Determinants of employee skills’ level and utilization in SMEs in the Republic of North Macedonia

Abstract

Recent research shows that continuous skill upgrading is paramount to achieving competitiveness and sustainability for individuals in the labour market and firms. Due to the dynamic business changes, firms expect higher levels of creativity, innovation, and initiative from their employees, hence ensure that they possess cutting-edge knowledge, skills, and abilities. Nevertheless, firms cannot capitalize solely on employees’ skills i.e., the full utilization of employees’ skills is necessary to achieve competitiveness. Thus, the determinants that influence the level and utilization of employee skills are crucial for firms as well. In this paper, the recruitment process and training are recognized as factors that affect skill level whereas the methods of motivation determine skill utilization. The results of the empirical analysis on a sample of SMEs in the Republic of North Macedonia indicate that the challenges firms face during the process of recruitment pertain to the lack of applicants’ skills and the small number of applicants. Also, almost 60% of the firms either announce only primary vacancy requirements or, although thoroughly defined, do not include the requirements in the vacancy announcement. As for the upgrading of skills, about 50% of the firms had organized one to three training sessions in the last three years, mainly pertaining to the improvement of job-specific skills of primary employees. Almost one-fifth of firms had not organized any training. The motivation methods are highly important not only to boost employees’ willingness to upgrade their skills but also to fully utilize them in their working activities. The findings indicate that more than half of the firms motivate their employees by providing bonuses and rewards, and by taking employees’ opinion into account. An additional motivating factor refers to employee participation; in particular, including employees in the process of new product/service development.