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Recruitment and training in small firms

Stephanie M. Jameson Centre for the Study of Small Tourism and Hospitality Firms, School of Tourism and Hospitality Management, Leeds Metropolitan University, Leeds, UK

Keywords

Recruitment, Training, Small firms, Hospitality, Tourism

Background
Small firms and training
Although definitions of small firms have been extensively debated, there is no disagreement that the most commonly found tourism or hospitality enterprise is small (Thomas, 1998). To date, very little research has been conducted in these organisations. This is no surprise and as Matlay argues:

The hospitality and tourism industries are two of the fastest growing and most dynamic sectors of the UK economy. Both industries are highly labour intensive and, because of this, the effective management of human resources is critical to their success. A defining characteristic of these industries is the high incidence of small firms. The issue of training in the small business sector in general has been neglected by academics and management specialists and this is also the case specifically in tourism and hospitality. This article goes some way to address this gap in knowledge and examines the recruitment and training practices of small tourism and hospitality firms. The issues examined include sources of recruitment, the extent to which small tourism and hospitality firms had training plans and training budgets, participation, and evaluation of training.

Abstract

been found to exist between the size of firm and level of formality in various sectors of the economy (see, for example, Scott et al. (1989); Curran et al. (1993)). Research conducted specifically in hospitality firms (Price, 1994, p. 49) found that:

The issue of training in the small business sector of the British economy has largely been neglected by academic researchers and human resource planning, development and management specialists who, until recently, were content to suggest solutions which were more relevant to the businesses strategies of larger firms (Matlay, 1996, p. 648).

one of the main findings from the survey was the importance of the relationship between establishment size and employment practices F F F there was a strong correlation between size and the extent to which establishments had introduced personnel policies, procedures or other arrangements which met the requirements of employment law.

This is supported by Johnson and Gubbins (1992, pp. 28-9) who suggest that:

relatively little is known about the extent, nature and determinants of training in small and medium-sized businesses, either on a national or on a local basis.

Received February 1999 Revised September 1999

Journal of European Industrial Training 24/1 [2000] 4349 # MCB University Press [ISSN 0309-0590]

It is argued that with the growth of tourism and hospitality and the importance of human resources within them this neglect should not continue. Research conducted in hospitality and tourism firms of all sizes has discovered that informality and a relatively unsophisticated management style characterise the approach taken towards recruitment and training (Goldsmith et al., 1997; Price, 1994; Lucas, 1995; Baum, 1995). Research on recruitment and training in small firms in general (Jameson, 1998) has also indicated that an informal approach towards the management of human resources is the norm in these firms. One of the major themes in small business literature has been the examination of the informality of relations between employers and employees. A correlation has
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The significance of this relationship cannot be underestimated and must be borne in mind when interpreting the results on recruitment and training in the small firms in the sample. Any meaningful analysis of recruitment and training cannot be undertaken without some understanding of the labour market within which small tourism and hospitality firms operate. Much effort has been expended developing theoretical models of the labour market. As far as the tourism and hospitality industries are concerned one of the most useful theories is dual labour market theory. Goldsmith et al. (1997) summarize this succinctly. Dual labour market theory proposes that the total labour market can be segmented. One section is the primary labour market, where jobs tend to be supplied by large, highly profitable firms with a high capital to labour ratio and high productivity. Here, production is usually large scale with high investment in technology. Employment in these firms is normally stable with relatively high skill and wage levels. In this context, there are normally opportunities for training. The secondary labour market is normally characterised by small firms with low capital to labour ratio, low productivity and small scale production. In these firms,
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Stephanie M. Jameson Recruitment and training in small firms Journal of European Industrial Training 24/1 [2000] 4349

wage and skill levels tend to be low, employment is unstable and training opportunities are usually limited. Small tourism and hospitality firms normally tend to operate within the secondary labour market. There are obvious relationships between recruitment and training. One relationship is where training can provide solutions to problems in the labour market. Campbell and Baldwin (1993) suggest that in many industrialised countries there is a concern that skills shortages and mismatches are appearing in the labour market and that policy makers are aware that recruitment difficulties and skill shortages may reduce the competitiveness of small and large firms. Bradley and Taylor (1996) suggest that there is a growing awareness that education and training systems can influence the skill and occupational mix of a locality and local economic wellbeing. Another type of relationship is one where the level of recruitment affects the level of training. In tourism and hospitality, with their reliance on the secondary labour market and high rates of labour turnover, there is a strong tendency to have high levels of recruitment and low levels of training. The arguments being that either it is not worth investing in training or there simply is not time.

Recruitment

Research on tourism and hospitality firms in general (i.e. not specifically small firms) refers to informal and unsystematic recruitment methods (Lucas and Boella, 1996). Others, who have carried out research into recruitment in small firms in general have found a reliance on informal methods (see, for example, Curran et al., 1993). Millward et al. (1992) found that, whereas larger enterprises relied greatly on formal methods and bureaucratic procedures by specialist personnel departments, the small business owner/manager is likely to handle recruiting and personnel matters without delegating and is unlikely to have any relevant skills. Tourism and hospitality have one of the highest levels of skill shortages (HCTC, 1995; HEFCE, 1998). If, as Bradley and Taylor (1996) suggest, training can influence the skill of a locality, then it is interesting to see how seriously small tourism and hospitality firms take training. According to Curran et al. (1996) small businesses experience problems in providing training for both owner-managers and workers. It has also been discovered that the hospitality industry displays one of the

Training

lowest levels of training activity in the UK economy (HCTC, 1995). These points should be borne in mind when the results of this survey are interpreted. Two of the indicators of a systematic approach to training are the existence of a training plan/policy and a specific budget for training. According to the Hospitality Training Foundation (HtF, 1996) 63 per cent of employers in all industries had a training plan. In catering and hospitality 64 per cent had a training plan. The most recent research on training and small firms found that only 28 per cent of such firms had a training plan. It is appropriate to discuss training budgets alongside training plans. It is also useful to compare the survey findings with all industries and with the hospitality industry (no figures are available for tourism). In all industries 55 per cent of employers had training budgets; in hospitality this figure was 43 per cent according to IFF research (HtF, 1996). However, research carried out by the HtF found that only 19 per cent of hospitality firms had a training budget. In the UK, the provision of training to SMEs has become a central issue of economic policy (Miller and Davenport, 1987). Storey (1994) has described this as a major indirect small firms policy initiative. Over the last decade, the provision of training and support to SMEs has increased considerably involving national and local Government, the private sector, and further and higher education institutes (Westhead, 1996. In the survey on small tourism and hospitality firms, the issue of training provision was examined. There is little point in investing in training without attempting to measure its effectiveness. Measuring the effectiveness of training is extremely difficult in any size of firm. The small firms literature suggests that owner-managers of small firms assess the value of workforce training in an informal way and tend to use various kinds of subjective assessments. The firms in the survey were questioned on if and how they measured the effectiveness of training.

Research method
Researchers at The Centre for the Study of Small Tourism and Hospitality Firms based at Leeds Metropolitan University, UK, were keen to examine business practices in small firms both by breadth and depth. As such, it was decided to administer a questionnaire to

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Stephanie M. Jameson Recruitment and training in small firms Journal of European Industrial Training 24/1 [2000] 4349

4,331 small firms. In total, 1,103 were returned completed, giving a response rate of 26 percent. The project focused on four regions: Cumbria; Heart of England; West Country; and Yorkshire. Eight sectors were chosen to provide a broadly based cross-section of these industries. These sectors were public house/ bar; travel agent; hotel; visitor attraction; B&B/guesthouse; fast food/takeaway; restaurant or cafe; self-catering. The vast majority of firms in the sample were independently-owned single outlet businesses (80 per cent). The definition of a small firm adopted for the survey is fewer than 50 employees and is a conflation of the European Commission's definition of very small (or micro) enterprises (fewer than ten employees) and small (between ten and 49 employees). The sample source was the Business Database (British Telecom) and a disproportionate stratified sample was specified within the four regions to provide a cross-section of experiences. This article presents some of the findings of the national survey of small tourism and hospitality firms. The survey is the most comprehensive of its kind ever to be undertaken in the UK and examined business performance, the business environment, marketing and recruitment and training in small tourism and hospitality firms. The survey represents a barometer of the changing attitudes and behaviour of those operating small tourism and hospitality firms. This article concentrates on the recruitment and training practices of the firms in the survey. The aim of the research was to discover the extent and nature of recruitment and training in small tourism and hospitality firms.

Results
Informality and a relatively unsophisticated management style characterise the approach taken towards recruitment and training in the small firms in the survey. When respondents in the survey were questioned about their recruitment activity during the past year (see Table I), and more

Table I Sources of recruitment Value Word of mouth Local press Job centre College/training providers Other Trade press 805 444 358 171 111 95 Rank order 1 2 3 4 5 6

specifically were asked about the methods used to recruit staff, word of mouth was the most commonly used recruitment method, followed by local press and job centres. These findings support the advice in the recruitment literature which normally suggests that small firms should recruit from the local labour market and should keep their recruitment spending within a very tight budget. In addition to questions on recruitment, respondents were asked a series of questions on training practices. When they were asked if they had a training plan for their business, the results were as indicated in Table II. Although only 11 per cent of small tourism and hospitality firms had a formal written plan, significantly more had some sort of training plan. Although this is lower than for other industries and the hospitality industry in general, it is higher than the figure for small firms, and does indicate some commitment to a systematic approach to training. As far as training budgets were concerned, 12 per cent of firms in the sample had them (see Figure 1). This figure of 12 per cent is not discouraging, and in fact, is almost identical to the figure of 12.5 per cent for small firms in general (Curran et al., 1996). Although both the figures for training plans and budgets appear encouraging, more details are required on the exact nature of the training plans and the precise amount of money devoted to training in relation to turnover etc. However, results from the survey do seem to indicate that some small tourism and hospitality firms are taking training seriously. Respondents were asked if they had provided training during the past 12 months (see Table III). On-the-job training was the most common training method used by small tourism and hospitality firms. This was followed by external training courses and induction. These results are unsurprising as small firms in general tend to favour informal training methods and usually value training which is specific to the job in question. Although on the job training may be appropriate for many jobs in small tourism and hospitality firms, this reliance on informal, unsophisticated training

Table II Incidence of training plans Number Percentage Yes, a formal written plan Yes, an informal unwritten plan No 124 280 315 11 25 29 [ 45 ]

Stephanie M. Jameson Recruitment and training in small firms Journal of European Industrial Training 24/1 [2000] 4349

Figure 1 Incidence of training budgets

Table III Forms of training offered by sample forms Value External training courses in work time Induction training Internal off the job training courses On the job training Other 354 313 153 633 33 Percentage 32 28 14 57 3

methods is typical of weak internal labour markets which generally have low skill requirements and lack training and promotion opportunities. This can be interpreted as part of the whole package of the informal, unsophisticated approach to the management of human resources in small firms which is characterised by vague hiring standards and unsystematic recruitment. It runs counter to the primary labour market which has a strong internal labour market with precise hiring standards, formalised recruitment, high skill requirements and opportunities for training and promotion. Respondents in the survey were asked about training courses provided by external agencies and their replies produced the following response (see Table IV).

As far as the small tourism and hospitality firms in the sample were concerned the courses which they found to be ``very helpful'' were organised by private providers (42 per cent found them to be very helpful). The provider who ranked second in the ``very helpful'' category was trade associations with 40 per cent. Courses provided by the banks appeared to be the least helpful as they had the highest percentage of respondents in the ``not very helpful''category. Banks continue to be in the limelight as far as services to small businesses are concerned. Obviously it depends on which bank and which courses small tourism and hospitality businesses have experienced. Much also depends on the expectations that the owner/managers have of such a service. When the positive responses were combined, i.e. ``very helpful'' and ``helpful'', the providers who fared best were private providers (86 per cent), trade associations (83 per cent) and local authorities (83 per cent). The banks' results were worst with only 40 per cent of owner-managers finding their courses helpful. When respondents were questioned on active involvement in education or training initiatives, the results showed the following (see Table V). As far as Investors in People is concerned the 9 per cent of small tourism and hospitality firms which were either committed to or recognised as Investors In People is still much higher than the industry average of 3 per cent. This contrasts with the HtF's suggestion that small firms are only as likely as large firms to engage in Investors in People activity. Another finding which contradicts the HtF's view is that NVQ/SVQs have not been implemented in smaller hospitality establishments. Again, 17 per cent of small tourism and hospitality firms in the survey were participating in NVQs and SVQs. Highest participation was work experience for school pupils and work experience for college students and both of these

Table IV Assessment of courses by various providers Bank Chamber of commerce No. % 8 19 5 12 18 43 11 27 College/university No. % 50 73 19 14 32 47 12 9 Local authority No. % 43 71 13 11 31 51 9 8 Private provider No. % 65 67 9 13 42 44 6 8 Tourist board No. % 38 81 20 10 26 54 13 7 Trade association No. % 46 8 12 40 7 10

No. Very helpful Helpful Not very helpful Don't know [ 46 ] 4 8 5 13

% 13 27 17 43

Stephanie M. Jameson Recruitment and training in small firms Journal of European Industrial Training 24/1 [2000] 4349

Table V Government training initiatives Number Percentage Investors in People: committed Investors in People: recognised Education and business partnership Modern apprenticeships Work experience for school pupils Training for S/NVQs Training for work (unemployed adults) Work experience for college students Youth training/youth credits 39 56 12 53 213 179 19 178 37 4 5 1 5 21 17 2 17 4

Table VI Provision of training: owner-managers, managers, staff Owner/ manager No. % 159 75 305 66 Manager No. % Staff No. %

Intention to train Probably Possibly Unlikely Don't know

14 215 20 390 35 7 87 8 186 17 28 224 20 219 20 6 46 4 63 8

``initiatives'' have traditionally been extensively utilised by tourism and hospitality firms of all sizes. As mentioned above, it is pointless to invest in training unless some attempt is made to measure its effectiveness. In this survey of small tourism and hospitality firms one-third of respondents attempted to measure the effectiveness of training within their firm (see Figure 2). This again indicates that some small tourism and hospitality firms are taking training seriously. In the survey a question on future training intentions was divided into three sections; those relating to owner-managers, managers, staff. The results are summarised in Table VI Not surprisingly, the most likely recipients of training in these firms in the next 12 months will be staff. This may illustrate an intention to take training seriously but, of course, this intention needs to be reviewed in a year's

time. It is also necessary to evaluate the level, type, and quality of training being provided. Although there is an intention to train owner-managers in the next 12 months these are the people in small tourism and hospitality firms least likely to receive training in the next year. Given their importance as trainers, there is a case to be made that they should receive more support and training on how to train their workers more effectively. Authors such as Pittaway (1999) discovered that SME owners felt that their own skills impacted on the performance of the business and that they needed further training.

Conclusion
In conclusion, this research has been undertaken as a result of the gap in knowledge on training in small firms, and more specifically on training in small tourism and hospitality firms. It suggests that this gap should not be allowed to continue, due to the growth and increasing importance of the tourism and hospitality industries and the nature of human resources within them. The research operates from the premiss that small firms are not microcosms of large firms, and as such require separate treatment. It is therefore inappropriate and inadequate simply to utilise previous research which is based on the large firm sector. This research has attempted partially to fill the gap in knowledge about the extent and nature of training in small tourism and hospitality firms. As expected, recruitment and training in small hospitality firms are largely carried out on an informal basis. This is entirely appropriate for the sizes of firms in question and is consistent with research conducted in various industry sectors. Implications of informality, however, may include being in breach of current employment law and may also result in recruiting people who are inappropriate in the long run. Informal

Figure 2 Measuring training effectiveness

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Stephanie M. Jameson Recruitment and training in small firms Journal of European Industrial Training 24/1 [2000] 4349

recruitment practices and inappropriate selection can lead to high labour turnover. Compared with other industries, hospitality and tourism have higher than average skills shortages, labour turnover and hard to fill vacancies at every level (HEFCE, 1998). The scenario is one in which firms rely heavily on the secondary labour market and exhibit high levels of recruitment. It is argued that high levels of recruitment can affect the level of training in a firm. In fact, Hendry et al. (1991) found that in some cases, managers may prefer to recruit rather than train. Wynarczyck et al. (1993) discovered that the absence of an internal labour market in a small firm can impede the provision of formal training. Although this survey has not found a high level of formal training in small tourism and hospitality firms, it has discovered that in some firms, training is being taken seriously. Although as mentioned above, small businesses experience problems in providing training and the hospitality industry has one of the lowest training levels in the UK, small firms in this sector actually had higher incidences of training plans than small firms in other sectors. Informality is again present in relation to the types of training offered in the firms. As expected, on-job training predominates. Although it is essential to train people to do the job for which they have been appointed, this reliance on informal training can result in the exclusion of staff development in a more general sense and can reduce the likelihood of developing an internal labour market. Dependence on informal on-job training can increase the utilisation of the external labour market which enforces the vicious circle of high levels of recruitment and low levels of training. Optimism regarding training in small tourism and hospitality firms can again be seen when examining results of relationships with Investors In People and NVQs. The results of this survey indicated that in both cases small firms had higher levels of commitment than the hospitality industry in general. Overall this research has offered a snapshot of the nature and extent of recruitment and training in small tourism and hospitality firms. It is suggested that more research needs to be conducted to establish if correlations exist between training activity and the type and size of small tourism and hospitality firm. It is also proposed that whether or not a firm is in a stage of growth can determine attitudes towards and participation in training. Future research should concentrate on depth rather

than breadth and a more qualitative approach would be appropriate which determine the reasons why small firm ownermanagers decide to train/or not, how they decide on the type of training and if the type of training is effective in the small firm context.

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