Human resource development in SMEs in a context of labor shortage: a profile analysis

Abstract

Purpose The purpose of this paper is to examine small and medium-sized enterprises’ (SMEs) level of participation in human resource development activities during a labor shortage. Drawing on human capital theory, it examines whether SMEs’ profiles, determined according to their participation in different types of training activities, relate to perceived benefits of training, barriers to participation in training and learning culture. Design/methodology/approach This study applies latent profile analysis (LPA) to 10 training practices of 427 SMEs in Quebec, Canada. Findings The LPA distinguished four profiles of SMEs, reflecting differing capacities for mobilizing training resources during a labor shortage. These four profiles show differences with regard to perceived training benefits, barriers to participation in training and learning culture. Originality/value To the best of the authors’ knowledge, this study is among the first to focus on the specific ability of SMEs to invest in their human capital in the unique and recent context of a labor shortage.

Doing more with less

“…Small- and medium-sized enterprises (SMEs), as highlighted by Deschênes (2023), account for more than 90% of all private sector jobs in Canada, equating to 1.22 million SMEs. As such, they are a key driver of the Canadian economy, and can be considered a bellwether for the Canadian economy writ large.…”

“…The impact of the pervasive skills shortage faced in both Canada and the wider economy mean that SMEs are having to consider contingency plans for survival. Deschênes (2023) reports that SMEs across Canada are being forced to reject contracts and slow or cancel growth projects due to the lack of skilled labor, with some demanding more from their staff for no benefit, or closing completely. These issues were being identified back in 2019, before the pandemic hit, and have now been exacerbated by COVID-19.…”

“…As such, SME HR departments are having to consider upskilling their current workforce in order to meet the new skills demands. The findings of Deschênes’ (2023) work has indicated that the pressure on SMEs in Canada is such that SME leaders are unwilling to dedicate finite resources into training and development for staff to learn new skills due to the need to constantly fire fight in order to stay afloat. Skills development requires long-term investment in staff and abilities, and while such an investment would have significant benefits overall, it could come at the cost of short-term viability and stability.…”

“…As such, training in Canadian SMEs is currently viewed as being a nice to have option, and something deployed on an ad hoc basis with minimal formal structures and engagement. While the research by Deschênes (2023) would suggest that such an investment in skills training would be beneficial, the barriers to training and the current learning culture in SMEs is not conducive. Deschênes (2023) highlights that Quebec’s Skills Development Act is an incentive to SMEs with a turnover of CAN$2 million or more, but this precludes the very small businesses (VSB) of fewer than five people, which is a significant portion of the SMEs in Canada.…”

“…Yet despite these figures, labor shortages are being recorded globally in most industries, without the corresponding spike in unemployment figures. In Canada, as indicated by Deschênes (2023), unemployment has hovered around 5.7–8%. The disconnect between these two figures is currently being analyzed and contested by industries and governments, but several key factors are already widely identified as being causes of this situation.…”