A practical performance measurement framework for SMEs in a South African context

Van Zyl, Christo Jasper (2020-03)

Thesis (MEng)--Stellenbosch University, 2020.

Thesis

ENGLISH ABSTRACT: The key word in the title of this research study, is “practical”. A workable performance measurement framework (the business development scorecard, BDSC) is proposed for the owners and managers of small and medium-sized businesses (SMEs) in South Africa. The new framework lays the foundation for a novel approach to SME performance measurement in South Africa that needs further development. To the best knowledge of the researcher, no similar framework exists. A secondary outcome of this research is the list of requirements for a SME performance measurement framework in South Africa. SMEs play a very significant role in the South African economy. Sources differ, but contributions of 42 percent to gross domestic product and 50 percent to employment are commonly mentioned. A larger number of successful SMEs are therefore good for the economy – especially for South Africa with its current unemployment rate of 29 percent. However, South African SMEs have a very high failure rate compared to most other countries worldwide. Measurement drives performance, and therefore the correct performance measurement system applied in a SME will increase its chances of success. A practical performance measurement framework for SMEs will promote better and wider use of performance measurement in SMEs with resulting economic benefits. By studying the relevant SME- and performance measurement literature, as well as logical conclusions from the researcher, the requirements for a South African SME performance measurement framework were identified. Popular existing frameworks were critically evaluated against these requirements with the objective to identify a framework or components of frameworks that could be used in the design of the new framework. A new framework, the business development scorecard (BDSC), is proposed that fits all the identified requirements. The BDSC uses principles from three different existing frameworks to adapt the Balanced Scorecard framework. It can be implemented incrementally with only the assistance of the SME’s accountant, which addresses the chronic resource scarcity of SMEs. The BDSC contains generic measures that drive survival of any SME as well as unique measures that drive the execution of a specific SME’s strategy. The framework further adapts the Balanced Scorecard by adding a fifth measurement perspective of “basic literacy” to the existing four measurement perspectives (financial, customer, processes, learning) of the Balanced Scorecard. The basic literacy perspective emphasises the South African context of the framework. The validity and practical use of the BDSC were proven through semi-structured interviews with a sample of 20 potential users of the framework. Participants in the survey were requested to express their level of agreement with the key attributes of the BDSC. Survey results strongly supported the BDSC. The BDSC should make a practical contribution to a better success rate among South African SMEs.

AFRIKAANSE OPSOMMING: Die sleutelwoord in die titel van hierdie navorsing is “prakties”. ‘n Werkbare raamwerk vir prestasiemeting, die business development scorecard (BDSC), word voorgestel vir die gebruik van klein- en medium-grootte ondernemings (KMO’s) in Suid-Afrika. Die nuwe raamwerk lê ‘n fondasie vir ‘n nuwe benadering tot prestasiemeting binne KMO’s in SA wat verder ontwikkel kan word. Na die beste wete van die navorser bestaan daar nie tans ‘n soortgelyke raamwerk nie. ‘n Sekondere resultaat van hierdie navorsing is die lys van vereistes vir ‘n prestasiemeting-raamwerk vir KMO’s in SA. KMO’s speel ‘n belangrike rol in die SA ekonomie. Bronne verskil, maar bydraes van 42 persent tot die bruto nasionale produk en 50 persent tot indiensneming, word algemeen genoem. ’n Groter aantal suksesvolle KMO’s is daarom baie goed vir die ekonomie – veral in SA met ‘n huidige amptelike werkloosheidskoers van 29 persent. SA KMO’s het egter ‘n baie hoë mislukkingskoers in vergelyking met die meeste lande ter wêreld. Meting is ‘n aandrywer van prestasie, en daarom sal die aanwending van die gepaste prestasiemeting-stelsel in ‘n KMO sy kanse op sukses verhoog. ‘n Werkbare prestasiemetingraamwerk vir gebruik deur KMO’s sal lei tot die meer algemene gebruik van prestasiemeting-stelsels in KMO’s met die gevolglike ekonomiese voordele. Deur middel van die bestudering van toepaslike KMO- en prestasiemeting literatuur, tesame met logiese gevolgtrekkings deur die navorser, is die vereistes waaraan die voorgenome raamwerk moet voldoen, identifiseer. Gewilde bestaande prestasiemeting-raamwerke is krities evalueer teenoor hierdie vereistes met die doel om ‘n raamwerk of gedeeltes van raamwerke te identifiseer wat gebruik kan word in die ontwikkeling van die nuwe voorgestelde raamwerk. ‘n Nuwe raamwerk, die business development scorecard (BDSC), word voorgestel wat aan al die geïdentifiseerde vereistes voldoen. Die BDSC gebruik beginsels uit drie verskillende bestaande raamwerke om die Balanced Scorecard (BSC) prestasiemeting-raamwerk aan te pas. Die BDSC kan in fases implimenteer word met slegs die hulp van die KMO se rekenmeester vir Fase 1, indien hulp nodig sou wees. Hierdie eienskap addresseer die kroniese tekort aan hulpbronne in KMO’s. Die BDSC bestaan uit ‘n stel generiese metings (Fase 1) wat oorlewing van enige KMO aandryf, asook ‘n stel unieke strategiese metings (Fase 2) wat die uitvoering van ‘n spesifieke KMO se strategie aandryf. Die BDSC pas die BSC ook verder aan deur ‘n vyfde dimensie vir meting, “basiese geletterdheid”, by die bestaande vier dimensies (finansies, kliënte, interne prosesse, ontwikkeling) van die BSC te voeg. Die basiese geletterdheidsdimensie beklemtoon die SA konteks van die raamwerk Die geldigheid en werkbaarheid van die BDSC is bewys deur middel van ‘n opname onder 20 potensiele gebruikers van die raamwerk. Deelnemers is gevra om die mate waartoe hulle saamstem met sleutelaspekte van die BDSC op ‘n 5-punt Likert skaal aan te toon. Die resultate van die opname was baie sterk ten gunste van die BDSC. Die BDSC behoort ‘n werkbare bydrae te maak tot ‘n groter sukseskoers onder KMO’s in SA.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/107844
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