Improving control through effective performance measurement in SMEs

Abstract

Research has demonstrated that the use of performance measures in SMEs (small to medium sized enterprises) is limited. Financial measures, which are required for examination by external stakeholders, are generally well developed. However, operational measures are typically ad hoc and lack formal structure. A structured approach to measuring perform ance in SMEs should improve strategic control. Current approaches, however, have proved inadequate for the specific requirements of the SME sector. A new process is presented for developing effective performance measurement in SMEs, which is tested through a case study. The aim of the process is to develop measures that drive operational performance towards the achievement of strategic objectives. The results of the case study demonstrate the potential of the process for improving strategic control and stimulating continuous improvement in SMEs.