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

Andile Mjongwana · Peter Nasiema Kamala

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Accounting and Organizational Management Financial Literacy and Behavior Intellectual Capital and Performance Analysis

Abstract

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.

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References

2013Purposeful Sampling for Qualitative Data Collection and Analysis in Mixed Method Implementation Research 1997The impact of customer satisfaction and relationship quality on customer retention: A critical reassessment and model development 2000An Empirical Investigation of an Incentive Plan that Includes Nonfinancial Performance Measures 2001Determinants of hotel guests’ satisfaction and repeat patronage in the Hong Kong hotel industry 2008A Meta-Analysis of Relationships Linking Employee Satisfaction to Customer Responses 2010Performance measurement and management: a literature review and a research agenda 2006MEASURING SERVICE QUALITY IN THE HOTEL INDUSTRY: A STUDY IN A BUSINESS HOTEL IN TURKEY 2011Investing in people: financial impact of human resource initiatives

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