A PIONEERING "cluster" programme by FAS, the State training agency, has resulted in a 32 per cent increase in employment among the participating small companies.

It could have wide ranging implications because half of all private sector employment outside farming is in similar enterprises.

The programme is aimed at improving management standards in small businesses and helping with cash flow problems. Small firm lobby groups identified these as the most common causes of failure among its members.

The scheme was targeted at firms with a turnover of less than £3 million and fewer than 50 employees in three FAS regions, Dublin south/Wicklow, the north east and the south west.

The scheme cost FAS £5,000 per company, with the client firms making a contribution of £300 each to ensure their commitment to the scheme.

An independent study by Fitzpatrick Consultants of the programme in the Dublin south/Wicklow region showed 25 new jobs were created. This works out on average as £2,000 per job, or less than a quarter of the normal cost to the taxpayer of creating a job.

The programme, entitled the FAS Company Development Cluster Programme, is organised around a cluster of firms in each region to maximise the use of resources and interaction between clients and the State training agency.

The four areas which FAS provided support for were finance, marketing, quality and production. Each company was allocated training days with monthly reviews of progress in each area.

Different priorities emerged for each company. But overall, financial training was the most sought after, with quality control or production training also in high demand.

The programme found most companies had adopted a haphazard approach to financial decisions in the past.

Firms involved in the programme were now "radically altering their management methods in the financial area, introducing budgeting, cash flow management, computerised accounts and other procedures previously missing," a FAS spokesman said.

Marketing was the other most neglected area. The study found that managers often gave so much priority to survival strategies that they had little left for expansion.