The Influence of Human Capital Development Strategies on Competitiveness of Small and Medium-Sized Practices in Uganda

Abstract

Purpose: Small and medium-sized practices (SMPs) in Uganda play an important role in providing professional services to Ugandan organizations, especially the Small and medium-sized entities (SMEs). The increasing number of SMPs in Uganda means that each firm must devise means of outcompeting the others. This study aimed to ascertain how human capital development strategies may be influential in the competitiveness of SMPs in Uganda. Human capital development strategies are schemes or programmes by which SMPs train their partners and professional staff to offer effective and top-quality work and promote the trust and confidence of their clients. There is also an ethical requirement to undertake work with due care and diligence.

Methodology: The SMPs in Uganda were selected randomly to respond to a structured questionnaire. A total of 124 responses were used for data analysis representing almost 90% of the sample size.

Results:

Confirmatory factor analysis was used to determine how human capital development strategies influence the competitiveness of SMPs in Uganda. There was evidence that human capital development strategies significantly influence the competitiveness of SMPs in Uganda. Whereas there were only 18 out of 124 SMPs in Uganda that are part of an Accounting Association or Network, evidence showed that there was a significant difference between the two groups in terms of the composite human capital development index and development spend. However, there was no significant difference in terms of development days allocated to assistants, supervisors or partners. Over 60% of the SMPs in Uganda spent less than USD 2000 per annum on human capital development programmes. The SMPs in Uganda were put into five groups depending on their level of spend. Evidence showed there was significant difference between SMPs that spent less than USD 1000 per annum and those that spent over USD 3000 per annum, with the latter showing higher levels of competitiveness.

Significance of study: This study will supplement the worldwide SMP surveys conducted by the International Federation of Accountants, the latest of which was conducted in 2018. In particular, the study reveals a need for SMPs in Uganda to invest more days (at least 20 per professional staff) and money on human capital development programmes. In addition, the argument for an outputs-based continuing professional development regime is supported. Whilst SMPs have invested time/money (inputs-based approach) on continuing professional development, it has not yet translated into higher levels of competitiveness with 96% of SMPs in Uganda earning less USD 1million in annual fee revenue.

Keywords: Human capital, development, strategies, competitiveness, Small and Medium-sized Practice