.

v. Evaluation of training and performance relationship

26
Evaluation of the relationship between training and performance is considered the most controversial
issue as has been noted by many researchers. Most evaluation takes place with trainee perception or
supervisor reports. This is no different in the Mirpur Cluster as 98% have agreed that the only
method used to evaluate informal training is the supervisor report while in formal institutions the
institutions report and trainee feedback have had a response of 71%. This relatively low response
will have to judged with the fact that not all of the Cluster businesses look to provide formal training
to the employees. Perhaps Hatil’s manager was spot on again that formal training is viewed as a
mode of training which is there to fill in the gap in skills and thus no real evaluation is used.

4.2.2 Questionnaire set two: Analysis of questionnaire to Hatil and the Mirpur cluster
for determining the effect of formal training and informal training

26
i. The implications from informal and formal training approaches

The response to the questions is a clear indication of why employees as like their managers prefer the
use of informal training over formal training. 84% of the Cluster employees and 88% of Hatil
employees have suggested that it is through informal training that they gain better practical
knowledge about work. Moreover, 92% of the Cluster employees and 93% of Hatil employees
suggest that through traininging on the job they have been able to acquire specific skills. And as
Kinni suggest that formal training would allow better understanding of modern technology, 66% of
the Cluster employees and 63% of Hatil employees have similar though of formal traiing. Howvere
the fact that formal training wasn’t able to get a similar response to that of informal training
highlights the acceptance of formal training is still not as great as informal training.

ii. The benefits and drawback of formal training

26
 79% of the respondents in the Cluster and Hatil have suggested that the main benefit of formal
training is that of formal training is that it allows to learn about modern technology. While the
drawbacks seem to be distributed the one drawback that manages to somewhat stand out is that of
lack of development of specific skills as 42% of the Cluster employees and 44% of Hatil employees
have responded in such fashion. Irrelevent topics in courses is not far behind with 36% in Cluster and
33% in Hatil responding.

iii. The main benefits and drawbacks of informal training

26
 The response to these questions also shows why informal training is important to employees.
Opinions were divided as to what benefits they were actually receiving from informal training with
responses divided between development of specific skills, practical knowledge and its flexible
delivery. 33% of the cluster and 40% of Hatil agreed that through informal training specicifc skills
were developed while 36% of the Cluster and 37% of Hatil maintained that practicak knowledge was
best gained through informal training. Flexibility of delivery also managed to pick up 23% of cluster
and 15% of Hatils’s responses. Both parties were however adampant that knowledge about modern
technology would be best gained through formal training as they though it was major drawback of
informal training with 61% of the Cluster and 57% of Hatil employees responding in it as a
drawback.

iv. The use of and action learning and mentors as a learning option

26
It has been seen in literature that the best possible option for SME is to train and learn informally and
on the job. Various literature also suggest that this process has been made effective through the use
of action learning and mentoring. Hatil and the Mirpur cluster have shown an agreement with such a
consensus. The fact 81% of the Cluster and 76% of Hatil employees have agreed that working under
a mentor has enabled acquiring of skills. Moreover 81% of the Cluster and 84% of Hatil employees
have agreed that action learning has been in existence as an option to gain better knowledge and skill
about tasks in hand.

v. Preferred choice of training

26
The response to this question perhaps sums it all up. 42% of the Cluster employees and 38% of Hatil
employees have said that they prefer informal training on the job over any other mode of training
while the other significant mode of training that employees would prefer is that of informal training
on the job with formal training courses when needed. 44% of the Cluster and 48% of Hatil would
prefer informal training on the job with provision for formal training when needed. This also implies
that the sole need of formal training is almost nonexistent in small businesses a fact that was also
highlighted by the Hatil manager.

4.2.3 Questionnaire set three: Analysis of questionnaire to Hatil for effective training

26
i. The impact on training needs assessment in providing effective training

About 84 percent of the total respondents agreed that training was offered to all newly hired
employees in the company. Moreover, 85 percent agreed that training was offered to some particular
employees based on specific needs and job requirements. This showed that Hatil conducts a needs
assessment before offering training to employees. In addition, 78 percent agreed that the training
courses offered were relevant to their jobs. This implies that without the needs assessment, Hatil
would not be able to offer the right courses to the right employees and would therefore fail to offer
effective training. According to the literature, needs assessment enables training to be effective. This
relationship was confirmed when about 82 percent agreed that training helped them improve their
working performance because their needs were assessed before training was conducted and therefore
made the training modules relevant to their jobs. However, the result of this study indicated that only
45 percent of employees were asked for their opinions by management on what they needed to be
trained in before they received training.

ii. The importance of training program in providing effective training

26
 According to the literature, a good training program needs course content to be relevan requirements
and needs to use methods of teaching that can aid trainees' participation. The approach to training
that would suit employees have already been demonstrated in the earlier questionnaire. Four items
examined this proposition. The first shows that about 68 percent of respondents agreed that the
courses were offered in the way they wanted. Of all of the respondents, about 82 percent felt that
training courses were helpful for them to do their job better. According to the literature, when
training participants feel that what is being taught to them will be helpful for them to do their job,
they participate more actively and pay more attention during the training class. Furthermore, about
78 percent of them thought that training courses were relevant to job requirements. About 85 percent
felt that they were actively involved in the training class. Such outcomes indicate the positive
relationship between the effectiveness of training with its programs. In other words, a high level of
course relevance to job requirements hints at a high level of training effectiveness, and vice versa.

iii. The necessarily flexibility in training in providing effective training

26
As mentioned by Gamerdinger (1997) and Ambler (2006), different people learn in different ways.
Thus, training needs to be flexible to suit each participant's learning style. In addition, Gamerdinger
(1997) also stated that different learning styles with the conjunction of good learning aids can
stimulate the sense of learners to internalize their learning more. Based on the data collected, 80
percent of the respondents remarked that there is a variation of training methods such as hands-on
training and in-classroom training to fit with their learning styles. Moreover, 76 percent remarked
that they liked the training methods and felt that these methods were effective. Also, about 80
percent felt that the training facility was sufficient to promote their learning. This result shows that
the training offered is flexible, which according to Haughey (2000) can lead to effective training.

iv. The application of knowledge transfer in bringing effective training

26
Transfer of knowledge has been divided into two separate processes for this case; transferring
knowledge from the trainer to the trainees and transferring knowledge from trainees to work
situations. To be able to transfer knowledge to the trainees effectively, the trainer needs to be
knowledgeable and experienced. 60 percent of respondents agreed that their training personnel were
knowledgeable. As mentioned by Noe and Schmitt (1986), to transfer their knowledge effectively,
trainees need to believe that the skills they are learning are helpful, and they are confident in
applying their newly learned skills in an environment that enables them to demonstrate what they
have learned. Data proved that more than 80 percent were confident in using what they have learned,
almost 70 percent thought that what they had learned was helpful in work situations, and about 65
percent thought that there was a good environment in which they could apply their newly learned
skills. Also, social support is another factor creating an environment for participants to use their
skills. The data also shows that employees received fair evaluation feedback and support from their
supervisors

v. Social supports role in effective training

26
 About 87 percent of employees said that they received support both financially and emotionally from
their supervisor to join training. Management encourages individuals to receive training as well as to
apply their learned skills in the workplace. About 70 percent agreed that job advancement and
promotion exist for them after training. Also, 80 percent of the respondents agreed that they are
given opportunities to practise the skills and knowledge learned. Seventy-four percent added that
they enjoyed sharing ideas and discussions with their peers during training session.

vi. Self-efficacy’s role in providing effective training

26
About 73 percent were motivated by job advancement after training. About 80 percent of
respondents were full of confidence that they would succeed when they first entered the training
program. Simply put, employees who were motivated, confident and committed to being trained
were efficacious, and hence the training was likely to be successful. However, it is pointed out that
about 30 percent were frustrated whenever they were faced with challenges. This frustration could
affect their self-efficacy.

4.3 Discussion of findings:

26
There will be times when a firm might be more likely to invest in training, and as the findings
suggests that there is a key distinction between the preferences for formal or informal training. With
regard to firm characteristics, the fact that training interventions have incraeseed with time in Hatil, it
is a significant variable on both training provision and the approach to training chosen. Small firm
support mechanisms must recognize the diversity of practices associated with various firm sizes
(Kotey and Slade, 2005), but as noted by Hatil’s manager this is not the only factor that influences
the investment and approach of training in SMEs

Along with Hatil, managers and employees have shown a tendency towards informal training over
formal training with a affirmative response of over 80%. this reemphasises researchers who
frequently note that informal development takes priority over formal development within smaller
organizations because it is firm specific, “on-the-job” and it is perceived as more useful (Hill and
Stewart, 2000; Kitching and Blackburn, 2002). There may be a number of reasons for this, but the
reasons most often put forward are the cost (in terms of time and resources), flexibility, and formal
training's lack of relevance to specific needs (Storey, 2004). However, most researches do not
examine moderators that might influence training decisions to provide a more detailed understanding
of the issues involved. It is clear from the findings that size, innovation, production, market and
organizational conditions must all be considered, and that blanket generalizations about training
practices in smaller firms are not justifiable as seen from the operations of Hatil and the Mirpur
cluster SME.

Earlier studies show that action learning can help construction SMEs improve performance (Davey
et al., 2002), introduce new procedures and develop better relationships with clients (Davey et al.
2001). In this case, mangers of the cluster and Hatil have suggested that it is through this action
oriented learning that they have been able to come so far. Given the limited resources they had
limited options but to go for such a route. yet again with a whopping response of over 80%.

Supervisor support of crucial importance for effectiveness of training in small businesses as the study
suggest it is only form of learning that enables on the job training to be effective and is also a source
for evaluation.. In such a scenario the supervisors role is no less then that of a mentor as Parker and
Hudson-Davies (2000) suggest mentoring can take various forms.
As said supervisor plays an important role in the evaluation of the relationship between training and
performance a fact that Hatil’s manager and also the Cluster manager agreed to. Keeping in line with
what the manager of Hatil has suggested Guest (1997) recognizes training, as a unique practice, that
26
affects the quality of the HR outcome of skills and ability, but behavioural and attitudinal change and
thus higher performance will be achieved by the contribution of the implementation of other
practices as well. However, in theory, according to Harrison (2000), learning (triggered by training)
is a variable that may have a positive effect on organizational performance and is considered to be a
key element to the attainment of organizational goals. Nevertheless, adopting a training activity as a
solution to lagging performance presupposes that this performance problem, i.e. this gap between the
desired and the actual performance, is due to lack of training. This is illustrated better by Swart et al.
(2005).

The organization management ought to adopt training interventions to bridge this gap. Bridging the
performance gap involve s adopting a particular training intervention aiming at changing specific
skills and attitudes of the employees. This becomes clearer by examining Bramley's individual model
of training.

26
The underlying logic of the individual model of training dictates that the organization should
recognize that its employees are not effective and a change should be attempted in their knowledge,
attitudes and skills. According to Swart et al. (2005) an individual improvement will be contingent
on the quality of the training program, the motivation of the individual and the individual's needs.
Thus Hatil’s manager has to look at ways through which he can evaluet the relationship better
something that also applies to the Mirpur SME cluster.

Chapter Five

5.1 Conclusions

5.1.1 Research Question one: What training approach is appropriate for Bangladeshi small-
medium businesses?
The findings of this study suggest that there will be times when formal training is appropriate for
SMEs. Dependent on size, product, market and organizational structures, formal training will be both
required and/or encouraged by SME management whether that be Hatil or the Mirpur SME cluster. It
is possible that training is undertaken in these firms as a tactical solution to a problem (Cassell et al.,
2002) and the demand for training is explicitly related to improving the way the business is operated
(Patton and Marlow, 2002). Nevertheless, formal training may still be appropriate to address
specific skills or development needs as has been suggested by Hatil and the Mirpur SME cluster.

26
This will require an understanding of the unique problems that the SME managers face. Therefore, it
is not only the type of training that will be important. Training support for SMEs requires targeted
interventions that address specific problems that SME managers need to resolve, and will require an
in-depth understanding of the organization's context and conditions (Perren et al., 1999; Cassell et
al., 2002; Patton and Marlow, 2002). Consequently, “when thinking about SMEs, addressing the
pertinent HR issues that emerge from current business priorities should be a key theme” (Cassell et
al., 2002, p. 690), particularly since different styles of learning may be appropriate in different
situations and dependent on organizational conditions.

5.1.2 Research Question two: What elements enable training to be effective in Bangladesh
small-medium businesses?
Even though the quality of higher education in Bangladesh is poor (Chen et al., 2006), employee
performance in the SMEs specially in the furniture sector is still high. This contradiction led to the
recognition that effective training can make up for poor education. Therefore, one of the main
question of the report analyzed the effectiveness of training in the SMEs in Bangladesh with the
focus being on Hatil a company that is rapidly developing the reputation of being the first small
business of Bangladesh to transform into a mainstream company and with the expectation that the
results can be applied to other developing countries where the quality of education is also in a critical
state.

The results of this study indicate that six propositions are influential on the effectiveness of training.
First, training needs were assessed before Hatil offered training to their employees so that they could
provide different courses of training according to specific situations and the relevance to the
organization's tasks and employees' needs. Second, a good training program also had a direct impact
on the effectiveness of Hatil. The employees were satisfied with the program and deemed it relevant
to their job requirements; thus they involved themselves in the training process rigorously and
became committed to their learning. Third, it was found that training has to be flexible enough to fit
with the different learning styles of each employee. Majority of past studies have already emphasized
the effects of either self-efficacy or training motivation on training effectiveness (Facteau et al.,
1995; Guerrero and Sire, 2001; Mathieu et al., 1992). The findings from the study confirmed the
importance of supervisors support, self-efficacy and training motivation of trainees, subsequently
affecting their reactions, learning and transfer motivation which determines the effectiveness of
training. It was also revealed that employees in Hatil are self-efficacious, confident, and committed
to learning, all of which are characteristics that lead to successful training. Last, but not least, social
26
support was an ingredient of effective training, because it not only inspires self-commitment in
employees, but also makes possible the transfer of knowledge, another element of effective training.

However, despite a training needs assessment being conducted, it can be inferred that management
used their experience and observation to assess rather than getting opinions directly from employees.
This relative lack of making an effort to get opinions from employees regarding the level of
satisfaction with the training program should be taken into account. Management should put more
effort into conducting an opinion poll.

5.1.3 Research Objectives

Along with the research questions this report had set out four objectives that needed to be achieved.
Through the literature and the analysis of data collected through interview and questionnaire the
following conclusions can be made about the objectives.
Objectives Conclusions
1. Factors that influence a. The size of the firm has an influence on what training approach to take:
owner/managers i. As size of the firm increases the number of training interventions both formal
decision of training and informal also increases
approach ii. The increase in formal training interventions indicates that there is a reliance
towards formal training courses and that training approach isn’t dominated
completely by informal training
b. As products furnitures fall in the category of being innovative products and thus
there are variations in products being offered by competitors. Add to it the
constantly changing customer trends and preferences means that small businesses
are constantly in the need for formal training on the latest designs and technologies
2. Determining the right a. As such there is no ideal mix of training practices that can suits any company. It
mix of training practices varies from one firm to another. It has already been noticed how factors such as

26
 firm characteristics have an impact the training decisions
b. Small businesses apply a practice of informal on the job training through the use of
supervisors.
c. It is the supervisors who are given formal training courses who then work as
mentors for the new or inexperienced workers
3. Learning options that a. Action learning is a vital part of the training process both for managers and
would further enhance workers of small business as it allows:
SME skill development i. Acquiring knowledge skills and capabilities learning during work
ii. Reflective thinking of work which enables to remove mistakes out of the
system
b. Mentoring has been a major contributor to the training process. Small businesses
have financial limitations which don’t allow them to invest lavishly in formal
training courses. Thus supervisors are used to carry out training for inexperienced
workers
4. Relationship between a. Small businesses haven’t shown much emphasis on evaluationg the relationship
training and small between training and small business
business performance b. The belive about training and performance is that training is something that can’t
be measures numerically. It is more of a method that allows to close the deficit/gap
that exist in knowledge skills and abilities (KSA)
c. There is a generalized method for evaluating the impact of training on performance
i. Supervisors report is used for evaluating informal on the job training
ii. The evaluation of formal training is done through the use of the training
institution’s report and the trainee’s feedback
Table: Conclusions of objectives
5.2 Recommendation:
5.2.1 Implementing knowledge management: Potential positive impacts of knowledge
management on training in SMEs
Since the use of knowledge management techniques is relatively new for training applications, this
paper relies on the combined work of knowledge management and training researchers to derive its
potential. Knowledge management can be used as a short-term information source or a long-term
knowledge and skill builder. Either way the knowledge server provides a new and innovative way to
access information for training. Information should be available in the knowledge server to be
accessed by all members of an organization who can benefit from it. An expert system can present
several advantages as defined by Candlin and Wright (1992). These advantages confirm the use of
a knowledge server as a short-term or long-term training device:

• Instant expert advice across the organization leads to quicker system response time.

26
 • Instant expert advice encourages more requests for advice and increases the amount of
expertise used within the organization.

• Expertise may be employed by lower paid staff.

• The task of knowledge retrieval can be removed from the expert, allowing the expert more
time for the development of knowledge.

The use of a knowledge management system may decrease the learning curve owing to instantaneous
expert information, the ability to employ expertise at all levels and increase expert development
efforts. Pretraining motivation has been found to influence training effectiveness. Social support
variables and attitudinal variables of intrinsic incentives, training reputation, organizational
commitment, and compliance are the most highly related factors to pretraining motivation. Managers
who perceived more intrinsic reasons to attend training, who were less likely to attend training
because it was required, reported higher levels of motivation to attend and learn from the agency's
supervisory and managerial training programs. (Facteau et al. 1995). The use of a knowledge system
by Hatil and specially by Mirpur SME cluster in training could provide more intrinsic reasons to
attend training, show a commitment to training, build a quality and effective training program.

5.3Managerial implication
As implied through out the study, training will be necessary to increase the productivity of small-
medium enterprises in Bangladesh while the quality of education remains so poor. In other words, it
has been found that effective training can compensate for poor quality in education in terms of
improving employee performance. However, this is short-lived. In the short term, training plays a
crucial role in increasing employees' capabilities, thus increasing the productivity of firms, while in
the long term, formal education has to be enhanced.

While managers may perceive that informal training is more relevant, this study highlights the
importance of targeted formal interventions to specific problems. We suggest that these findings are
consistent with tactical approaches to training that address specific and identified training needs. By
addressing particular crises or difficulties, SMEs managers are investing (either time or money) to
provide access to specific knowledge resources that can contribute directly to business performance.

26
In spite of the good performance that exists in Bangladeshi small-medium enterpises, these SMEs
still have the potential to grow if their workers and managers receive more vigorous and continuous
training to cope with the constant changes in the business arena. It is not only these six propositions
that contribute to the effectiveness of training. They only assist in paving the road for future research
to determine more dimensions that will also contribute to the effectiveness of training it is mediated
by a number of contingent variables, including market, structure and leadership. Further analysis is
required to provide a deeper understanding of these effects.

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26
Appendices

Excerpts from the interview of Hatil Manager:

1. In your opinion where does Hatil stand as a local manufacturer in Bangladesh

o Enjoys the status of a market leader among local manufacturers

o A fierce competitor for the import market despite being “handicapped” in terms of
resources

o Growing into a well known local brand

2. Considering such a position do you agree with the status of a SME according to
…………

o In the context of local manufacturers no

26
 o However in terms of resources and import market and global market yes we are a
small business

3. Its been almost twenty years since Hatil started operation as a small enterprise with the
vision of becoming global furniture company. What has been the reason behind this
slow growth and how much has knowledge and skills been a factor?

o Local manufacturers like Hatil has always had to face competition from the import
market

i. The competition was initially restricted to price

ii. How technological changes and changes in consumer preferences had

increased this gap significantly.

o With limited financial resources Hatil was nither being able to recruit labour who had
the knowledge and skills required for such manufacturing.

4. Wasn’t investing in training an option for acquiring skills

o The option training comes when there would be facilities or institution for training

o There were no institutions providing training on furniture manufacturing up until the

last five years

o Currently there is UCEP an NGO who are arranging training courses based on the
demand of Hatil.

5. So this does mean that Hatil is affirmative in providing formal training to its labour

o Only where it is needed. Such as a course on a new technology or a lecture on new

designs or to meet any other specific need that Hatil can’t manage to provide

6. How does new recruits learn the manufacturing or for that matter manufacturing skills

o Hatil has a unit of senior manufacturing workers who takes care of new recruits
26
 o And when it comes to formal training its these senior workers who are sent for it as
they have the skill base to be developed upon.

7. How do evaluate whether the training provided has resulted in an improvement in

Hatil’s performance

o When it comes to on the job training, evaluation is done through

i. Supervisors reports on the workers who were under him

ii. As far as the formal courses are concerned they are provided to fill in a skill
gap on a specific skill and thus UCEP’s report and employee’s feedback on
the course is used.

8. Finally do you consider training to be an integral part of Hatil’s progress in the

furniture market and how do you segregate whther the need is of formal or informal
training

o It is of great significance considering

i. The lack of skilled labour in Bangladesh

ii. The constant threat of the importers bringing in new products on which the
local manufacturers like Hatil

o On the job training is of great significance as it is the approach used is the most
practical approach for workers to gain skills

o However on the job training doesn’t allow the acquiring of any new knowledge or
skill, which is filled in by formal training

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Questionnaire for managers of Mirpur SME cluster
Question 1 2 3 4 5

Given the changing trend in customer

preferences and threat of importers,
training is important for survival

The workers receive training during their

work

Supervisors/mentor are used to provide

training

Training institutions are generally not

required unless they are fulfilling a
specific need

Formal training is used only to gain

knowledge and skills that aren't available
within the company.

As the company grows the role of

informal training increases

As the company grows take up formal

training also increases

Supervisor report is the only method

used to evaluate training performance

Training providers report and worker

feedback is used for formal training
evaluation

26
Questionnaire for Employees of Hatil and Mirpur SME cluster:

1. Which form of training has enabled you to gain practical knowledge?

a. Training on the job (informal)

b. Training though institutions (formal)

2. Which form of training has enabled to you to acquire a specific particular skill:

a. Training on the job (informal)

b. Training though institutions (formal)

3. Knowledge about modern technology has been bettered acuired through:

a. Training on the job (informal)

b. Training though institutions (formal)

4. What has been the main benefit from the informal training:

a. Specific skills have been developed

b. Practical knowledge about process

c. Allowed to learn about modern technology

d. Available when needed

e. No benefits as such

5. What has been the main drawback of informal training

a. Supervisor not knowledgeable enough

b. Unable to gain knowledge about technology

26
 c. Realization of knowledge gained takes time

d. No drawbacks as such

6. What has been the main benefit of the formal training that has been provided

a. Specific skills have been developed

b. Practical knowledge about process

c. Allowed to learn about modern technology

d. Available when needed

e. No benefits as such

7. What has been the main drawback of the formal training that has been provided:

a. No development of specific skills

b. Irrelevant topics discussed

c. Transfer of knowledge gained takes time

8. Working under an experienced mentor has allowed you to acquire a wide range skills through
a longer time period

a. Strongly agree

b. Agree

c. Neutral

d. Disagree

e. Strongly Disagree

9. Learning through work has enabled to analyze your work and improve your working system

a. Strongly agree

26
 b. Agree

c. Neutral

d. Disagree

e. Strongly Disagree

10. If given a choice you would prefer:

a. Training on the job (informal)

b. Training on the job (informal) with provision for formal training courses when needed

c. Formal training courses

d. Formal training courses with on the job training periods when needed

26
Questionnaire for effective training to Hatil employees
Questions 1 2 3 4 5
1. Training is offered to all newly
hired employees in the
company
2. Training is offered to some
particular employees based on
specific needs and job
requirements
3. The training courses offered
are relevant to your job
4. Training has helped improve
working performance because
your needs were assessed
before training was conducted
and therefore made the
training modules relevant to
your job
5. Your opinions are asked by
management on what you
need to be trained in before
you receive training
6. The training offered is in the
way you want
7. Training offered is helpful to
do job better
8. Training was relevant to job
requirements
9. You are actively involved in
the training session
10. Variation of training methods
are used to fit with your
learning styles
11. You are keen on the training
methods and feel that these
methods were effective
12. The training facility was
sufficient to promote their
learning
13. You are motivated by the
prospects job advancement
training
14. You receive from supervisor to
join training
15. Management encourages
individuals to receive training
as well as to apply learned
skills in the workplace
16. Job advancement and
promotion exist for after
training
17. You are given opportunities to
practice the skills and
knowledge learned
18. Your training personnel were
knowledgeable
19. Your are confident in using
what you have learned
20. What you had learned was 26
helpful in work situations
21. There is a good environment in
which you could apply your
newly learned skills
26