The Influence of Determination of the Required Competencies on the Business Performance of Small and Medium Enterprises

Abstract

Purpose - Small and medium enterprises (SMEs) are very important from a social and economic point of view. They account for two-thirds of jobs in the private sector and are responsible for more than half of the total added value attained by companies in the EU. Competency management consists of three phases: determining the required competencies; determining current competencies and the competency gap; and undertaking activities to ensure and develop the necessary competencies. The required competencies determine the key activities and behaviors required in each key area of work. They represent the basis for the quality performance of other phases of competency management. The primary aim of this research is to determine whether and to what extent determining the required human resources competencies influence the business performance of small and medium enterprises. Methodology - The empirical research was conducted on 234 SMEs in the Federation of Bosnia and Herzegovina (FB&H) in January 2021. The percentage of processed SMEs reflects the real situation according to statistical data on the number of SMEs in the FB&H. An original questionnaire was created for the survey. Data collected by the conducted empirical research were analyzed using graphic representations; descriptive statistics; structural analysis; KolmogorovSmirnov test; Mann-Whitney U test; Kruskal-Wallis test; correlation analysis; factor analysis; and hierarchical multiple regression models. Findings - The research results showed the correlation between the studied variables and the influence of determining the required human resources competencies on the business performance of SMEs. The paper includes a comparison with similar research and recommendations for future research. Contribution - Given that very little research in this area is available in the literature, and that research has not been conducted in this way so far, the contributions of the paper are reflected in several achievements that have made a significant departure from other research on this issue. The same or similar research has not been conducted in Bosnia and Herzegovina so far. The subject of research has been set in a new and original way linking the determining the required human resources competencies and business performance of SMEs through the development of a theoretical model of the relationship between defined variables. An original theoretical and empirical model has been formed, the purpose of which is to determine the impact, direction, and intensity of the links between the first phase of human resources competency management and the business performance of SMEs. A model for measuring business performance has been developed using a balanced scorecard model that includes four perspectives (financial, customer, internal business processes, and learning and growth). Empirical verification of the defined model expanded and deepened the insight into the paradigm of modern business, the first phase of human resources competency management, and its development and affirmation in the field of management and business success.