Food for thought this week in the shape of a report from Lloyds Commercial Banking which shows that thousands of SMEs are failing to tackle vital skills gaps in their workforce.

SMEs taking part in the survey expressed concern that skills shortages were having a detrimental impact on their business – and in particular were holding back growth and limiting competitiveness.  Yet despite these concerns, 80 per cent of the 1,000 businesses questioned had not increased their investment in training and development over the past year, citing budget constraints and time pressures as the main reason for lack of action.

There’s no doubt that SMEs are often wary about investing in formal training programmes.  Quite apart from the cost and staff time away from the office, there’s always that nagging worry that your recently trained employees will take their new-found skills and head off into the sunset (in the direction of another, usually larger employer who can afford to pay them more).

Keeping staff skills up-to-date is, however, vital for any business that wants to expand and out-perform its competitors.  So what’s the best way for HR people (or whoever in the business is responsible for staff development) to put together a strong business case for training and make sure development pays dividends for the company?

Understand what skills the business needs

In a fast-moving business environment, the skills you need today will not necessarily be the skills you need tomorrow.  Yes, of course it is important to address any current, urgent skills gaps that are hampering performance – but it’s equally important to look ahead and predict what qualities and competencies the business will need from its people in the future.  Talk to senior managers and get a sound understanding of where the business is heading and whether this will call for new or up-dated skills.  It’s worth looking around at what’s happening in your wider industry sector too – to see what trends are emerging and how competitors are reacting to changes in the market.  The most effective training and development plans are those that are closely aligned to the business strategy and flexible enough to adapt quickly if the market moves and priorities change.

Audit current competencies

Pulling together and analysing information about who you’ve got and what they are capable of can be an enlightening experience.  Ideally, the business will already have this information safely housed in its HR software system – or at the very least on a spreadsheet somewhere – but it’s surprising how few businesses actually look at the data they have or make efforts to keep it up-to-date.  The latest technology makes it easy to collect and manage this data – and drilling down into it is definitely worthwhile.  You may find, for example, that you have employees with valuable skills developed in their past career which are not being put to good use in their current role.  It’s also worth looking at skills employees may have gleaned from an outside interest or voluntary work – these may not have been relevant at the time you employed them but may well become useful as the business develops.  If you have a clear understanding of the competencies and skill sets that already exist within the business, you will be able to identify and fill any gaps much more effectively.

Talk to people

Of course it’s not just about the skills your people have – it’s also about their potential and their aspirations.  Talking to people about their ambitions, how they see their career developing and what skills they would like to develop should be an important part of any performance management process.  It’s no good developing people for a job they don’t want to do or training them in skills needed by a particular team if they are more interested in learning about the work of another department.  Regular, good quality conversations between managers and their people will ensure that the right development is targeted at the right people – and that employee aspirations are matched with business needs.  The latest performance management software provides a central place to record the details of these conversations – and to make sure that any development that’s agreed actually takes place.

Think widely about development

Once the business is clear about it’s development priorities, the next stage is to think carefully about what kind of training will be most effective and also feasible within the budget.  Lack of funds is often a barrier to training in SMEs – but it doesn’t have to be expensive.  Many formal training providers have adjusted their offering in the light of difficult economic times and are now developing shorter and more cost-effective programmes.  Look at bringing costs down by joining forces with another SME with similar development needs and investigate if there are any government or industry-subsidised training programmes you could take advantage of.  Some of the most effective forms of development are cost-free.  Try job swaps, shadowing or allow employees to ‘step up’ while a senior colleague is away on holiday.  Organise lunch time ‘learning bites’ where experienced employees share their knowledge with others and encourage senior staff to mentor and coach those at earlier stages of their careers.  Reverse mentoring – where younger employees mentor more senior staff – can also be a really effective development tool.  It’s a great way, for example, of helping older managers get to grips with areas like social media and can be a real breeding ground for innovative ideas.


Make sure the training strategy you put together has clear goals and that you have thought about how to measure progress.  Training is notoriously difficult to evaluate but you can put some markers down to help you assess how effective development interventions have been.  You could consider monitoring if there is an increase in sales after a marketing training course, for example, or whether employee engagement has improved after a management development programme.  Anecdotal feedback from clients or customer satisfaction ratings can also be useful measures, depending on the nature of your business.  Make sure you share the results of your evaluation and talk about successes with the senior management team so that they can see the investment has been worthwhile – and to encourage them to allocate a bigger budget next time round!

How much emphasis does your business put on training – and what kind of development have you found most effective?  Let us have your views.