37 - lit review

SMEs Managers – A Need for Competence

Abstract

• Managerial competencies are crucial for developing corporate strategy, especially in SMEs.

• Competence development in SMEs differs from that in large organizations.

• SMEs drive the economy in developed countries, and their competitiveness depends on managers' competencies.

• Education systems provide the foundational knowledge and skills for professional competencies and lifelong learning.

• Knowledge of necessary competencies informs the development of educational programs to meet labor market needs.

• A survey was conducted to identify key managerial competencies needed in SMEs and those managers wish to develop.

• Keywords: manager, competence, managerial competencies, small and medium-sized enterprises (SME), educational model.

Introduction

• Managerial competence is vital because management develops corporate strategy.

• A manager is responsible for:

  • Planning and decision-making.

  • Organizing.

  • Leading people.

  • Controlling resources (human, financial, material, and information).

• Managers lead teams to achieve goals in a changing market.

• Management staff is a diverse group.

• Studies on competencies should be linked to education.

• The Polish education system has historically favored an authoritarian model, which:

  • Prepares graduates to follow orders.

  • Assumes one correct perspective.

  • Does not foster creativity (Szałach, 2012).

• A subjective education model fosters creativity and independent project implementation.

  • This model can support developing managerial competencies that require independence and innovation.

• Competency studies primarily focus on large organizations.

• Studies in SMEs link competence development to competitiveness, but argue that it differs from large organizations.

• SMEs are vital for economic development.

• They drive innovation, create jobs, and offset negative economic trends.

• Sustainable SME development is essential because:

  • They create a significant portion of workplaces.

  • They support industry transformation to advanced technologies.

  • They develop innovations to enhance competitiveness.

  • They contribute to the global market.

• Innovation is key to SME competitiveness, which is driven by management competencies.

• There is an increasing interest in developing individual and organizational competencies to improve employee performance.

• Since McClelland and Boyatzis, competencies have been viewed as a source of success and competitive advantage.

• Boyatzis (1982) defines competence as a fundamental characteristic leading to effective performance, representing potential and capabilities.

• Competencies are identified by the characteristics of high-performing managers, including motivation, personal qualities, skills, self-representation, social roles, and knowledge.

• Hoffman (1999) notes that the meaning of competence depends on its purpose, distinguishing between:

  • Competence as observable performance in assigned tasks.

  • Competence as an attribute of a person needed to achieve satisfactory results.

• Spencer (1993) includes ethical values and enthusiasm as critical for performance, in addition to knowledge, skills, and behavior.

• Before "competence," terms like abilities, skills, and qualifications were used.

• Lévy-Leboyer (1997) defines competencies as the integrated use of abilities, personality traits, knowledge, and skills for task completion.

• Rakowska and Sitko-Lutek (2000) and Filipowicz (2004) define competence using three components: knowledge, skills, and attitudes.

• Rostowski (2008) includes talents, skills, abilities, knowledge, physical skills, style, personality, principles, values, and interests in his definition.

• Walczak (2009) includes explicit and implicit knowledge, skills, abilities, values, and personality traits.

• Oleksyn (2010) and Pocztowski (2003) note that managerial competencies are closely related to human capital, including:

  • Talents, predispositions, interests, and internal motivation.

  • Education and knowledge.

  • Professional experience and practical skills.

  • Attitudes, behavior, characteristic features, psycho-physical condition.

  • Formal authority and health.

• Managerial competency can be contrasted with job-related competence.

• Woodruffe (1991) distinguishes between job functions and a person's behavior that supports competent performance.

• Cheetham and Chivers (1996, 1998) developed a holistic model of professional competence.

• A modified version considers cognitive and functional competencies, personal and ethical competencies, and meta-competencies (Winterton et al., 2000).

• These dimensions frame the competencies of SME managers:

  • Tacit/practical knowledge linked to functional competences.

  • Technical/theoretical knowledge representing managerial principles and theories.

  • Procedural knowledge.

  • Contextual knowledge specific to the organization and sector.

• Defining competence needs in SMEs is challenging due to their diversity.

• Models are used as a starting point for competence development.

• Carr (1999) found that SMEs commonly need training in management.

• Entrepreneurs often have product, technology, and sector knowledge but lack management skills.

• SMEs need competencies beyond product and technical knowledge.

• Respondents identified needs in finance, marketing and sales, human resource management, export, IT, and strategy/planning.

• Wawrzeńczyk-Kulik (2010) cites an international team's work in the Leonardo da Vinci project, which identified general and specific competencies for SME managers.

• General competencies include innovation, planning, cooperation, leadership, decision-making, self-confidence, perseverance and problem-solving.

• Special competences include knowledge of the staff; of assessment and incentive systems; knowledge of recruitment and human resource management; knowledge of advertising and marketing; knowledge of the market; knowledge of production and logistics and knowledge of finance and law.

• A core competence for SME development is the ability to obtain and share information.

• Copp (2011) found that managers associate competences with interpersonal skills, interpersonal intelligence, interpersonal skills (motivating), knowledge, experience, expertise, reliability, openness, and communication skills.

• The most important competencies in business management are leadership skills ($75$), objectives and activity management ($67.85$), human resources management ($67.85$), expertise ($46.42$), objectivity ($25$), self-control ($17.85$).

• Lis (2012) highlights the importance of competences related to quality management.

• The model used in companies implementing integrated systems using WCM (World Class Manufacturing) combines best practices in production improvement and innovation.

Methodology and research methods

• The research aimed to identify employers’ expectations for management staff regarding knowledge, skills, attitudes, and behavior.

• Based on the theory of managerial competencies, the study aimed to answer:

  • What knowledge, skills, and competencies do managers in SMEs possess?

  • How useful are these in their work?

  • What do employers expect from managers, and how do they assess their abilities?

  • What is the gap between educational models and labor market needs?

• A direct survey was conducted using a questionnaire.

• The questionnaire had 15 questions using Likert scales, multiple-choice, and closed-ended questions.

• It was divided into three sections:

  • Employer expectations regarding knowledge, skills, qualities, and attitudes.

  • Managers’ skills and competences.

  • Managers’ education and demographic data.

• 200 employers in the Silesia Region (Poland) participated.

• Respondents who failed to answer at least 20% of the questions were excluded, resulting in 180 usable questionnaires.

• The survey was anonymous.

• 75% of the companies were in the private sector, and 25% were in the state sector.

• Companies were located in cities of various sizes, with over 40% in cities with over 100,000 residents.

• The enterprises varied in size:

  • Micro-enterprises: $55.3$

  • Small enterprises: Over $25.5$

  • Medium-sized enterprises: $19.3$

• Most respondents were from business ($20.6$), manufacturing ($10.2$), public administration ($10.0$), construction ($8.9$), financial intermediation ($6.1$), and transportation/warehouse management/communication ($5.6$).

• Respondents’ education levels:

  • Higher education: $67.2$ (economic: $19.8$, managerial/technical: $16.5$, humanities: $13.2$).

  • Secondary education: $16.1$ (economic: $13.8$; technical: $13.8$).

  • Post-secondary education: $10.0$ (economic: $38.9$, technical: $16.7$).

• The survey was sample-based using non-random sampling.

• The findings allow identification of specific mechanisms and formulation of questions and conclusions.

• Data were collected in July and September 2012.

• Contingency tables were used for data analysis.

• The chi-square test, Cramer's V coefficient, and Lambda Λ were used to analyse the measures of the relationship strength between the variables.

• Data analysis was done using IBM SPSS Statistics 20.

Findings

• Employers consider candidates' suitability and expected roles when recruiting for managerial positions.

• The assessment was based on 14 evaluation criteria.

• Experience is very important (58.3% of employers).

• Almost half of the respondents chose the following criteria: a degree in a specific field of study (50.6%), knowledge of foreign languages - 46.1%, personality traits and character (“good impression”).

• Sufficient qualification and certificates, internships, and placements are also valued.

• Only $3.9$ are ready to hire people without professional experience.

• These employers believe inexperienced employees have lower salary demands and do not bring negative habits.

• Demographic criteria are the least important.

• Company size influences recruitment criteria.

• Professional experience is the most important criterion across company sizes ($53.9 - 64.5$).

• Personal qualities are also important.

• Small and medium-sized companies value qualifications, while larger companies prioritize specialized education.

• Micro-companies value willingness to learn and adaptability over specific fields of study.

• Medium-sized enterprises prefer managers prepared by external institutions.

• Micro-companies are more likely to consider recommendations and hire managers without prior experience.

• Table 1 summarizes the main criteria taken into consideration by employers hiring managers by company size (number of employees).

• Applicants’ willingness to improve qualifications and focus on development is highly valued.

• General intelligence, creativity, communication skills, and industry/market knowledge are also important.

• Table 2 shows the ranking by employers in this group of criteria.

• The structure of competencies includes:

  • Theoretical and practical knowledge.

  • Skills.

  • Characteristics and attitudes.

• This structure was used to identify employer expectations.

• General economic knowledge and knowledge of the latest trends in organization and management are considered important.

• General knowledge in humanities was ranked the lowest.

• Applying knowledge into practice is essential.

• Problem-solving and decision-making skills are decisive.

• Computing skills are highly important.

• Interpersonal and teamwork skills are necessary.

• Representatives of state-owned enterprises had slightly different opinions from those in private companies.

• Table 3 presents the components of knowledge and skills expected by employers.

• Employers prioritize responsibility, loyalty, regularity, reliability, honesty, ethics, and truthfulness.

• Creativity is highly valued.

• Independence, activity, initiative, and self-control in stressful situations are also valued.

• Cooperation skills, friendliness, and openness are desired.

• Employers seek creative employees within defined limits.

• Innovation, flexibility, and confidence are appreciated.

• Employers do not seek charismatic leaders but creative, responsible, and independent employees within defined limits.

• Table 4 presents the desired characteristics for managerial candidates.

• A degree in economics is perceived as beneficial in the labour market.

• Graduates in finance and accounting, computer science and econometrics, and economics have the best chances.

• Graduates in science of commodities have a little chance.

• The research confirms a decline of interest in management graduates which is noticed in the labour market.

• Relationships between fields of study and employment opportunities:

  • Finance and accounting graduates are in the greatest demand by financial intermediation ($55$) and public administration ($45$).

  • Management graduates are perceived as needed in transport, warehouse management ($30$), public administration ($17$) and in trade ($13.5$).

  • Economics graduates are needed in transportation business, trade and construction ($25-30$).

  • Banking arouses interest only in financial intermediation ($18.2$).

  • Computer science and econometrics are highly valued in the construction sector (almost $44$) and manufacturing ($37$).

Discussion and conclusions

• Experience is crucial for managerial positions, regardless of company size.

• Experience includes knowledge and skills in performing tasks and solving problems.

• Experience is not solely determined by years of service.

• Career development provides knowledge of job requirements, challenges, effective management, teamwork, and motivation.

• Experience impacts competence, enabling new knowledge acquisition, skill development, and behavior change.

• Employers seek qualified managers with additional courses and training.

• Larger companies require specialized education, while smaller companies prioritize preparedness.

• Employers prefer immediate benefits from managers' work.

• SMEs often lack structured training plans and respond to immediate needs.

• From the point of view of the labour market, usefulness of knowledge and skills specific to middle and senior managers, as well as general economic knowledge, knowledge of the latest trends in organization and management are the most important.

• Managers’ qualities like responsibility, loyalty, regularity, reliability, honesty, ethics, and truthfulness are crucial.

• Employers value creativity within defined limits.

• Organizations need to treat employees as individualists, but this individualism is clearly embedded within the group which defines it.

• Managers are expected to efficiently utilize existing resources.

• Competencies are interdependent, making isolation difficult.

• Practical application should guide the creation of new competencies.