The future of competence management in SMEs …is it really that bright?

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The future of competence management in SMEs

…is it really that bright?

By

Jaap Meursing

University of Groningen

Faculty of Management and Organization

Master thesis MSc Human Resource Management

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The future of competence management in SMEs

…is it really that bright?

This paper is made possible by

The University of Groningen

Supervisor

Dr. P.H. van de Meer

De Winter Adviesgroep

Supervisor

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ABSTRACT

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1. INTRODUCTION

The business environment is more chaotic, challenging and turbulent than ever before (Kanter, 1995). This is due to continuous technological developments, shorter product life cycles, increasingly demanding consumers and global competition (Hammer & Champy, 1993). In this context, the focus has shifted to more knowledge economies, which enforces the key role of human capital in creating the competitiveness of enterprises and their economic growth. This development has a direct effect on human resource management (HRM), which shifts its focus from measuring individual productivity of employees to strategic management of human resources (Hagan, 1996). This means that organizations are becoming more aware of the competences of their employees, in order to stay competitive. Competence management is therefore an important part of strategic human resource management, because it entails the planning, implementation and evaluation of competence, in order to reach the objectives of the organization (Hamel & Prahalad, 1990). Literature has shown that competence management can have multiple positive effects (Hagan, 1996; Hadjimanolis, 2000) and competence management could be especially relevant for medium sized enterprises (SMEs), due to their limited resources. Many state therefore that competence management has a bright future (Hagan, 1996; Duhan, 2007), but how bright is this future really when we look at the ability of SMEs to successful implement competence management. Besides this point, another interesting question rises, because does this bright future apply to all SMEs or does it only apply to SMEs in specific sectors. In this paper we will answer these questions by researching the current use of competence management in SMEs and by researching which SME sector is best able to successful implement competence management. In this way we will not only give an overview of the current use of competence management in SME sectors, but we will also answer in what degree competence management is even an option for SMEs. This paper will focus on the SME sectors in the three northern provinces of the Netherlands; Groningen, Friesland and Drenthe, which results in the following research question:

“Which SME sector in the three northern provinces of the Netherlands; Groningen, Friesland, Drenthe, makes the most use of competence management and which SME sector in these provinces is best able to successful implement competence management?”

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2. THEORETICAL FRAMEWORK

In this chapter we will first explain the concept of competence management. In order to fully understand competence management we will first focus on the history of competence management and we will take a closer look at competences, competence management and the different forms of competence management. We will also give an overview of the advantages and disadvantages of competence management, in order to give a balanced view of this phenomenon. The second part of this chapter will elaborate on how competence management, as part of the HR strategy, fits within strategic human resource management. In this second part, we will make use of the SLAP model (Bax, 2003), in order to better understand the strategic, tactical and operational implications of competence management. After we have elaborated on competence management and how it fits within strategic human resource management, we will focus on the minimal requirements which a SME has to meet in order to successful implement competence management. The last part of this chapter will be dedicated to SMEs and SME sectors.

2.1 Competence management

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8 2.1.1 Definition of competences

Books and articles on competences divide competences in two different types. The first type is on organizational level. Competences on this level are also called core-competences. Like stated in the previous paragraph, competence management primarily emerged due to the publication of an article about core competences (Hamel & Prahalad, 1990). Core competences are almost similar to distinctive competences, which are subject of older strategy texts were it is described as something the organization does particularly well in comparison to other organizations (Boxall & Purcell, 2003). Core competences are therefore the most important resources of an organization to gain a competitive advantage, due to the fact that it enables organizations to provide particular benefits to customers (Boxall & Purcell, 2003; Bax, 2003). Core competences will be discussed more thoroughly when we elaborate on how competence management, as part of the HR strategy, fits within strategic human resource management. The second type of competences is focused on individual level. In this paper we will primarily focus on this second type. It is however impossible to ignore the first type, because core-competences are realised by individual competences and they are therefore correlated with each other. If we focus on competences on individual level, than literature shows us that there is not one universal definition for this type of competences. The following definitions can be given;

• Competences are specific defined behavioural traits, that contributes to the successful functioning and therefore the realisation of organizational goals (Kluytmans, 2001).

• Competences are capabilities that express themselves in successful behaviour (Van Dongen, 2003).

• Competences are personal traits, described in behavioural terms, which contributes to the successful functioning and therefore the realisation of organizational goals (Van der Heijden, 1999).

• Competences are specific traits, knowledge or skills of people, groups of people or organizations (Kruijf & Stoker, 1999).

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9 greater than the differences. In regard to competences it is important to chose one definition to avoid confusion. In this paper we will use the definition Kluytmans (2001), because he is one of the few researchers, who is aware of the differences and similarities.

2.1.2 Definition of competence management

Competence management is focused on improving the performance of the individual employee and the organization as a whole. This can be done through different formal- and informal training activities. Competence management is not really a method or an instrument, but it is a way of thinking about developing the competences of the individual as well as the organization (Vols & Aalbers, 1998). Also in regard to competence management, there is no universal definition, but like competences, there are a lot of similarities between the different definitions. Literature gives us the following definitions regarding competence management;

• Competence management is the continuous, integrated alignment of strategic objectives , translated to competences with talents of employees ( Kluytmans, 2001).

• Competence management is managing competences in such a way that the right competences are on the right place on the right time (Van Dongen, 2003).

• Competence management is the continuous, integrated alignment of competences and talents (Van der Heijden, 1999).

• Competence management is the development and exploitation of competences of employees in line with the strategy and the objectives of the organization, with a department or with a team within the organization (Kruijf & Stoker, 1999)

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10 talents and abilities of the employees on the other side. In this paper we will use the definition of Kluytmans (2001), because this will best fit the definition of competences, which was discussed in the previous paragraph.

2.1.3 Different forms of competence management

Competence management is a management philosophy and like stated in the previous paragraph, this means that it is a way of thinking about developing the competences of the individual employee as well as the organization (Vols & Aalbers, 1998). The way in which competence management gets shape depends largely on the ideas and opinions of the organization about the relationship between the employees and the success of the organization. In practise this means that we can distinguish different forms of competence management. Kruijf and Stoker (1999) are two researchers who focused on these different forms and they eventually distinguished four forms of competence management. However, before discussing these different forms we will first discuss the order model of Kruijf and Stoker (1999). The order model will help us better understand the differences between the different forms of competence management, because this model focuses on the central relationship between the organization and the employees on three organizational levels. We will therefore first discuss the order model (Kruijf & Stoker, 1999) and then we will elaborate on the different forms of competence management.

The order model (Kruijf & Stoker, 1999) distinguishes three levels within the organization. The different levels do not follow an action-reaction path, but they are interactive with each other. The basic idea is that an organization constantly needs to evaluate if there are competence gaps between the different levels. The first level, aiming, which is also called the strategic level of the order model, deals with the strategy and the objectives of the organization. Based on this a direction can be determined. The second level, arranging, which is also called the tactical level of the order model, deals with the organizational processes, procedures, systems and organizational culture, which are used as the building blocks for the organization instead of the products and markets. The last level, accomplishing, which is also called the operational level, deals with the specific performance, personality and behavioral characteristics of an employee and how this employee creates value for the organization. Now that we have discussed the three levels in the order model it is easier to understand the differences between the different competence management forms, because the different forms of competence management refer to these three levels.

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11 management means that competence management activities can coincide with each other. The activities stand alone, but can create extra value because they can coincide. The third form of competence management is integrated competence management. This form of competence management means that competences and other concept, like financial concepts, are used to run the organization. The last form of competence management is absorbed competence management. This form of competence management means that competence management is completely interwoven on all levels of the organization. In this competence management form the organization only sees itself as a collection of competences and competence management is the primary mechanism for choosing a strategy. As we can see, the first form only refers to the operational level and the last form refers to all levels. Regarding the different forms, it is up to the organization to decide which competence management form is best suited. The choice depends on the employee-, organizational characteristics and on the ambition of the organization (Kruijf & Stoker, 1999).

2.1.4 Advantages and disadvantages of competence management

Competence management is an intriguing philosophy, with advantages but also with some disadvantages. This paragraph elaborated on these advantages and disadvantages. In this paragraph we will try to give an objective perspective about competence management. In the first part we will focus on the advantages, which are primarily based on the work of Van der Heijden (1999). In the second part we will discuss the disadvantages of competence management.

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12 relevant HR systems and instruments. Thirdly, the HRM system needs to be accepted. Which means that it is practical, does not cost a lot of time and refers to the business. Competence management meets this requirement because it unambiguously states the needed behaviours for the organization to operate successfully. Finally, HRM needs to be flexible, because organizations and their environment change a lot, so it is necessary for HRM to be flexible. Competence management can be characterized as flexible, because it is not focused on changing tasks and activities, but on employee characteristics that are needed to complete multiple tasks. Empirical evidence also shows us that competence management has added value for HRM in organizations and SMEs in particular. Hughes (2001) state that high performing SMEs address both broader categories of staff and broader fields of topics when they adapted a form of competence management. Furthermore, SMEs that use competence management seem to be more limited by their management skills than they are by failures in the financial market (Hughes, 2001). Also, high performing SMEs use more methods for developing in-house competence (Voxted, 1998) and they show a broader range of in-house competences (Ylinenpaa, 1997). In conclusion it can be said that high performing SMEs are more marketed-oriented in comparison to other SMEs and they have a far better understanding of their competitors (Story, 1994).

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13 reason why some researchers are not convinced about the added value of competence management is the lack of empirical evidence. There are only a few cases which actually deal with competence management and most cases only highlight the advantages of competence management and not its disadvantages (Krijger, 2003). Further research is therefore needed in order to give a balanced view about competence management.

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2.2 The SLAP Model

This paragraph will focus on how competence management, as part of the HR strategy, fits within strategic human resource management. In this way, competence management gets a more strategic meaning, because it is linked to organization- and environmental factors, which influences the demand and supply side of the labour allocation process (Bax, 2003). The basic function of the SLAP model is to find the right person for the right job. This point of view overlaps the function of competence management, because it puts an emphasis on the employee. We can distinguish three levels in the SLAP model, just like the order model from Kruijf and Stoker (1999).

2.2.1 The strategic level of the SLAP model

On strategic level it is important to find alignment between the exogenous planning environment, the HR strategy and the business strategy, as shown in figure 1. Bax (2003) states that the labour allocation process does not take place in a vacuum, because organizations are open systems who interact with the environment. The SLAP model is therefore a contingency approach which is dependable on the environment. The exogenous planning environment is therefore an important aspect of the model. Demographic trends can, for example, influence the availability of labour and a bad tendency in the market can lower the demand for certain products, which influences the demand of labour. The second element is the business strategy, the business strategy is a coherent selection of distinguished competences, also called core competences, which we discussed earlier (Bax 2003). This definition makes clear that choices have to be made about which core-competences to use. Core core-competences are characteristics of organizations/products/services that are unique and cannot be imitated or replaced by other organizations on the short run (Bax, 2003). Examples of core competences are; delivery time, specific product characteristic, organizational culture, etc. The HR strategy can be described as all the policies which indicate all the choices in the labour allocation process, the alignment between labour supply and demand, to anticipate to relevant developments from the organization and to contribute to the competitive capacity of the organization (Bax, 2003).

Figure 1: Strategic elements of the SLAP model

(source: Bax, 2003) Exogenous planning

environment

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15 Competence management is part of the HR strategy and on a strategic level it primarily deals with how competences can contribute to the core competences of the organization. If the strategic level of the SLAP model is compared to the previously discussed order model of Kruijf and Stoker (1999), it can be concluded that the strategic level of the SLAP model is similar to the aiming level of Kruijf and Stoker (1999), because it focuses on the current and missing competences for eventually fulfilling the organizational objectives. Concrete steps can be taken if the strategy reveals a gap between the current competences and competences that are missing to fulfil the organizational objectives. The actual interventions will be part of the tactical level of the SLAP model.

2.2.2 The tactical level of the SLAP model

On strategic level, the HR strategy is already formulated and this level is therefore primarily focused on the adjustment between the supply and demand of labour. As is shown in Figure 2, the basic assumption of this level is not that the demand and supply of labour will automatically balance itself out, but that HRM instruments need to be used to align both sides to each other (Bax 2003). Therefore, interventions can take place on both sides. On the supply side, adjustments can be made in; recruitment, selection, training, appraisal and rewarding, and on the demand side, adjustments can be made in tasks, functions and/or roles.

Figure 2: Tactical elements of the SLAP model

(source: Bax, 2003)

Competence management is part of the labour demand side, because the demand side is the starting point of competence management. If the tactical level of the SLAP model is compared to the order model of Kruijf and Stoker (1999), like is done in the previous paragraph on strategic level, it is clear that the tactical level of the SLAP model clearly resembles the arranging level. The most important function of this level is to connect the employee to the organization. Just like on strategic level, it is important to recognise the gap between the current and desired situation. The competence activities on strategic and operational level, by Kruijf and Stoker (1999) called aiming and accomplishing, is used as input for this level.

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16 2.2.3 The operational level of the SLAP model

The last level of the SLAP model is the operational level, which is shown in figure 3. This level deals with the actual execution of the HR activities. These instruments have a direct effect on the conditions of labour and on the terms of employment (Bax 2003). These conditions of labour and terms of employment have a direct effect on the individual employee and will become apparent in the form of commitment, employee turnover and absenteeism.

Figure 3: Operational elements of the SLAP model

(source: Bax, 2003)

Literature (Klarus, 1998) especially focuses on the implementation of competence management on this level, because much time is invested in setting up competence profiles. If the SLAP model of Bax (2003) is compared to the order model of Kruijf and Stoker (1999), the resembles with the accomplishing level will become clear. Kruijf and Stoker (1999) state that there are two activities on this level. The first one is setting up competence profiles for functions, the second one is setting up competence profiles for individual employees. If competence profiles are created for a function, than it means that a employee who holds that function need certain competences. If competence profiles are created for an individual employee, than it means that the focus lies on the individual employee and which competences he/she possesses. In this way employees and functions can be combined to each other. • Recruitment • Selection • Training • Appraisal • Rewarding • Tasks • Function • Roles

Conditions of labour / Terms of employment

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17 2.2.4 The complete SLAP model

Organizations can make different choices on each level of the SLAP model, which is shown in figure 4. The most important aspect of the SLAP model is the alignment between the different levels (Bax 2003). Like stated earlier, modern HRM needs to be efficient, which means that the different layers in the SLAP model need to be in line with each other. If these layers are in line with each other, then the sum will be greater than the individual parts.

Figure 4: The complete SLAP model

(source: Bax, 2003) Exogenous planning

environment

HR strategy _{Business strategy}

• Recruitment • Selection • Training • Appraisal • Rewarding • Tasks • Function • Roles Labour supply Labour demand

Conditions of labour / Terms of employment

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2.3 Minimum requirements

Competence management can certainly be of added value to SMEs, as we have concluded earlier. Some SMEs are therefore eager to implement competence management. However, not every SME is suitable to adopt competence management. One of the researchers who have struggled with this question is Meijer (2002). He states that an organization needs to have a specific breeding ground if it wants to successful implement competence management. Besides Meijer (2002), there are also other researchers who concluded this. Based on the research of primarily; Guiver- Freeman (2001, 2004), Van der Heijden (1999), Meijer (2002), Van Dongen (2003), Wesselink and Mulder (2004) and Slobodnik and Wile (2000), we can distinguish four requirements which a SME has to meet in order to successful implement competence management. These four requirements refer to; the strategy/objectives of a SME, the organizational structure of a SME, the organizational culture of a SME and the type leadership style used in the SME. In the following paragraphs we will discuss these requirements in more detail.

2.3.1 Strategy and objectives

To successful implement competence management, it is important for a SME to have a clear strategy with clear objectives, which have to be known throughout the organization (Van der Heijden, 1999). This is important, because the SME needs to identify which competences they need in order to reach their organizational objectives. When they have recognized these competences, the SME can recognise which competences they already have and which competences they still need. The difference between these two is called the competence gap (Van der Heijden, 1999). This competence gap is an essential part of competence management. It is therefore necessary for a SME to have a clear strategy with clear objectives which can be broken down in competences. Otherwise implementing competence management is doomed to fail (Van der Heijden, 1999; Guiver- Freeman, 2004). This requirement refers to the aiming level in the order model (Kruijf & Stoker, 1999), because it focuses on the current and missing competences for eventually fulfilling the organizational objectives. This requirement also refers to the strategic level of the SLAP model (Bax 2003). Bax (2003) states that competence management on a strategic level primarily deals with how competences can contribute to the core competences of the organization, which refers to the strategy and objective of the SME.

2.3.2 Organizational structure

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19 departments (Daft, 2004). As can be seen, there are a lot of different elements which refers to the organizational structure. Volz and Aalbers (1998) concluded that competence management has a greater chance to succeed if the organization consists of only a few hierarchical layers. Dee and Maat (1997) found the same result. This is primarily because, if an organization has just a few hierarchal layers there is more room for creativity and entrepreneurship. In this way, employees are not hold back by procedures and regulations. When organizations think in competences the focus will shift from task responsibility to process responsibility. The characteristics just described completely fits the profile of an organic organizational structure, which is characterized by horizontal communication and less hierarchy of authority (Daft, 2004). This organic structure is also mentioned by Bax (2003), who state that within an organic structure, the employees contribute to the realisation of the organizational goals, instead of their own departmental goals. In an organization with an organic structure there is a high degree of dependence and cohesion between the employees (Bax, 2003). The mechanic organizational structure is characterized by the complete opposite, with primarily vertical communication and a strict hierarchy of control and authority (Daft, 2004). Bax (2003) adds that this mechanic structure can also be called a commando structure, because interactions between employees are primarily vertically. To successful implement competence management it is therefore required that the SME has a organic organizational structure

2.3.3 Organizational culture

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20 following the courtship phase, the infancy phase, the go-go phase, the adolescence phase and the prime phase, to finally reach the top, the stable phase. After the stable phase, the line will descend following the aristocracy phase, the recrimination phase, the bureaucracy phase and finally, the death phase. Introducing a new concept, like competence management, is best done when the organization is in one of the first five phases (Guiver- Freeman, 2001), because after that, the focus within the organization will shift to much from flexibility to control, which leaves very little room for introducing new concepts. When an organization reaches the stable phase, there will not be a lot of support to implement a new concept like competence management. When the decline is started, every change-attempt will meet a lot of resistance (Guiver- Freeman, 2001). This is also in line with the organic/mechanic concept, because control and rigidness is a main characteristic of the mechanic culture (Bax, 2003). In contrast, flexibility is an important aspect of the organic culture. To successful implement competence management it is therefore also required that the SME has an organic organizational culture.

2.3.4 Leadership style

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21 to conclude that, in order to successful implement competence management, there needs to be a transformational leadership style in the SME.

2.3.5 Overview of all the minimum requirements

The previous paragraphs have elaborated on the four minimal requirements which SME has to meet in order to successful implement competence management. Figure 5 gives an overview of all these minimal requirements. This figure will be the foundation of our research in order to find out in what degree SMEs are able to successful implement competence management. Every requirement clearly states criteria which a SME has to meet in order to successful implement competence management. To summarize, it is necessary for a SME that they have a clear strategy and have clear objectives, which needs to be well known throughout the organization in order to give direction to competence management. Secondly, the organizational structure needs to be organic in order to give room for creativity and entrepreneurship. Thirdly, the organizational culture also needs to be organic in order to maintain an development focused organizational context. In conclusion, managers in a SME have to use a transactional leadership style, which will create an ambiance of trust between managers and other employees. If a SME has the intention to implement competence management and they posses all the minimal requirement, they have a high change that competence management will be implemented successfully. In the next paragraph we will focus on the last part of our theoretical framework, the SMEs and the SME sectors.

Figure 5: The minimum requirements

Unsuccessful implementation of competence management Successful implementation of

competence management

Strategy and objectives Intention to implement competence management

Organizational structure

Organizational culture

Leadership style

unclear strategy and unclear objectives Mechanic organizational structure Mechanic organizational culture Transactional leadership style

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2.4 SMEs and SME sectors

This paragraph will focus on the SMEs and the SME sectors. In the first paragraph we will focus on defining SMEs and SME sectors, as we did with competences and competence management. In the second paragraph we will elaborate on SMEs and the SME sectors in Europe. This is important in order to find out how competence management in the Netherlands relates to competence management in other European countries. In the last paragraph we will focus our attention to the Dutch SME market.

2.4.1 Definitions of SMEs and SME sectors

The European Union and therefore also the Dutch government, divides companies into three categories; large, medium-sized and small enterprises. There are two criteria which an organization has to meet in order to fall into the SME category. First of all, an organization is a SME if it has less than 250 employees. Secondly, an organization is a SME when its annual turnover is maximal 50 million euro’s or has a balance total that is less or equal than 43 million euro’s. Concerning the SME sectors, we will divide SMEs into sectors based on the NACE-code. This code is used by the European union in order to divide organizations into sectors based on their economic activities. We will also use the paper of Isusi (2006), who focused on competence development in SME’s across Europe. In this paper, Isusi (2006) focused on five sectors; the manufacturing sector, the service sector, the trade sector, the construction sector and the transport sector. In this paper we will use these five sectors in order to compare our research to that of Isusi (2006).

2.4.2 SMEs and SME sectors in Europe

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23 Luxemburg, France and the United Kingdom. The SME in these countries are, in contrast to the Scandinavian countries, hardly involved in developing the competences of their employees. The last group consists of The Netherlands, Belgium, Ireland, Germany, Iceland and Switzerland. These countries take the centre positions in comparison to other European countries.

Table 6: SMEs involved in developing competences per country

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24 There are a couple of reasons which could explain the differences between these three groups. The different structure of the business sector can for example be one aspect that can influence the level of involvement in developing competences, because in the northern countries, like Finland, Denmark, and Norway, there are more larger SMEs in comparison to the more southern countries, like Portugal, France and Spain. Another reason can be the difference between the institutional framework across countries. By institutional framework we mean public policy involvement, the infrastructures concerning training, etc. The differences in the labour market can also explain these differences, because countries like Italy, France and Spain have higher unemployment rates and a lower degree of job security than other European countries.

Not only are there differences between European countries in regard to developing competences, there are also differences between SME sectors. Based on the research of Isusi (2006), we can distinguish five different SME sectors, which we discussed in the previous paragraph. Table 7 gives an overview of the outcomes of this research, which state the percentage of SMEs in specific SME sectors, that are involved in developing the competences of their employees across Europe. The largest difference is between the manufacturing SME sector and the transport SME sector. However, It is hard to explain these differences, because it is difficult to account every factor that can influence it, like the pressure from competitors or the different enterprise structures. We can however conclude that, on average, European SMEs in these sectors have a high involvement in developing competences, which could be contributed by their need of the latest knowledge to survive in their markets. It is clear however that further research is needed in order to fully understand the differences between the different counties and the differences between the different SME sectors.

Table 7: SMEs involved in developing competences per sector

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25 2.4.3 SMEs and SME sectors in the Netherlands

Now that we have covered the European SME market, we will shift our attention to the Dutch SME market. As can be seen in table 6, 92 percent of all the SMEs in the Netherlands at least adapted a fragmented competence management form (Isusi, 2006). However, not much is known about the specific involvement of SMEs in developing the competences in the Netherlands. We therefore hope that this paper can, in part, contribute to this. If we look at the contribution of SMEs to the Dutch economy, we can conclude that 99,7 percent of all the organizations in the Netherlands are SME (De Vree, 2006). This SME market is good for 58 percent of all turnover accumulated in the Netherlands (De Vree, 2006). Based on these figures, it can be said that the SME market represents a huge part of the Dutch economy. If we look at the specific SME sectors in the different provinces, in table 8, we can clearly see differences between the different provinces.

Table 8: SME sectors involved in developing competences per Dutch province

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3 METHODS

Now that we have discussed the theoretical framework of this paper, we will focus on the actual setup of our research. This chapter is divided into two sections. The first section will focus on the participants of our research. The second paragraph will focus on the measures which we used in order to get the necessary results.

3.1 Participants

Participants for this study were SMEs in Groningen, Friesland and Drenthe. These SMEs consisted of maximal 250 employees. The SMEs in the northern part of the Netherlands were chosen randomly. The contact information came from the Dutch chamber of commerce. 1750 SMEs were selected, 350 per sector. Eventually this research had 92 responses. 19 responses came from the manufacturing sector, 22 from the service sector, 19 from the trade sector, 15 from the construction sector and 17 from the transport sector. If we look at the responses per province, we can say that 26 responses came from Friesland, 43 responses came from Groningen and 33 came from Drenthe.

3.2 Measures

The main subject of inquiry were the middle managers in the selected SMEs, because they are the ones who have to work with competence management within the SMEs. They are the link between the top management, who decide to implement competence management and the other employees who are subject to competence management. To find the desired results an electronic questionnaire was used, which was directed to middle managers in the selected SME. This questionnaire can be found in the appendix. Middle managers had completed the questionnaires during working hours. The questionnaire consisted out of six sections. The first section covered questions regarding basic information about the SME. The following four sections covered, the earlier discussed, minimal requirements which a SME has to meet in order to successful implement competence management. The last section covered the use of competence management in SMEs. We will continue this chapter by discussing these sections in more detail.

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4. RESULTS

After elaborating on the necessary theories in chapter two and the methodology of our research in chapter three, this chapter will deal with the results of our research. Like stated in the previous chapter, our research had 92 responses. 19 responses came from the manufacturing sector, 22 from the service sector, 19 from the trade sector, 15 from the construction sector and 17 from the transport sector. 26 responses came from Friesland, 43 responses came from Groningen and 33 came from Drenthe. This means that if we divide our responses in sectors and in provinces, we will get a few SMEs per category. Interpreting these results therefore needs to be done with care. This chapter is divided into two paragraphs. The first paragraph will focus on the current use of competence management in SMEs. In this paragraph we will also compare our results to the European results, which we described earlier. However, due to the limited size of our sample group it is it difficult to compare our results to the European results of Isusi (2006), but the questions that we used in our research are similar to that of Isusi (2006), so our results should give a fair view of the differences between the European SME market and the SME market in the northern part of the Netherlands. The second paragraph will focus on the minimal requirements which a SME has to meet in order to successful implement competence management. In this paragraph we will look at the degree in which SMEs in SME sectors meet these requirements.

4.1 Results on the current use of competence management

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30 competences. As with the European results, the SMEs in the manufacturing- and service sector in the northern part of the Netherlands are more involved in developing competences than in any other sector. However, an important difference is that, in contrast to the European market, SMEs in the service sector are more focused on developing competences than SMEs in the manufacturing sector.

Table 9: SMEs involved in developing competences

Percentage of SMEs involved in developing competences in Europe Percentage of SMEs involved in developing competences in

Groningen, Friesland and Drenthe Manufacturing sector* 85% 74% Service sector* 82% 77% Trade sector* 82% 68% Construction sector* 77% 67% Transport sector* 72% 64%

*The difference between the sectors are significant

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31 Table 10: Use of competence management per SME sector

Percentage of SMEs that have a policy to improve the competences of employees Percentage of SMEs that have a person/group who is responsible for identifying the competence gap Percentage of SMEs that use competence management for running the business

Percentage of SMEs that use competence management as a primary mechanism for choosing the strategy

Manufacturing sector 63% 32% 26% 0%

Service sector 64% 41% 32% 5%

Trade sector 58% 37% 26% 0%

Construction sector 40% 13% 13% 0%

Transport sector 35% 18% 12% 0%

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4.2 Results on the minimal requirements

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33 Table 11: SMEs who meet the minimal requirements

Percentage of SMEs that have a clear strategy with clear objectives

Percentage of SMEs that have an organic structure

Percentage of SMEs that have an organic culture

Percentage of SMEs that have a transformational leadership style

Percentage of SMEs that meet all the minimal requirements

SMEs that at least use competence management as part of their business strategy*

86% 81% 86% 71% 67%

SMEs that do not use competence management as part of their business strategy*

60% 43% 39% 13% 10%

*The difference between these two groups is significant

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34 Table 12: SMEs who meet the minimal requirements per sector

Percentage of SMEs that have a clear strategy with clear objectives

Percentage of SMEs that have an organic structure

Percentage of SMEs that have an organic culture

Percentage of SMEs that have a transformational leadership style

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35

5. DISCUSSION

This chapter will create a creative and critical connection between the theory chapter and the results chapter. The purpose of this chapter is to answer the central question, discuss the limitations of our research and to give ideas about future research. This chapter is divided into two parts. The first part will discuss the theoretical and practical implications and the second part will discuss the limitations and will give ideas about future research

5.1 Theoretical and practical implications

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36 Netherlands are probably more focused on competence management than SMEs in the northern part, because of the differences between table 6 and 9. However, looking at the minimal requirements, the SME market in the northern part of the Netherlands certainly has a breeding ground in which competence management could thrive.

5.2 Limitations and future research

In the previous paragraph we have discussed the theoretical and practical implications of our study. However, when considering this study and its contributions, it is necessary to take the limitations into account. These limitations can be an indicator for future research. The most important limitation is that, like mentioned earlier, we only had a few SMEs per category. This means that it is difficult to make firm conclusions. Thorough research is therefore needed to strengthen our results. Besides this, we can say that the northern part of the Netherlands is probably not a good representation for the Dutch SME market as a whole, because SMEs in the northern part of the Netherlands are less focused on competence management than in other parts of the Netherlands. We based this conclusion on tables 6, 8 and 9, but further research is needed to verify this. Secondly, the minimal requirements also need further research. In our study we have discovered the importance of the different requirements in order to successful implement competence management. However, we still have limited knowledge about the interaction between the minimal requirements. Further research is therefore needed to discover the interaction between these requirements. Future research also needs to focus on the differences between the different SME sectors, considering the minimal requirements. Thirdly, moving on to competence management itself, it not only important to research the differences between the sectors, but also the differences between organizations that use competence management and organizations that do not use it. Furthermore, future research also needs to focus on the interaction between the size of the organization and the effects of competence management. We already stated that HRM has limited possibilities in SMEs and that the impact on the business performance is smaller in comparison to HRM in larger organizations (Compeer, Smolders, De Kok, 2005), but what does this precisely mean for the added value of competence management. We will conclude this paper by mentioning the most important limitation of competence management, which is the lack of a balanced perspective. The advantages that we have mentioned in this paper are primarily based on literature (Van der Helden, 1999) and they therefore need to be tested in practice. Research on the disadvantages of competence management is also scarce and it also needs further research. Future research should eventually give a more balanced view about competence management, with clear advantages and disadvantages. These advantages and disadvantages should take the characteristics of the different sectors into account and the minimal requirements which a SME has to meet in order to successful implement competence management. In this way, individual organizations can conclude if competence management can contribute to their specific needs.

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37

REFERENCES

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Berghenegouwen, G. J. 2002, Strategisch opleiden en leren in organisaties. (3th ed.). Stenfert Kroese: Groningen.

Boxall, P., & Purcell, J. 2003. Strategy and human resource management. New York: Palgrave Macmillan.

Castanias, R. P., & Helfat, C. E. 1991. Managerial resources and rents. Journal of management. 17(1): 155-171.

Compeer, N., Smolders, M., De Kok, J. 2005. Scale effects in HRM research. Business & Policy Research. EIM: Zoetermeer.

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Daft, R. L. 2004. Organization: Theory and design (8th ed.). Cincinnati: South-Western College Publishing.

Dee, M., & Maat, B. 2000. Maakt CM de belofte waar? Gids voor personeelsmanagement. 79 (5): 41- 43.

Dongen, T., van. 2003. Competentiemanagement. En dan? Een mensgerichte visie op competentiemanagement. Thema.: Zaltbommel.

Duhan, S. 2007. A capabilities toolkit for strategic information systems planning in SMEs. Oxford books University: Oxford.

Guiver-Freeman, M. 2001. Praktisch Competentiemanagement. Academic Service: Schoonhoven.

Guiver- Freeman, M. 2004. Strategie en doelen bepalen. Academic Service: Den Haag.

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38 Hagan, C. M. 1996. The core competence organization: Implications for human resource

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Hamel, G., & Prahalad, C. 1990. The Core Competence of the Corporation. Harvard Business Review. 68( 3): 79-93.

Hammer, M., & Champy, J. 1993. Reengineering the corporation. Harper Collins: New York.

Heijden, J., van der. 1999. Competentiemanagement; van belofte naar verzilvering. Kluwer: Deventer.

Hoekstra, H.A., & Sluijs, E., van der. 1999. Management van competenties; het realiseren van HRM. Van Gorcum: Assen.

Hughes, A. 2001. Innovation and Business performance: Small entrepreneurial firms in the UK and the EU. CBR: Cambridge.

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Kluytmans, F. 2001. Leerboek personeelsmanagement. Wolters-Noordhoff: Groningen.

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Krijger, P. L. 2003. Competentiemanagement. Gids voor personeelsmanagement. 82 (1) 30-33.

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39 Kruijff, M., & Stoker, J. 2003. Managen met Competenties (1st ed.). Reed Business Information:

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40

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41

Questionnaire

In deze vragenlijst wordt voornamelijk gevraagd of u het met de desbetreffende stelling eens bent of niet. Als u het met de stelling eens bent, dan vinkt u ‘ja’ aan. Als u het niet (helemaal) eens bent met de stelling, dan vinkt u ‘nee’ aan.

.

1. In welke provincie(s) is het bedrijf gevestigd waar u werkzaam bent?

o Groningen

o Friesland

o Drenthe

2. In welke sector(en) is dit bedrijf actief?

o Industrie o Dienstverlening o Handel o Bouw o Transport o Overige

3. In hoeverre bent u het eens/oneens met de volgende stellingen omtrent de strategie van het bedrijf waar u werkzaam bent?

Het is u volledig duidelijk welke strategie en doelstellingen het bedrijf de komende jaren nastreeft.

o Ja

o Nee

U wordt regelmatig geïnformeerd over de strategie en de doelstellingen van het bedrijf.

o Ja

o Nee

4. In hoeverre bent u het eens/oneens met de volgende stellingen omtrent de structuur van het bedrijf waar u werkzaam bent?

het bedrijf is erg gecentraliseerd. Iedereen werkt onder een meerdere, totdat diegene uiteindelijk bij de top komt. De organisatiestructuur lijkt meer op een piramide dan op een platte schotel.

o Ja

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42 In het bedrijf is het heel goed mogelijk dat er op de werkvloer beslissingen worden genomen zonder dat die door een meerdere zijn goedgekeurd.

o Ja

o Nee

In het bedrijf wordt het nemen van beslissingen overwegend overgelaten aan mensen die buiten de ‘line of command’ staan.

o Ja

o Nee

In het bedrijf zijn het aantal hiërarchische niveaus groot.

o Ja

o Nee

In het bedrijf wordt er veel gecommuniceerd tussen meerderen en ondergeschikten, omdat de

opdrachten nu eenmaal van boven komen en er ook naar boven toe moet worden teruggerapporteerd.

o Ja

o Nee

Omdat uw collega’s vooral veel met elkaar moeten samenwerken en zij elkaar aanvullen in kennis en vaardigheden, communiceren zij meer met elkaar dan met hun chefs.

o Ja

o Nee

Het bedrijf en de technologie die u gebruikt is zodanig dat medewerkers, als zij dat willen en wanneer zij dat willen, heel gemakkelijk contact kunnen leggen met anderen in de organisatie.

o Ja

o Nee

5. In hoeverre bent u het eens/oneens met de volgende stellingen omtrent de cultuur van het bedrijf waar u werkzaam bent?

In het bedrijf voelen de medewerkers (en afdelingen) dat zij elkaar nodig hebben. Samenwerking staat voorop.

o Ja

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43 De sfeer bij het bedrijf is het beste te typeren als ‘ieder voor zich en God voor ons allen!’.

Medewerkers (en afdelingen) bewaken nauwgezet hun eigen positie binnen de organisatie.

o Ja

o Nee

Afdelingen hebben binnen het bedrijf een sterke eigen identiteit. Medewerkers voelen zich in de eerste plaats betrokken bij hun afdeling en pas daarna bij het bedrijf als totaal.

o Ja

o Nee

In het bedrijf voelen medewerkers zich in de eerste plaats betrokken bij het bedrijf(sonderdeel) als totaal, pas daarna bij de afdeling waar zij werken.

o Ja

o Nee

In het bedrijf hebben medewerkers sterk het gevoel dat het bedrijf rekening houdt met hun problemen en zich hun welzijn aantrekt.

o Ja

o Nee

In het bedrijf voelen medewerkers een sterke druk om het werk af te krijgen. Zij denken dat het bedrijf meer in hun werk is geïnteresseerd dan in henzelf. Beslissingen worden door individuen genomen.

o Ja

o Nee

het bedrijf is erg formalistisch ingesteld. Het is duidelijk dat medewerkers risicomijders zijn die zich strikt aan de regels houden en zich het liefst zo weinig mogelijk inspannen.

o Ja

o Nee

In het bedrijf voelen medewerkers zich gemakkelijk in nieuwe en onbekende situaties. Zij doen steeds hun uiterste best en elke werkdag is een nieuwe uitdaging.

o Ja

o Nee

In het bedrijf staan medewerkers open voor buitenstaanders en nieuwkomers.

o Ja

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44 In het bedrijf staan medewerkers niet open voor buitenstaanders en nieuwkomers. Het valt niet mee om erachter te komen wat er op een andere afdeling precies speelt. Over het algemeen lopen medewerkers niet direct met het hart op de tong.

o Ja

o Nee

Resultanten zijn bij het bedrijf belangrijker dan procedures.

o Ja

o Nee

6. In hoeverre bent u het eens/oneens met de volgende stellingen omtrent uw leidinggevende binnen het bedrijf waar u werkzaam bent?

Uw leidinggevende draagt duidelijk een visie en missie uit, waardoor hij respect en vertrouwen krijgt.

o Ja

o Nee

Uw leidinggevende communiceert de hoge verwachtingen van het bedrijf en benadrukt belangrijke belangen.

o Ja

o Nee

Uw leidinggevende stimuleert voornamelijk uw rationeel denkvermogen en benadrukt de voorzichtige aanpak van problemen die u dient te hebben.

o Ja

o Nee

Uw leidinggevende geeft u persoonlijke aandacht en behandeld ook andere medewerkers individueel, waarbij hij/zij veelvuldig coached en adviseert.

o Ja

o Nee

Uw leidinggevende communiceert wat er van u verwacht wordt en wat voor compensatie u zult ontvangen wanneer u aan zijn/haar verwachtingen voldoet.

o Ja

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45 Uw leidinggevende kijkt en zoekt naar afwijkingen van standaarden en onderneemt op basis hiervan de benodigde acties.

o Ja

o Nee

Uw leidinggevende komt alleen in actie wanneer er wordt afgeweken van de standaard.

o Ja

o Nee

7. In hoeverre bent u het eens/oneens met de volgende stellingen omtrent competentiemanagement binnen het bedrijf waar u werkzaam bent?

In het bedrijf worden er activiteiten opgezet om de kennis en vaardigheden van de medewerkers binnen de organisatie te vergroten.

o Ja

o Nee

In het bedrijf is er een beleid opgesteld om de kennis en vaardigheden binnen de organisatie te vergroten.

o Ja

o Nee

In het bedrijf is er een persoon of groep verantwoordelijk voor het identificeren van de kennis en vaardigheden die de organisatie nog mist om de doelstellingen te realiseren.

o Ja

o Nee

In het bedrijf wordt competentiemanagement, net als financiële indicatoren, gebruikt om de organisatie te sturen.

o Ja

o Nee

In het bedrijf wordt de organisatie gezien als een collectie van competenties.

Competentiemanagement is het belangrijkste middel om binnen uw organisatie de strategie te bepalen.

o Ja

The future of competence management in SMEs …is it really that bright?

The future of competence management in SMEs

…is it really that bright?

By

Jaap Meursing

University of Groningen

Faculty of Management and Organization

Master thesis MSc Human Resource Management

The future of competence management in SMEs

…is it really that bright?

ABSTRACT

TABLE OF CONTENTS

1. INTRODUCTION

2. THEORETICAL FRAMEWORK

2.1

Competence management

2.2

The SLAP Model

2.3

Minimum requirements

2.4

SMEs and SME sectors

3

METHODS

3.1

Participants

3.2

Measures

4.

RESULTS

4.1

Results on the current use of competence management

4.2

Results on the minimal requirements

5.

DISCUSSION

5.1

Theoretical and practical implications

5.2

Limitations and future research

REFERENCES

Questionnaire