Training and Development in Sri Lankan SMEs: The Invisible Gap
Small and medium enterprises (SMEs) make up over 75% of
business establishments in Sri-Lanka. They are the backbone of local economies
in Kandy, Galle, Kurunegala, and every district in between. However, despite
their importance, a major Human Resource Management (HRM) issue remains largely
unnoticed, the lack of structured training and development (T&D). This
“invisible gap” limits employee growth, organizational performance, and
long-term competitiveness (Armstrong, 2020).
SME owners fear that trained employees will leave for larger competitors. However, researches does not support the idea that avoiding training is the safer option. Dissanayake (2018) found that Sri-Lankan SMEs with structured training programs showed measurably higher productivity and lower staff turnover than those that relied entirely on informal on-the-job learning (Dissanayake, 2018) . The logic is straightforward, people stay where they feel they are growing.
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Figure 1: Types of training provided by Sri Lankan SMEs to employees, by approximate share of establishments (illustrative, based on SME sector research
Training is defined as planned activities aimed at improving job-related skills, while learning is a continuous process shaped by experience (Henderson, 2017). In many Sri-Lankan SMEs, training is informal rather than a planned activity. According to Learning Organization concept, firms should continuously learn and adapt (Senge, 1990). However, SMEs goes against these HRM concepts.
The government has tried to address this gap through institutions like the Tertiary and Vocational Education Commission (TVEC) and the National Apprentice and Industrial Training Authority (NAITA), which offer subsidized training for SME workers. However, awareness of these programs among small business owners remains low, and the administrative processes for accessing them can be discouraging. It is noted that fewer than one in five eligible SMEs in their study had ever made use of publicly funded training support (Perera and Jayasekara, 2020).
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| Figure 2: Importance of Training and Development to an organization |
Effective training in a SME context does not need to mean expensive off-site workshops. Instead, structured peer learning, where experienced employees pass on knowledge to newer staff, is one of the most cost-effective training models available. Paired with regular one-on-one check-ins between owners or managers and employees, this approach builds both skills and loyalty simultaneously (Storey, 2004). Moreover, SMEs can go for low-cost training options via digital platforms and apply Kolb’s learning theory to reflect, learn and improve (Kolb, 1984).
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| Figure 3: Kolb's Learning Cycle (1984) |
Solutions for Improving Training and Development
1. Conduct Regular Training Needs Analysis (TNA)
Identifying skill gaps before planning training programs to ensure relevance
and effectiveness.
Example: HR conducts surveys and finds employees lack digital skills, then
arranges training programs.
2. Introduce Continuous Learning Culture
Encouraging ongoing learning instead of one-time training programs to keep
employees updated.
Example: Monthly “learning sessions” or online courses for employees to upgrade
skills.
3. Use Blended Learning Methods
Combining classroom training, online learning, and practical sessions for
better understanding.
Example: Employees attend workshops and also complete e-learning modules.
4. Measure Training Effectiveness (ROI & Feedback)
Evaluating whether training improves performance using feedback and performance
metrics.
Example: Compare employee performance before and after training to check
improvement.
5. Focus on Soft Skills Development
Training employees in communication, leadership, and teamwork along with
technical skills.
Example: Conduct workshops on communication and problem-solving skills.
Conclusion
Training and development in Sri-Lankan SMEs is not a luxury reserved for large corporates with dedicated T & D teams. It is a survival strategy. The SMEs that invest in their people, even in small, deliberate ways, build more capable organizations that are better placed to grow, adapt, and compete. Given that SMEs are the engine of the Sri-Lankan economy, getting this right is not just good for individual businesses but it is good for the country.
Please refer: for more information - https://youtu.be/GkPi4ETzn2A?si=4t4BqKNHwL37GPaC
References- Becker, G.S. (1964) Human Capital: A Theoretical and Empirical Analysis. Chicago: University of Chicago Press.
- Barney, J. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99–120.
- Dissanayake, D. M. R. (2018). Training and development practices and employee performance in SMEs in Sri Lanka. International Journal of Scientific and Research Publications, 8(3), pp. 180-192. doi: 10.29322/IJSRP.8.3.2018.p7524.
- Perera, A. and Jayasekara, P. (2020). Human resource development in Sri Lankan small and medium enterprises: Challenges and opportunities. Sri Lankan Journal of Human Resource Management, 10(1), pp. 45-62.
- Storey, D. J. (2004). Exploring the link, among small firms, between management training and firm performance: A comparison between the UK and other OECD countries. International Journal of Human Resource Management, 15(1), pp. 112-130. doi: 10.1080/0958519032000157375.
- Tertiary and Vocational Education Commission (2023). Annual Report 2022/2023. Colombo: TVEC. Available at: https://www.tvec.gov.lk
- Senge, P. (1990) The Fifth Discipline: The Art and Practice of the Learning Organization
- YouTube (n.d.) Training & development: 6 best practices for L&D [video online]. Available at: https://youtu.be/GkPi4ETzn2A (Accessed: 14 April 2026).
- Kolb, D.A. (1984) Experiential Learning: Experience as the Source of Learning and Development. Englewood Cliffs, NJ: Prentice Hall.
Really insightful blog! It clearly highlights an often overlooked issue in Sri Lankan SMEs and explains the importance of continuous training in a very practical way, but wouldn’t even low cost solutions like mentoring or online learning help overcome these challenges?
ReplyDeleteThank you, I really appreciate your insight. I agree, even simple and low-cost options like mentoring or online learning can make a big difference. It really shows that improving skills doesn’t always require large investments, but more about using practical and consistent approaches that support employee growth.
DeleteA strong point raised here is that effective SME training does not always require expensive off-site workshops, as structured peer learning, regular one-on-one check-ins, and low-cost digital platforms can build both employee skills and loyalty in a highly practical way. The use of Kolb’s learning theory further strengthens this idea by emphasizing continuous reflection, learning, and improvement, which is especially valuable for SMEs with limited resources. How can SMEs effectively measure whether these low-cost training approaches are improving both employee performance and long-term retention?
ReplyDeleteThank you, I really appreciate your thoughtful question. SMEs can look at simple indicators like improvements in day-to-day performance, feedback from supervisors, and employee involvement over time. Retention trends and regular check-ins can also give a clear idea of whether these approaches are creating long-term value for both employees and the organization.
DeleteDear Hashini,
ReplyDeleteThank you for sharing your blog. This is a very useful and relevant discussion because you highlight a major HRM issue that is often overlooked in SMEs. I liked how you combined the economic importance of SMEs with the argument that lack of structured training limits employee growth, performance and competitiveness. Your discussion of informal learning, low use of publicly funded training support and low-cost solutions such as peer learning and one-to-one check-ins makes the blog practical as well as academic. To improve it further, you could add a little more critical analysis on why SME owners remain reluctant to invest in training despite the long-term benefits. Overall, this is a strong and thoughtful blog. Well done.
Thank you so much for your detailed feedback. I’m really glad you found the discussion both practical and relevant. I appreciate your suggestion on adding more critical analysis, especially on why SME owners may hesitate to invest in training. That’s definitely an important area I can explore further to strengthen the overall argument.
DeleteGood read! It makes me wonder whether SMEs in Sri Lanka realize how much training impacts long-term survival. Do you think the main barrier is cost, or more about awareness and mindset among SME owners?
ReplyDeleteThank you, I really appreciate your question. I think it’s a mix of both, but often mindset and awareness play a bigger role. Many SME owners focus on short term costs and may not fully see the long term value of training. It highlights the need for a more long-term view when it comes to developing employees.
DeleteYour post correctly emphasizes that training and development is not a luxury for Sri Lankan SMEs but a survival strategy. Structured learning, even though low-cost peer mentoring or digital platforms, can strengthen employee loyalty and productivity, ensuring SMEs remain competitive in a challenging market.
ReplyDeleteThank you, I really appreciate your insight. I agree, especially in a competitive environment, even simple and low cost training approaches can make a real difference. It shows how investing in employee development can support both productivity and long-term sustainability.
DeleteThis was such a thoughtful and meaningful read. 💯 You’ve done a great job highlighting an important issue that often goes unnoticed in Sri Lankan SMEs. I really liked how clearly you explained the ideas while still supporting them with strong research.
ReplyDeleteWhat stood out most was your focus on simple, practical solutions like peer learning—it makes the topic feel realistic and achievable. Your conclusion also leaves a strong impression about how important this is for the country as a whole.
Overall, a well-written and engaging piece—really enjoyed reading it! 💥
Thank you, I really appreciate your kind feedback. I’m glad you found the discussion clear and practical. It really shows how even simple approaches like peer learning can make a meaningful difference in developing employees and supporting overall growth.
DeleteTraining and development is often overlooked in many SMEs due to cost constraints, time limitations, and focus on day-to-day survival. However, this creates an “invisible gap” where employees are expected to perform well without being given enough opportunities to upgrade their skills.
ReplyDeleteI feel this gap directly impacts productivity, innovation, and long-term growth. Without proper training, SMEs may struggle to adapt to changing technologies and market demands, which can limit their competitiveness.
Thank you, I really appreciate your insight. You’ve highlighted an important issue, this gap can definitely affect how employees perform and how organizations grow over time. It shows why even small, consistent efforts in training can help build skills, improve adaptability, and support long-term success.
DeleteThis is a sophisticated analysis that addresses a pivotal economic lever in Sri Lanka. I particularly appreciate your characterization of the lack of structured training as an invisible gap. This terminology effectively illustrates how a systemic deficiency though less overt than a labor strike or financial crisis can quietly undermine long-term organizational viability.
ReplyDeleteThank you, I really appreciate your thoughtful insight. I’m glad the idea of the “invisible gap” came across clearly. It really shows how something less visible can still have a significant impact on long-term performance and sustainability.
DeleteThis is a clear and impactful piece that highlights a very real yet often overlooked issue in Sri Lankan SMEs. You’ve effectively combined theory with local evidence, and your argument that training is a survival strategy rather than a luxury is particularly compelling. The inclusion of practical, low-cost solutions makes the discussion realistic and useful, not just theoretical.
ReplyDeleteIn my opinion, the biggest insight here is the mindset barrier among SME owners. The fear of losing trained employees seems to be doing more harm than good. Shifting this mindset from viewing training as a cost to seeing it as an investment could significantly improve both retention and performance. Even small, consistent efforts in learning can create a strong competitive advantage for SMEs.
Thank you, really appreciate your thoughts!
DeleteYou’ve brought out a key issue there and the mindset around training in SMEs. Seeing it as a cost rather than an investment can really limit growth.
And like you said, even small and consistent efforts can make a big difference over time, not just in performance but also in retaining people. That shift in thinking is probably where the real change needs to start.
This is a strong and very relevant discussion on Sri Lankan SMEs.
ReplyDeleteWhat stands out is your clear point about the “invisible gap” in training and development. The fear that trained employees will leave is common, but you’ve correctly shown that lack of training actually increases turnover (Dissanayake, 2018).
Your use of Senge (1990) and Kolb (1984) fits well and shows that even SMEs can build structured learning without high cost. The focus on peer learning and blended learning is especially practical for the Sri Lankan context.
Including government support like TVEC is also a good point, because it shows there are already systems in place, but awareness and access are weak (Perera and Jayasekara, 2020).
One question you could think about:
Do you think SME owners in Sri Lanka see training as a cost or as a long-term investment in business growth?
Overall, clear, realistic, and well-supported..
Thank you, really appreciate this detailed insight!
DeleteYou’ve picked up on the key issue very well, especially that “invisible gap” in training. That fear of employees leaving is quite common, but like you mentioned, not investing in development can actually make turnover worse.
To your question, I think many SME owners still see training more as a cost, mainly due to short-term pressures. But there’s slowly a shift happening where some are starting to recognize it as an investment, especially when they see the impact on performance and retention.
This is a strong and well-structured argument. You clearly link theory (like Kolb’s Learning Cycle and Senge’s Learning Organization) with the real SME context in Sri Lanka, which makes the discussion both academic and practical. The way you highlight the “fear of training leading to employee turnover” is especially important because it reflects a real but often misunderstood HR mindset in SMEs.
ReplyDeleteWhat stands out most is the shift you propose from viewing training as a cost to seeing it as a retention and productivity strategy. The inclusion of government support (TVEC and NAITA) also adds good contextual grounding, showing that solutions already exist but are underutilized.
Overall, this is a well-balanced piece that connects HR theory, Sri Lankan SME realities, and practical solutions in a clear and convincing way.
Thank you, really appreciate your thoughts!
DeleteYou’ve captured the main idea very well, especially that shift from seeing training as a cost to recognising it as something that supports retention and productivity.
Glad you also noticed the local context with things like TVEC and NAITA that support is there, but it’s often underused. Nice to hear the balance between theory and practical side came through clearly.
Great article! It clearly highlights the importance of training and development in enhancing employee skills and organizational performance in the Sri Lankan context. I especially liked how you connected continuous learning with long-term success.
ReplyDeleteHow can organizations in Sri Lanka ensure their training programs are aligned with changing market skill demands?
Thank you for your thoughtful comment!
DeleteYou’ve highlighted a key point saying continuous learning is essential for long-term success. To keep training aligned with changing market demands, organizations in Sri Lanka need to regularly assess skill gaps, stay updated with industry trends, and work closely with industry partners.
From an HR perspective, using feedback, performance data, and flexible learning programs can help ensure training stays relevant. This way, employees develop the skills that are actually needed in a fast-changing market.