LUẬN văn THẠC sĩ (KINH tế) an empirical study on the impact of recession on training and development in small to medium sized firms in ireland

Keywords:TrainingandDevelopmentT&D, motivation ,recession, SMEs... AIM AND OBJECTIVES OF THE RESEARCH Theaimof thisresearchis to find outwhatimpactrecessionhashad on traininganddevelopme

yWhite Word Count:21,411

Adissertationsubmittedinpartfulfillment oftherequirementsof theMasters

inBusinessAdministration(HumanResource Management)toDublinBusinessSchooland

LiverpoolJohnMoore’sUniversity

August2013

I,SaraNaqiMirza, declarethattheworkcontainedi n

t h i s dissertationisentirelymyownandthatallsourcesused havebeenacknowledgedaspertherequirements.

Signed:……….Date:

………

TABLE OF CONTENTS

Chapter1:Introduction……….12

1.1I n t r o d u c t i o n … … … …

… … 1 3 1.2 Backgroundoftheproblem……….13

1.3 Aimandobjectivesoftheresearch……….14

1.4 Suitabilityoftheresearcherandinterestofsubjectarea………15

1.5 Recipientsoftheresearch………15

1.6 Learningstyleoftheresearcher……… 15

1.7 Limitationsandcontributionsoftheresearch……….16

1.8 Organizationofthedissertation……… 16

Chapter2:LiteratureReview………,……18

2.1 ImportanceofSMEsinIreland……… 19

2.2 ImpactofrecessiononSMEs……… 21

2.3 TrainingandDevelopment……… 24

2.4 Traininganddevelopmentinrecession……….… 2 7 2.5 EffectofTrainingandDevelopmentonmotivation……… 30

andperformance 2.5.1 SocialExchangeTheory……….…32

2.5.2 Training:asourceofintrinsicorextrinsicmotivation? 34

2.6 Importanceof"Effective"T&DInitiatives……….34Chapt

er3:ResearchMethodology………39

3.1 ResearchQ u e s t i o n s … … … …

… … 4 0 3.2 ResearchM e t h o d o l o g y … … … …

… … 4 2 3.3ResearchDesign… … … …

… … … … 4 3 3.3.1 ResearchPhilosophy………

44 3.3.1.1 Epistemology-Interpretivism……… 44

3.3.1.2 Ontology-Subjectivism……… 46

3.3.2 ResearchApproach:Inductive……….47

3.3.3 ResearchStrategy:CaseStudy……….48

3.3.4ResearchChoice………

……….493.3.5 TimeHorizon………

……… 50

3.3.6 DataCollectionandAnalysis…… ……… … 50

3.3.6.1 DataCollection……….50

3.3.6.2 DataAnalysis………

523.4ResearchEthics……….53

Chapter4:DataAnalysisandFindings……… …

554 1 DataAnalysis……… ……….56

4.2ResearchFindings……….……58 4.2.1 ResearchQuestionno.1……….….58 4.2.2 ResearchQuestionno.2……….59

4.2.3 ResearchQuestionno.3………

61Chapter5:Discussion………63

5.1 DiscussionoftheFindings……… 64

5.2 Limitationsofthestudy………68

Chapter6:ConclusionandRecommendations………

706.1Conclusion………

….71 6.2FurtherResearch………73

6.3Recommendations……… 7

4 Chapter7:ReflectionandSkillDevelopment………

7 6 7.1Introduction………

…….77

7.2Reflection………

77 7.2.1 ReflectionontheProcess……….7

7 7.2.2 ReflectionontheSources……….79

7.2.3 ReflectiononDissertationformulation……… 80

7.2.4 Reflectiononyourownlearning……….817.3S killDevelopment……….837.4Conclu sion……….85

Bibliography……….86A ppendices……… 96

… 9 7 A p p en di x B:T&Dtechniquesusedwithinorganizations………… 9 8AppendixC:InterviewGuides……… 103A p

p e n d i x D:EthicalStances……….106Appen dixE:RequestEmailtocompanies………

107A p p e n d i x F:ConfidentialityAgreements……….108A ppendixG:PersonalSWOTanalysis………112

Figure1:BusinesseconomyinIreland:SME%versusNonSME%bysector Figure2:IdentifyinggapandneedfortrainingFigure3:B

ramley'smodelofTraining

Figure4:DevelopingaresearchquestionforaqualitativestudyFigure5:The ResearchOnion

Figure6:Kolb'sLearningStyles

Ihaveafewspecialpeopleinmylife,tothank.

Firstofall,ThankyouPAPA!

foryoursupport,loveandencouragement.Thankyouforbeingstrongtose ndmeaway.

Iloveyousomuch!

Mybrother,Aliwhohasalwaysbeenmoreconfidentthanmyownselftha tICANDOIT!

MybestfriendSaba,Youaremypillarofstrength!

Thankyouforbeingthereformethrougheverythickandthin.Wetrulyhav efacedlifetogether!

And….thisMastersisformymotherandsister.ForIkno

w…Youareveryproud!

AspecialthankstomysupervisorMs.GayWhiteforconstantlysupporting meandbeingsoencouraging.

Lastly,allthosewhotooktimeouttoparticipateinmyresearch.

Theresearcherhas triedtoinvestigatethisschoolofthought.ThisresearchlooksattheS M E s

w i t h i n Ireland SMEshave alwaysbeenregardedveryimportant,

heavilycontributingtowards theIrisheconomy, whichhasbeenso badlyhit in

financiallystrained position arecuttingdownexpenditurein everyareaandnot

justT&D,whereasfirms who areable to stillperformwellin

Thefindingsprovides newinsightsto theliteraturethat is

alreadypresentandcanbeinvestigatedfurtherwith alargersamplesize

Keywords:TrainingandDevelopment(T&D), motivation ,recession, SMEs

Excellenceisanartwonbytrainingand habit

~Aristotle

CHAPTER 1: INTR ODUCTION

Theeffectof thefinancialcrisison theIrisheconomyhasbeenimmense.

Irisheconomyis heavilyrelianton Small toMediumsized (SMEs)firmswhichaccountfor99.8%of theenterprises.(Irishtimes,2012)

Over70%ofthepeopleinIrelandareemployedbySMEs ,andwith over115,000 job losses(between2008t o

2 0 1 1 ) w i t h i n t h e S M E s , t h e y havebeenaffected the mostbyrecession.(Irishtimes , 2012)WithmostSMEsbeingindigenous, nonexportingfirmstheyrelyheavilyon

domesticdemandwhichhasdecreasedover thepastfewyearsdueto a decreasein disposableincome

(Departmentoffinance,2012)

ThisreduceddemandresultedinincreasedcompetitionbetweenSMEs forsurvival

Whensuchascenariooccursforfirms, wheretheycompeteforsurvival dueto a

financiallystrainedsituationpressuresfor costcuttingsincreaseboth internallyandexternally.(Cainet.al, 2011 , pp.2)

Todealwith thissituationmanagementbalancesbudgetsbycuttingdownontraininganddevelopmentinitiativesthat theyfeelareneedless.(Minton.Eversole,2010citedinCainet.al,2011, pp.3)

ThoughCain et.al,2011,pp4arguesthis ideaandwhile doingsoquotesColeman,2009

"Engagement,moraleand motivationincreasesthroughtraininganddevelopmentprogramsandcompaniesendup makingmoremoney"

1.2

BACKGROUND OF THE PROBLEM

Ireland'seconomiccrisis is oneofthe mostseriousin

itshistory.There'snodoubtthatthecurrenteconomic,fiscaland

bankingproblemsareoneofthesevereamonganydevelopednation.(Roche,2011,pp.33)Though,itwasclaimedbythegovernmentthatthecountryisemergingoutofrecession butrecentarticlesfromtheIrishTimesseemtosuggestadifferentstory

AIM AND OBJECTIVES OF THE RESEARCH

Theaimof thisresearchis to find outwhatimpactrecessionhashad on

traininganddevelopmentinIrishS M E s whichareso important andcontributeheavilyto theeconomy

Hasitbeennegativelycompromised orhaveHRmanagersembracedit todeveloptheirhumancapital?

Thisresearchwilltherefore,beableto providewith aninsightasto how

SMEsaredealingwithtraininganddevelopmentduringthisfinancialcrunch

Havethe techniqueschangedinanywayfromthepre-recessionsituation and howisT&Dbeingcarriedouti n

2 0 1 3

This studyis alsointerestingasitbringstogethertheimportanceofdevelopinghumancapitalto

thesuccesso f aSMEduringatougheconomic situation

employeestogetabalancedperspectiveon howand

towhatextenthasrecessionaffectedT&Dandemployeemotivationin SMEs

1.4

SUITABLILITY OF THE RESEARCHER ANDINTEREST OF SUBJECT AREA

Theresearcheris suitabletoconductthisresearchdueto akeeninterestinHRM ,

holdingstrongbackgroundknowledgeof thedomain, theresearchercananalyseandunderstand the

RECIPIENTS OF THIS RESEARCH

Therecipientof this studyis firstly,DBSto whom this studywill bepresentedalongwithmysupervisorM s

G a y White.Itis underthemthatthisresearchwill becarriedout

OtherthanDBSandmysupervisor, H R professionalsandIrishSMEscanalsobebenefittedbythisstudy

1.6

LEARNING STYLE OF THE RESEARCHER

ThelearningstylemodeldevelopedbyHoney&Mumford(1986)describesfourstylesoflearning."Activists","Reflector","Theorists",and"Pragmatists".Eventhoughthismodelwasoriginatedfrom theworkofKolb(1984),

thewordsusedto describeeachstagebyHoney&Mumford(1986)weredifferent

Theresearcherrecognizesitselfasa"theorist".Theresearcherduringthecourseof

thisresearchtooklogicals t e p s afterindulgingin

athoughtprocess,assimilatingdifferentfacts,conceptsandtheoriesalongwithpaying greatattentiontodetails.Theresearchmethodologywas also in linewiththelearningstyle Qualitativestudiesrequiretheresearchert o

b e detailed,andperceive everysituationasunique, to beableto handlelarge amountof

datacollectedandb e abletoshapeit up intheformof atheory

ReferAppendixAfor differentlearningstyles

LIMITATIONS AND CONTRIBUTIONS OF THE RESEARCH:

Thesample sizeof thisresearchis fourwhich is verysmall consideringtheno ofSMEspresentinIreland.T h i s i s

o n e of themajorlimitation of thisresearchbutduet o t i m e constraintconductingthis research with

alargersamplesizecouldnot havebeenpossible

Though,thisresearchcanformthefoundationformanyfutureresearcheson

thesametopicwithalargersamplesizeorquantitativemethods

All ofthesearediscussedindetaillaterin thedissertation

This studywillcontribute towardsaqualitativeresearchin thedomain of humanresourceswithinSMEs.Thereis littlequalitativeliteraturepresenton SMEs andthisresearchwilladdtothat.Thisresearchwillfindo u t

h o w andtowhatdegree hasrecessionaffectedT&DwithintheIrishSMEs;andwhatis being

particularlyprioritizedin 2013

Thevariousgapsin theliteratureidentifiedandfilledarediscussedin thelaterchaptersof the dissertation

1.8

ORGANISATION OF THE DISSERTATION

Thedisposition of thethesis is asfollows:

Thischapterdiscussestheapproachtakentowardsanalysingthe data.Itwillalsopresentthefindingsof thisresearch.Itwill show how thesefindingshavefilled thegapsin theliterature.

8 BIBLIOGRAPHY

9.APPENDIX

CHAPTER 2:

To explain theimportanceof thisresearch, it is necessaryto look upon theinfluenceof SMEs

inIreland,followedbytheimpactofrecessionon them, leadingto TrainingandDevelopmentand

howithasbeenlinkedtomotivationandproductivityalongwithitscontribution to thesuccessof afirmand

Accordingto areportonSME lendingmarketinIreland, 2013microfirmsareclassifiedasfirms with aturnoverofless than orequalto 2 million Euros.Small firmsbetween2 million Euros to 10millionEuroswhereasmediumwere reportedto be theoneswithaturnoverbetween10million Euros to 50millionEuros

Withstilloveralmost200,000smalltomediumsizedfirmsoperatinginIreland,andwith

anaverageofalmost12,000newbusinessessettingupeachyear,theSMEsectoris offimmenseimportance

(IrishBusinessandEmployersConfederation, 2011,pp.18)

SMEs without a doubtcontributeto themajorityofthebusinesscommunity.CentralStatisticsOffice

(CSO)2 0 1 2 , agreeswith thefiguressuggestedbyIBEC,2011andstatesthatthereareingeneral

over199,000activeSMEs.Accordingto areportbyEuropeanCommission (2012)onSMEsinIreland,

theystatethatthereare154,489 enterprises(excludingthe fishing,

miningandagriculturalsector.)Outofthese137,669aremicro(employslessthan10person),

14,168ares m a l l (between10 and 50employees)and2,652arem e d i u m s i z e d

(between50and250employees)

Hence,SMEs formalmost99.8%oftheIrishenterprises, with therest0.2%beinglargerenterprises

SME'sinIrelandcontributes to69%ofthe totalemploymentwhich ishigherthanotherEUmemberstates.T h i s

s h o w s t h e importance andimpact of SMEs with inIreland.The

CentralStatisticsOffice(2012)statedt h a t SME'sinIrelandaccountsfor,69%of

privatesectoremploymentwith52%ofthe totalturnoverand5 1 % oftheGrossValueAdded

SOURCE:CENTRALSTA

Out ofthe 69%employmentthatSMEsoffer,

microfirmscontribute27.2%,smallfirmsemploys23.1%whereastherest18.8%comesfrommediumfirms

Although,the 0.2%thataccountsforlarger enterprisespresentwith

inIrelandareresponsibleforemployingt h e rest31%workers,assuggestedbyareport onthe

SMElendingmarketinIreland(2013)

Eventhough,Irelandhasareputationof

beingahighlyglobaleconomythestatisticssuggestdifferentlywhenitcomesto theSMEsector

Accordingto areporton"Assistance forsmall tomediumenterprise-theSMEsectorIreland(2013),

64%oft h e privatesectorworkforceinIrelandareemployedbytheindigenousnon-exportingfirms,and out of this6 4 % , 56%werereportedto be workingfornonexporting,indigenousSMEs

These statisticssuggestthatIrishSMEsplaysavitalroletogenerateemployment

Abreakdownofpersonsengaged, turnoverandGrossValueAdded

(GVA)betweentheSMEandnon-S M E enterprisesrevealsthatsmalltomediumsizedconstructionenterprisescontributeto 95.3% ofemployment, whereasalmostthree quarterof theworkersemployedin Distribution andserviceswork inS M E s

Iflooked on aturnover basis , SMEs contributed to 81% ofthe total turnover in

theconstructionsectorand73.1% in thedistribution

Excludingtheindustrialsectorwhichis dominatedbylargercompaniesinmanufacturing, the

otherthreesectorsi.e.:construction,distributionandservicescontributeto over50%oftotalGVA

Thetablebelowprovidesasummaryof thestatisticsproducedmyCSO (2010)comparingthe SMEandthen o n

S M E sectorinaccordancewith thepercentageofemployment, turnoverandGVA