Management: Time to scrutinise the shibboleth of training

Afundamental cause of the difference in productivity between Britain and Germany is that the Germans place much emphasis upon vocational qualifications for large sections of the workforce. Training, or the lack of it, argues the National Institute of Social and Economic Research, lies at the heart of Britain's poor economic performance.

Yet in Britain there are important differences between small and large firms. Small businesses are much less likely to train workers than larger firms. Owner-managers of small businesses are also less likely to receive training than managers in large firms. So why are small firms particularly unwilling to take part in training?

There are a number of possible reasons for this. First, for some reason, small firms are unaware of the benefits of training. Second, while small firms may be aware of the benefits, the cost of either the owner or workers being 'away from the shop' is so great that the benefits turn out to be not worthwhile. Third, a long-term investment in training is not worthwhile because small firms are not sure they are going to survive long enough.

But a more contentious explanation for low take-up rates is that training yields the small firm few benefits. This may be because the small firm benefits from training only if it is focused upon day-to-day needs. It may be that training is valued only where it is delivered by those having extensive relevant working experience, and most trainers are professional teachers.

Training is also delivered in many different ways: for instance, via distance learning, short courses, weekend seminars or day release. It is also delivered to different types of small firms. And it is quite possible that, while some firms may benefit, the bulk do not. Scepticism about the effectiveness of training for small firms is fuelled by the results of a survey established on the Business Start-Up - the former Enterprise Allowance Scheme. It examined just over 2,000 businesses started in May 1991 and found that by November 1992 71 per cent were still in business. However, the most interesting point is that those business owners who attended Training and Enterprise Council courses before starting their business were less likely to survive than those who had been on no such courses.

A table in the document identifies six types of courses that the business owner could have participated in before starting in business. It shows that those on five of the courses were likely to have slightly higher failure rates than non-participants. For the sixth course the rates were identical.

Yet the report shows that more founders of new firms are now required to undertake training. Fifty-four per cent of BSU participants had been on at least one of the courses identified in the table. It may be that business failure rates would have been higher if the courses had not existed. It is also possible that those who were thought most likely to experience difficulties were those most likely to be sent on courses. However, these 'sample selection' arguments are not plausible, since on some courses a higher proportion of failed business owners were required to undertake training, whereas for other courses it is the reverse.

Disconcerting as these findings may be they are not new. Earlier follow-up studies of participants in the Enterprise Allowance Scheme have consistently found that pre-start up training does not influence either the survival or non-survival of businesses.

So, why is it that so much money is now being spent on this by TECs? The time is ripe for a thorough investigation of value for money in this area.

The author is director of Warwick Business School's centre for small and medium-sized enterprises.