Framework for a Small Business Owner/Operator Management Skills Competencies and Standards

Most standards development is occupation specific and focused in the area of trades and professions. Other than institutional designations by universities and colleges, there are very few cross-sectoral standards, in the area of management and small business. There is a general belief that business schools claim to cover this area of skill need. While there are extensive bibliographies and not on publications providing knowledge in all of the competency areas there are considerably less offerings that meet the characteristics and learning needs of the small business owner/operator. The banks are attempting to provide some assistance in this area. All the major banks are now responding with publications on assisting small businesses to be better managers especially in the area of financial management. In particular, the Business Development Bank of Canada has perhaps gone the furthest by providing more user-friendly learning material and programs directed at small business segment of the market.

At the present time, the recognition and use of management performance standards is very limited. The Canada Human Resource Tourism Council is the most advanced in the development of standards for owner/operators. This paper looks at several of these. No other Sector Council has developed management standards and in particular stamdards for small business. On the international scene the Australian model has been mentioned as an approach to standards in the Canadian context. Both of these approaches are reviewed below.

VARIOUS APPROACHES TO SMALL BUSINESS OWNER/OPERATOR STANDARDS

Australian Model

The Standard

The Australian Competency Standard for Small Business is based on a business cycle approach. There are six identified units of competency reflecting the cycles through which business structures move. These six units are

1. Confirm a Business Opportunity
2. Assess Business Variables
3. Translate the Business Plan into Action
4. Efficiently Utilize Resources
5. Monitor Customer Relations
6. Monitor Trends to Maintain Competitive Advantage

Since the process is based on the business cycle six feeds back into one and basically repeats itself. This process would not only be used for a new business start-up but developing new products and business expansion.

The Competency Units are then broken down into smaller elements and supported by performance criteria. For example Unit 1 - Confirm a Business Opportunity has as its first Element 1 - Identify Business Opportunity and as Its Element 2 - Establish Market Demand. Under these elements performance criteria are established.

UNIT1. Confirm a Business Opportunity

Element 1: Identify Business Opportunity

Performance Criteria

• Business opportunities have been recognised from various sources and documented.
• An individual decision to act on recognised opportunity has been made.

Under Unit 1 there are four Elements and numerous performance criteria. This process is repeated for all the six UNITS and Elements.

After the standard is developed and approved it is used to do the following:

• help recognize prior learning;
• course development - for on-job and of-job training
• accreditation - the delivery of relevant competency standards
• influence - the delivery of training to be more flexible
• assessment - against the competency standards
• certification - national framework for the recognition of training (NFROT)

An important factor in the development of this model was the definition of a small business. Small business are defined to be manufacturing firms employing 100 or less and construction and service firms employing 20 or less. This definition generally reflects certain management organizational characteristics, such as, independently owned, the owner/manager makes the firm's principal decisions, and provides most of the operating capital. These characteristics, as research has demonstrated, are important in the development of standards and are the basis for using the business cycle as the framework for competencies for this target market.

The Process

The process for the development of cross-industry standards is not to develop a "one size fits all" but to use its generic framework for industries to develop the specific content for their own application. In principle, this approach could be easily applied across Sector Councils in the Canadian context. To some extent this is already being practised, although in a limited way, by the tourism industry.

The standards development process has extensive structure and is more fully developed and linked between the national government and the states. Overseeing the Small Business Management Competency Standards Body is the National Training Board which provides guidelines for standards policy across the country. The process incorporates guidelines for curricula development under NFROT, Most of the accreditation is facilitated by the State Training Authorities who follow the NFROT guidelines.

There are some structures in Canada initially designed to provide a similar infrastructure such as the Canadian Labour Force Development Board and the local board structures under provincial jurisdiction. The new mandate of the CLFDB may in fact make if difficult to implement and manage this process given the changing scope of its mandate. With expenditure reduction as a top priority of governments at both the provincial and federal levels, there is less enthusiasm to financially support new infrastructure for national standards development similar to the Australian model. Also the whole issue of national industry standards is less clear with the recent restructuring of the CLFDB and its mandate in the area of national standards.

Canadian Approach

Three basic options have been identified for the development of national standards.

• A bottom-up approach driven by the needs of trades groups, professionals, labour groups and business.

• An interprovincial standards agency similar to the Australian model - supported by a national coordinating body for all standards.

• A hybrid approach - where governments provide assistance to stakeholders to coordinate standards activity that could have the potential to develop national standards - the sector council approach.

Standards and skills development of trades and professional bodies are under provincial jurisdiction with the exception of marine and air transportation. The federal responsibility for standards development rest largely with the Human Resource development Department, however, Industry Canada has responsibility for small business and management skills development.

The CLFDB plays a role in promoting the need for national standards but has no jurisdiction in monitoring or overseeing standards development.

The Sector Councils play a much greater role in the development of industry standards since part of their mandates incorporates this component. Beyond regulated occupations under provincial jurisdiction, successful non-regulated industry standards development still needs a bottom-up approach with some government financial assistance, and is one of the reasons why the sector councils are seen as a potential vehicle to develop standards. The hybrid approach is more responsive to the needs of the stakeholders and flexible enough to develop a wide range of standards such as cross- industry standards. Many Sector Councils have already developed industry occupational standards. This current project is a major step in exploring the potential to develop cross-industry generic standards.

One sector council, the Canadian Tourism Human Resource Council , provides the essential framework to build the basis for successfully developing a generic set of management skills for a small business owner/operator that would be available for all councils to use.

Standards in the Canadian Tourism Human Resource Council (CTHRC)

The principal mandate of the Council is to develop standards and where possible national standards. Members of the Council have already developed some 60 occupational standards of which over 20 are nationally recognized. Several of the standards are already cross-industry especially those at the management level and those designed for use by small business owner/operators.

The members of the Tourism Council represent structures already developed in the industry nationally and provincially. The Council acts as an umbrella organization to bring these groups together to develop standards. To some extent the Tourism Council has many of the elements of the Australian model (provincial agencies and national organizations) and is one of the reasons why the standards are evolving and becoming national in their use. Also, the fact that there are many sub-industry groups operating in the tourism industry reflects the development of several cross-industry standards.

One of the factors that is frequently overlooked and often taken for granted in the Tourism standards process is the flexibility among council members in the development of these standards. Not every provincial body is involved in the production of standards and not all developed standards are accepted nationally. This same flexibility needs to be imbededin the process to develop generic cross-industry standards at the sector council level. Not all Councils need to be involved in the development of a standard and standards do not have to be accepted nationally by all industry groups.

Standards Process

The CTHRC standards process outlined in Appendix 2 consists of six steps and actively involves industry in an integral way and in every aspect of the development process.

1. Recruit the Industry Validation Committee and Standards Industry Advisory Committee
2. Define the Occupation
3. Draft the Standard
4. Review the Standard
5. Validate the Standard
6. Revise the Standard

The validation committee requires 80% experienced individuals, 15% immediate supervisors and 5% educators.

The standards that are developed are reference points for performance measurements and are always evolving because of the changes in technology and/or management methods. Thus there is always a need to update the standards and incorporate new ideas and methods so that standards are relevant to the industry.

The Council has recognized the need for standards at both worker and management level, as well as the owner and operator of a small business. No other Councils have developed standards at the management level or for small business.

Using the Tourism Council's standard for a small business operator as the basis for developing a broader cross-industry/ cross-council set of management skills for a small business owner/operator are based on several factors.

• The core competency blocks and their management skills are reflected in many other standards structures and identified management skills for micro businesses.

• The failure and success factors of many small business are skills sets identified in this standard.
• The standards process offers a framework for development without reinventing a completely new process.
• There is no other generic standard that comes close to meeting the needs of the small business owner/operator.
• The standard already has cross-sectoral dimension since it reflects the needs of 8 sub-industry groups.
• The process demonstrates a high degree of flexibility in developing cross-industry standards.

Participation could come from sector councils, government agencies and others such as the Business Development Bank and small business associations and other organizations depending on the nature of the standard in order to pursue the development of management skills in the context of a standards framework outlined in the Standards Development Process (Appendix 2).

Once the structure has been determined then the draft management skills (Appendix 1) can be reviewed, modified and validated.