1. Chapter One: Introduction
1.1. Background
Small and Medium Enterprises (SMEs) have been key drivers of several economies worldwide (Harris, Aziz, & Norhashim, 2012). In developing countries, SMEs have been vital to the creation of jobs in the labor markets (Bhatti, Syed, Shah, & Shaikh, 2012), where it was engaged in a continuous process of seeking strategic options, which may have provided them with a competitive advantage in the local market. The drive to achieve competitive advantages may explain why SMEs possess the motivation to acquire new skills to improve their performance (Salim & Sulaiman, 2011). The propensity to acquire new knowledge and skills may be a tendency of firms to adapt to their market requirements. In competitive markets, innovation and learning have been essential strategies for the survival and growth in small and medium firms (Varis & Littunen, 2010).
A leadership development program is one of the most popular methods of developing managerial and leadership skills within an organization. Organizations are committing to training and development to enhance their leadership potential (Conger & Benjamin, 1999). Fulmer (1997:60) highlighted that many organizations are trying to make leaders “who are capable of helping the corporation shape a more positive future”. A report by Bersin and Associates indicates that U.S. organizations increased investments in leadership development by 14 percent over 2011 figures to an estimated $13.6 billion in 2012 (O'Leonard & Loew, 2012).
The process of leadership development and management is a continuous and integrated activity, where the success of any stage depends on the proper preparation, training and rehabilitation, which is of paramount importance in the process of leadership development, which requires careful attention in planning, implementation, follow-up and evaluation, to ensure the achievement of its goals and objectives.
1.2. Problem Statement
Training, as part of human resource development, is becoming increasingly important, it requires a substantial allocation of financial, human and time resources. Yet despite the substantial investment of valuable resources, the information and skills that are gained in training may never actually be applied in the workplace (Donovan, Hannigan & Crowe, 2001).
In Saudi Arabia, the process of economic and social reconstruction has harnessed capital, organized labor and state agencies. Increasingly more public policies on human resource development and diversity has been formulated. The task facing Saudi Arabia is to find creative solutions for integrating economic growth and human resource development. Thus, the need to develop internal employees in line with labor legislation has required the organizations where research is conducted to develop a structured training program.
Small and Medium Enterprises in Saudi Arabia contribute to the GDP by only 20% compared to 70% of some other economies. Despite the efforts to improve the quality of the business environment, small enterprises in the Kingdom continue to suffer from a complexity of regulatory and administrative procedures, slow capacity, poor capacity to attract talents, and difficulty in obtaining funding. The proportion of funding for small and medium enterprises is only (5%) of the total funding, which is a small proportion compared to global rates. We will seek to help these enterprises to obtain funding and urge our financial institutions to increase the funding to 20% by the year (1452 AH – 2030 AD). Small and Medium Enterprises General Authority seeks to establish more business incubators, training institutions, to help entrepreneurs develop their skills and innovations. (www.smea.gov.sa)
Saudi Arabia efforts to take its SME leadership to the next level, as it will offer innovative training to entrepreneurial talent across the Kingdom, eventually enhancing the role of SMEs in economic development. This will lead to a stronger support system for SME owners and future entrepreneurs and ensure that they have the necessary skills and experience to succeed.
The developing program aims to provide existing and potential entrepreneurs with the skills and knowledge they may need to become future business leaders.
The King Salman Program for Human Capital Development will establish HR centers of excellence in every government agency, and provide training. They will work to raise the productivity of employees to the highest levels possible, by implementing proper performance management standards, providing continuous training for professional development, and sharing knowledge. They will develop targeted policies to identify and empower future leaders, and will furnish a stimulating environment that provides equal opportunities and rewards for excellence.
It will have also to identify and put into effect the best practices that would ensure that public sector employees have the right skills for the future. However, by 2020, they aim to have trained, through distance learning, 500,000 government employees. All ministries and government institutions will be required to adopt best practices in human capital development. They will continue to hire individuals according to merit and work towards building a broad talent base, so they will become leaders of the future. (2030 Saudi Vision document, 2017)
1.3. Research Questions
Q1: What is the degree of application of Reddin's Three Dimensions Leadership Theory in SMEs in Saudi Arabia
Q2: Is there a significant difference on Performance (Task completion, Relations, Leadership Effectiveness) due to the 3-D leadership development program (Situational Management, team management, Output Management).
Q3: Is there a significant difference on Performance (Task completion, Relations, Leadership Effectiveness) due to the demographic variables (Position, Sex, Years of Experience, No. of training courses taken, Education Level)
1.4. Research Objectives
The aim of the research study is to explore whether the leadership development program has any effect at the individual and organizational levels. To reveal an effect of the training program. We will investigate how the leadership development program influenced three leadership competencies of trainees and evaluate the results of effectiveness on the (Task Oriented, Human Relations, and the leadership effectiveness) based on the 3-D theory.
Owing to the cost involved in this program, the human resource development section is required to demonstrate the effectiveness of the program in measurable terms. The results of the scientific research conducted on the effectiveness of the developed training program can justify the cost in terms of capital investment, and would determine the future use of similar training programs.
To achieve this aim, this study will target the following objectives:
1. To develop a leadership training program
2. To apply the developed program
3. To evaluate the results of the training program
1.5. Scope of the Study
The main idea of the development programs is that participants will apply what they learn to their jobs in order to achieve greater performance outcomes.
In order to ensure that the findings of this study are practical and applicable, we recommend demarcating and focusing the study as follows:
A literature review dealing with Leadership development theories, and recommend one theory for adaption.
A literature review dealing with the development, application and evaluation of training programs.
A literature review dealing with SME’s Human development programs in Saudi Arabia.
1.6. Significance of the Study
The findings of the present study will benefit both the knowledge and practitioners as follows:
1. Contribution to Knowledge
Findings of the research will add to the knowledge and understanding of the subject of Leadership, and build skills and capacities around the leadership competencies.
Regardless of growing spending on leadership development programs, experts delineate the lack of evaluations of the effectiveness of leadership development programs (Day, 2000; Sogunro, 1997). Burke and Day in their meta-analysis concluded that the majority of organizations ignore the effect of training programs on job performance improving (Collins, 2002). Thus, the ‘hard’ organizational level is extremely important in terms of the evaluation of effectiveness. Transfer to the organizational level, including task completion and human relations, complicated this objective substantially. In this context, the effectiveness of a leadership development program has become more complex and required strong methodology and appropriate methods.
This study will help leadership experts and scholars to go further in exploring the outcomes of leadership development programs, especially at the organizational level.
e…