Non-financial performance measurement by small and medium sized enterprises operating in the hotel industry in the city of Cape Town

04 Sep 2018

Small and Medium Enterprises (SMEs) operating in the hotel industry in South Africa are perceived to be failing partly due to their reluctance to adopt Non-Financial Performance Measures (NFPMs). The main purpose of this study was to determine whether SMEs in the hotel industry use NFPMs, the purpose and perceived effectiveness of the NFPMs used, as well as the factors that inhibit these entities from using NFPMs. To achieve these objectives, a questionnaire survey was administered on owners/managers of 100 hotels operating in the city of Cape Town in South Africa. The results of the study revealed that all sampled SMEs use NFPMs, and that customer oriented measures were the most frequently used NFPMs, while learning and innovation related measures were the least frequently used NFPMs by the sampled SMEs. The NFPMs, were mainly used for improving the profitability of their business, improving productivity and effectiveness, as well as for improving decision?making. The results also revealed that customer oriented measures were perceived by the sampled respondents to be the most effective of the three NFPMs identified. The use of NFPMs was however inhibited by high cost of implementing these measures, incomparability of the measures to those of other SMEs due to their entity specific nature, difficulty in quantifying the NFPMs measures, as well as employee resistance. This study provides useful information on the usage of NFPMs that the Department of Small Business Development can possibly use to inform the development of interventions aimed at reducing SMEs? failure. These findings may also help SMEs to improve their usage of NFPMs in order to capitalise on the benefits gained from using these measures. Furthermore, these findings may help SMEs to overcome the factors that inhibit them from using NFPMs and lead them to more efficient operation.