To be or not to be trained

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					                 To be or not to be trained?
                 Results of a survey on training in Quebec SMEs
Pierre Emmanuel Paradis, Senior Economist
May 2003
                                                                              Figure 1
Summary: Small and medium enterprises (SMEs) in           Training offered by Quebec small businesses
Quebec rely greatly on training to counter the
growing shortage of labour in the economy. Training
                                                                  Quebec 6,5       32,9                  34,3                26,3
represents a major and growing component of SME
investment in human capital, serving to integrate new      Rest of Canada          45,0                          45,1               9,1
employees, increase their level of productivity as well                 0         20           40           60          80            100
as to sustain and raise the productivity of existing
                                                                               Formal (in class)
employees. Training activities amongst Quebec
SMEs are extremely diversified, in accordance with                             Informal (mentoring, on-site training)

the wide variety of individual needs and realities of                          Formal and informal

small businesses. Despite its laudable aim, the Act to                         No training
Foster the Development of Manpower Training has
not had the expected positive effect in this regard.
                                                          B. Responsibility and motivation
A. Nature and frequency of training activities            About one-half of SME managers believe that small
                                                          businesses play a leading role in employee training,
Training offered by SMEs to their employees               34% believe that teaching institutions are responsible
includes formal training, provided by institutions or     for this training, and in a distant third place, 7%
companies specialized in a specific area of expertise,
                                                          believe that employees themselves are responsible.
and informal training, offered in a less structured
context, and focussed on the company’s day-to-day
                                                          The three leading incentives for training are greater
activities and specific characteristics. In Quebec,       productivity and competitiveness (65%), skill
nearly three-quarters of SMEs carry out one form or       improvement among under-qualified employees
the other of training, or both at the same time. Few
                                                          (60%) and integration of new employees (52%). Two
offer formal activities only.                             other factors mentioned are technological upgrades
                                                          and employee retention.
Two out of three SMEs systematically train their new
employees. Close to half of these companies offer
                                                          C. Duration and intensity
training to all of their employees, while it is offered
to a lesser degree to employees performing new            Training is given in three instances: upon hiring, to
functions (41%) or holding key positions (33%).
                                                          upgrade skills upon hiring, and to maintain or
                                                          improve the skills of existing employees. Upon
Over the last three years, the majority of Quebec         hiring at a Quebec SME, the average duration of
SMEs (54%) have increased their training budgets,
                                                          training is 126.4 hours, of which more than eight out
while 36% have made no changes and 3% have cut            of ten (82%) represent informal training. This is
their contribution. In the years to come, three out of
                                                          equivalent to three weeks full time or 6.3% of annual
five SMEs plan to increase their training budgets,        hours. This result is slightly below the national level
while the others plan to do the opposite.                 of 136.5 hours.
                      Table 1                                           Satisfaction with private trainers (74%) is greater
          Training hours for new employees                              than that for other levels of training. With two-thirds
                       Informal         Formal        Total             of SMEs expressing satisfaction, universities and
Quebec                   104.0           22.4         126.4             colleges tie for second place, followed by high school
Canada                   113.1           23.4         136.5             (56%).

In addition to this basic training, two out of three                    D. Impact of the Quebec legislation
SMEs believe that it takes a few months or more
before a new employee is fully productive. In                           The proportion of Quebec SMEs that offer training
general, the higher the required skill level, the longer                (74%) is markedly lower than in the rest of the
this period.                                                            country (91%), despite the existence of the above-
                                                                        mentioned act that requires companies to invest the
                      Figure 2                                          equivalent of 1% of their payroll in training.
         Training needed for a new employee
              to reach full productivity                                Contrary to its original objectives, this act has had
                                                                        the effect of actually slowing training activities
     A year or more                                       35
                                                                        within Quebec SMEs. This inconguity stems from
      A few months                                   31                 the fact that the extensive paperwork and conformity
                                                                        costs associated with this act are such that, as a
         A few weeks                            24                      result, many SMEs prefer to pay the “1% tax” rather
                                                                        than invest their energies into these formalities. Thus,
          A few days       7                                            it is not surprising that 40% of respondents consider
 Almost immediately 1
                                                                        this “tax” to be a major irritant in the management of
                                                                        their human resources, compared with less than 1 %
         Don't know    1                                                across the country.
                       0          10       20        30        40
                                                                        E. Proposed solutions
                                       % responses

As for the duration of training needed to maintain                      Reducing the tax burden (50%) and implementing tax
productivity, 30% of employees receive training for                     credits (46%) are the two incentives most often cited
more than one week a year, while 30% require up to                      for increasing the level of training offered by SMEs.
one week and 21% require one to two days per year.                      Better information (26%) and an increase in
Less that one in 10 SMEs believe that their                             government resources for these programs (26%) are
employees require no periodic upgrading.                                also possible solutions.

In short, a general sectoral pattern of training offered                Concerning the 1 % Act, efforts shall be recentered
in SMEs can be identified (see Table 2). Clearly, this                  towards recognising the competencies of employees
is a very general framework that varies depending on                    rather than monitoring the specific training activities.
the nature of the activities of a given company.
                                                                        This survey was conducted among 1,179 SMEs in
                        Table 2                                         Quebec and its margin of error is 2.8%, 19 times out
              Sectoral patterns of training                             of 20.
No.         Training                 Sectors
 1 High upon hiring and Finance, wholesale
    for existing employees
 2 High upon hiring, low Transport, construction,
    for existing employees manufacturing, services,
 3 Low upon hiring,        Agriculture, hospitality
    minimal for existing