Non-financial Performance Measurement in SMEs Embroidery and Weaving in West Sumatera - Politeknik Negeri Padang
Non-financial Performance Measurement in SMEs Embroidery and Weaving in West Sumatera
Primadona
1
, Emrizal2 1,2
Politeknik Negeri Padang
Abstract-Performance measurement non-finacial during this tends to in ignore because in traditional views in general
performance on companies in measuring with financial capacity. To SMEs craft embroidery and weaving in west sumatra , performance measurement using the ability to impede in financial performance measurement effort especially in about the development of SMEs, because of 67 the number of SMEs all only 17 SMEs with financial reports. Is caused by some things, are generally SMEs not need a financial report which is very important in measuring performance. The other is limited capability the owner SMEs in make a report a finance company and they are not all SMEs can be counted the financial reports . This research aims to understand the measurement of non-financial performance in measuring ability SMEs sector specifically to the craft and weaving in west sumatra by using the method with instrument qualitative data collection using indept-interview and observation. The research is the continuation of research conducted in 2017 using quantitative methods. Further research that you can do is by using the mix method so get the result that more perfect .
Keywords: performance,SMEs, non financial performance indicator I.
INTRODUCTION Performance measurement to organizations business indispensable , not only to think of business development but also need to evaluate the course of business. With the performance measurement shall be find out how well organization or company managed and this is very important to parties that directly touch with the company . Measurement performance as one of the used in the process strategic, Performance indicators researchers to help an enterprise assess the strategic objectives and targets to companies ( Kaplan dan Norton, 1992, 1996 ). So that performance measurement companies should produce capable of in by the company.
According to literature in twenty years , interest in performance measurement business has seen a significant increase (Taticchi, Cagnazzo dan Botarelli 2008; St-Pierre dan Delisle 2006, Garengo, Biazzo dan Bititci 2005; Jarvis, Curran, Kitching , dan Lightfoot 2000; Fisher 1992). According to (Taticchi , Cagnazzo , and Botarelli , 2008 ) , performance measurement has evolved from focusing financial perspective to non- financial perspective and it is in studies prove by which many discuss this topic. Performance measurement to companies , in particular SMEs actually very important to do, However due to the limited to provide information especially financial information cause performance measurement difficult. Traditional views said that performance measurement to companies look at of information and financial performance but with progress an integrated financial performance and non-financial also been it is supposed to do ( Kaplan & Norton, 1996; Raphael & Man, 2013).
According (Chong, 2008), most of literature that is devoted to the study of how large organization measuring its performance. He suggested that there is a mismatch that clearly in understand how small and medium enterprises or (SMEs ) a measure of their performance. The gap is caused by nature and complexity structure business , and the pemilik-manajer willing to participate in the process of research. But if seen from the fact that is especially to smes craft needlepoint and embroidery when viewed from performance measurement of financial aspects will be difficult to be fulfilled because there are several factors barrier, of them : (1) Limited knowledge the owner smes in produce financial report, (2) The system uses to SMEs, (3) To lack of awareness of smes aware of the importance of business performance measurement. All these problems make smes difficult to measure the performance of business. Although some previous research has described that measure performance was the concept of multi-dimensi which means the effectiveness of the are two fundamental dimension performance, The effectiveness of referring to the extent to which the needs of stakeholders fulfilled , while efficiency is a measure of how economical resources companies used when a level give satisfaction to stakeholders and other parties (Neely, Adams et al.,2002).
The Combination between the size of financial and non-keuangan has become framework popular in various fields in the country and this provides hope that in addition need financial information , information non financial is very important in performance evaluation of businesses such as to see economy , strategy , financial and accounting (Porter,1992; Handy & MacDonald, 1994). The an integrated would give a complete picture of about the performance of to smes both in terms of quantitative ( objective ) and qualitative ( subjective ). Performance indicators affected parties who were directly involved in such as the employees of business , customers , and the owner (Handy & MacDonald, 1994; Kaplan & Norton,1992).
The purpose of this research is to find performance evaluation of business to smes by using non financial. This article consists of four parts consisting of introduction to both the importance of the study is done, Literature review followed by methods used in doing this research. This paper will be end with conclusion , implication and limitations.
This section will talk about research old conducted deals with the measurement of performance non financial focusing performance measurement to SMEs. Before the 1980s , performance measurement most developed and used in industrial companies large part on large countries in the world that the main focus on achieving a number of financial step (Johnson & Kaplan, 1987). But due to improving complexity organization and markets and in early 1980, Where company is compete , this is no longer appropriate for use as the only step to assess the company performance (Kennerley dan Neely 2002). System also must include performance indicators non- keuangan.One who rational to this trend provided by kelly ( 2007). He was showing that the company created through the various activity that promotes success factors. These factors covering innovation , the quality , productivity , and customer satisfaction.
Even though they were research old make clear and even capable of being deduced that the measurement of financial performance have a major influence in successful business. Several researchers also tried to summarizes weaknesses found if only use financial aspects in measuring performance business (Yeniyurt ,2003: dan Gomes, Yasin & Lisboa.,2004).
a.
Traditional performance seen from the size of inadequate accounting for the strategic (Kaplan dan Norton, 1992); b. This look too fixated on history and look back (Ittner dan Larcher, 2003); c.
They have deficiencies prediktif ability to explain the performance of the future (Ittner dan Larcher, 2003); d.
They informed of cases of up to bare her foundations ( Ittner dan Larcker, 2003); e.
They do not connecting non-financial for number financial (Kaplan & Norton, 1992).
f.
They have reported functional but not interrelating functional process in deciding (Ittner dan Larcker, 2003). But reintegration in performance measurement have proven and needs to be done so as to be firm capable of successfully. Build differs from the framework of common performance measurement for all kinds of organizations and companies , many researchers focus on designing and adopt performance measurement system organizations and companies based on certain characteristics (Beamon 1999). Debate long still continues so until now, the researchers not adopt that best practices which are received in universal by the company due to the limited requirements on measuring performance (Gomes et al, 2004.), of them: a.
II. LITERATURE REVIEW
Perfection produces if reflects non- financial relevant information based upon the success key any business ( Clarke , 1995 ); b.
Must be able to be implemented as a means of articulate strategy and monitoring the business ( Grady, 1991) c. Should be based on the purpose of the organization , decisive factor success , and the needs of customers and must monitor financial aspects and non financial ( Manoochehri , 1999) d. Performance measurement must can change dynamically with strategy
(Bhimani, 1993); e. Must meet the needs in a particular situation in operation manufacturing and should be long term and simple to understand and apply performance assessment (Santori dan Anderson, 1987); f. Performance measurement must be able to make links to appreciate a system ( Tsang et al, 1999) ; and g. Size financial and non-financial to be in harmony and suitable within the framework of strategic (Drucker, 1990; McNair dan Mosconi, 1987).
Briggs, Claiboborne, and Cole (2006) Concluded that financial size is generally performance indicators left while size non-financial as sustainability, Learning and growth, is repair processes internal in size performance can give insight about the performance of the future. Although suggested by sedecon consulting ( 1999 ), the measures must be developed of the strategy and adapted to match the context of certain in the structure of the organization, the gap between what would measured and what can be measured was the main reason for performance measurement so challenging ( Meyer, 2002). In general, function performance measurement can be described as into four aspects following ( Neely 1998).
a.
Check position.The formation of status and monitoring progress currently from time to time and to the basis of.
b.
Communicate position.Communicate with the shareholders or fellow the owner, customers, or employees with prepare an annual report, etc.
c.
Confirmation priority.Performance data give insight into what is important for business, so that expose the deficiency allow organization to identify priority.
d.
Obliging progress .Steps that can help organizations and focus on specific issues to encourage people to find a way in improving the performance of .Communicate priority measures will be able to form the basis for progress.
Even after much research carried out to performance measurement business it definition performance measurement business are still being debated .Neely ( 1998 ) define performance measurement business as process of measuring efficiency and effectiveness past actions through acquisition , examination , sorting , analysis , interpretation and the spread of an appropriate data. Moullin ( 2003 ) suggested that the definition is performance measurement and emphasizing good judgment of the value of an organization that can be given keberbagai stakeholders and manner of the organization can be managed . Nanni et al .( 1990 ) performance measurement tool defined as the monitoring and maintain control organization that is the process to ensure that an organization pursue strategies that leads to the achievement of the objectives and targets overall. Amaratunga and baldry ( 2002 ) give a definition more specific performance measurement that provide a foundation for an organization to assess how well or progress towards a goal was reached , helps to identify the strength and weakness , and decided initiatives future , with the aim of enhancing organisational performance. This definition is described the role and process of performance measurement clearly of various aspek.berdasarkan some definition of above so it can be concluded that performance measurement is a system that structured and collecting , monitoring , and judge information about the organization , in order to reach the proposed goals and objectives. In this research , the objectives and targets in focus on on strategic objectives organization , the purpose of business units and objectives as well as the ability business owners develop their business viewed from resources available.
Based some literature that present then model performance measurement proper to smes in see performance measurement non financial is business models that diadobsi of research ( Wu & Zhao , 2008 with an indicator developed is the ability , resources , and environment .For more details so outlined each performance indicators business become main in understanding performance variables business : a.
The ability , that is referring to the ability of the organization that not only consider the ability static the management team , but also gauge if the ability personnel can be converted into the ability of the organization.
b.
Resources, the sources that could hinder the development and expansion.Thus, a companies should efficient manage man, financial, social ( government or community support ), technology, and physical resources.To do so, smes can answer three following questions: ( 1 ) what resources needed to achieve their performance proposed? ( 2 ) what resources can be obtained? and, ( 3 ) are resources used properly? c. Environment , namely compared with large organizations , ukm-hidup more dependent on business condition .Measuring the business environment that necessary .To do it , smes need to measure competitive environment , technology , industry , economy , and social . Third the instruments will seen in performance measurement to SMEs craft needlepoint and weaving in west sumatra .
III. RESEARCH METHODE This research in a qualitative with data collection method used observation and interview deep.The research was done in 2017 with five the west sumatera, the bukittinggi, pariaman city, kabupaten agam, cities and towns sawahlunto the.Masing-masing location will be respondents about 13 sme so all respondents were 65 smes and 2 respondents including agencies to confirm information from SMEs. Unit analysis in this research is the owner smes on the site of research .The the data based on purposive sampling this is goals the research you want .To see performance non-financial so used three dimensions namely dimensions the ability , dimensions resources , dimensions environment , dimensions strategy and the process and dimensions work and objectives .
Dimensions used in this research reference to dimensions in use by ( Wu & zhao , 2008) .Wu and Zhao is conducting the research in australia about the method suitable in measuring non financial performance to SMEs .An indicator used in this research is as follows:
1. Dimensions The Ability a.
How to apply a process that systematic and organized b.
Almost all existing SMEs have human resources good .It means resources needed available and interviewed revealed that they have human resources are good for producing goods and even able to empowered reservations happen if products. Usually available resources lies in research locations and produce generated also according to those of smes .If in the city sawahlunto been noted by weaving Silungkang and is different by Pandai
2. The capability of resources
During this time which is always done by the owners of SMES in responding to customers is with menelp subscribers and also by giving the product in accordance with the requested quality. In addition on time in finishing order also deeply in watch by the owners of the SMEs. In general smes this is able to respond to customers in ways be a better both in services to be taken directly to the consumers both through cargo transport services or courier. This is the sort of are still being undertaken by customers , in addition to use good service also by applying system the price competitive . This means that if customers ordering the more so will be given the discount directly to the product ordered. Generally have been working to smes are employees originate from local area as if viewed to SMEs Pandai Sikek Silungkang , all weaver is society the region work as weaver already hereditary. So far the owner SMEs regardful good its ability and in of the life. Usually weaver be human resource deeply in count on in produce products .They work home each with remuneration system based on a product produced. The owner SMEs usually provides wages first useful to help in fulfilling living needs. Here SMEs role in managing resources good human resources and resources capital. Resources capital should be much because wages given to be became an investment in produce products .Equipment used usually been possessed by each weaver. So SMEs not need so much provides equipment for investment. Based on the description above then we can conclude that than 65 responde 17 respondents who already have the capability of being good. The ability manage resources and are able to beradaptasian with the trend and technological advances have been done by to 17 respondents but 48 respondents other new able to manage resources especially human resources .It means only 26 % smes would have the ability non financial while 74 % yet have the ability non financial. While for be able to apply the ability beraddaptasai with the progression of the technology still cannot be implemented. While another way could not due to the limited owned by sme both in limited capability knowledge and in managing resources for example resources capital .
Generally SMEs market product directly to consumers. Only a few years old last there are the ability to market by means of technology as sales online , use web-site . From 65 respondents in interviewed at five locations to only 12 respondents who had been distributing their product with using technology while the rest namely 53 respondents still sells directly or traditionally their products. This is because by several things, which are ( 1 ) the lack of the ability of SMEs marketing will use the sale of on-line and through websites or technology with both takes charge of e-commerce and this make sme owner think in doing this because the impact of this is not yet clear, (3) Using sale or marketing with the system e- commerce means smes should be ready to the product who marketed while so far smes not could have prepared a lot of products because of financial capacity.
According to a research who writers do to five locations in west sumatra by a unit analysis the owner SMEs craft and weaving. The area where the have 13 respondents for measuring non- financial performance to SMEs craft and weaving .
How did company understand technological change
How the company apply a process that systematic and organized b. How to the firm do measuring customer satisfaction regularly and the results used to encourage improvement c.
3. Dimensions Environment a.
How had a reputation for good and capable of being maintained
How the company support the success of this measure e.
How the company manages of employees that process managerial experience good c. How to company has access to production factor at low cost d.
How to manage the availability of capital sufficient b.
2. Dimensions Resources a.
How to the firm do measuring customer satisfaction regularly and the results of which used to encourage improvement
IV. RESULT
1. Performance evaluation of the ability
Sikek who have a name sonket Pandai Sikek. A result or to typical the products of different in accordance with regional characteristics .So also the results of needlepoint and embroidery produced is also different and all that will be produced in accordance with consumer demand. To SMEs so far in managing human resources varied , there are resources man or weaver working fixed and there is a pattern working if they need work and so if smes need additional weaver. The management of human resources so far are able to doing well by almost by all SMEs.
The so far appear in marketing the product is setting a price in terms of products .Compared with similar products derived from other regions , our products have a high price , according to interviews with the smes said that is the standard price for the woven generally high so that the product is forced to sell at a high price. If not the adjust to the price for this applies in provides wages in weaver so fear for the owners smes is if many weaver which no longer want work as weaver so in the long term would be hard to produce products. Wages given to weaver have been high and and it was not made pekejaan weaver as the main work it made work weaving as odd jobs by reason of wages received is still felt small compared to other did work .This is what so problems in managing the source of human resources especially weaver.
To overcome the problem of capital adequacy , conducted by smes for this is borrowing to banks and other banking institutions .Than 65 respondents who in spoke to only 28 respondents or 43 % that have access kelembaga financial while the rest not have access financial institutions. The reason is the difficulty of meet the terms and conditions in give by financial institutions this thus made smes did not connection with banking institutions .And in marketing products , access to financial institution is important done to facilitate transactions with consumers. While to look to get the raw materials to in production during this is very easily done .There are 2 SMEs that have direct access to a source of raw material namely in Bandung while the rest are still diverse but still in areas of West Sumatra , namely the city of Bukittinggi and Padang. In fact if seen from the effectiveness of is more effective a pittance direct order to the center of raw materials but should have massive capital because every order shaii in large quantities and this is what are obstacles to smes in
All SMEs did not have standard clear.All products have been made by weavers based on demand sme so quality received smes varied.Is caused by the absence of standard clear the weaving or embroidery produced. The quality of also affected by tool used there is a black and white there is a for embroidery and for equipment weave that standard .The weaving Pandai sikek the weaving Silungkang and Muaro Kalabab is different that there has been no standard in marketing products. While to manage SMEs usually only some workers course , because employees here just need to serve consumers in marketing products and ordering raw materials and a great job is to produce a product has been done by weavers. The average SMEs have a weaver or child sewing ranged from 20 to 70 child suture and weaver .Weaver had usually had had the capability to weave or embroider that they ve had since hereditary so what will be done by the owners of the small and medium enterprises only provided input on models that are favored by consumers. Skill owned by weavers never training structurally , generally skills that provided was only for discussion and feedback so that innovation and creativity weaver inadequate once. In addition in general weaver has low education is and has no basic education in designing or in studying model design new and this a problem for the owners SMEs in produce products.
Based on the description above resources management and conducted by just as the sme but not management.Peralatana generally owned by weavers and the sme just as the from the product means not too hard to do for owners SMEs. While in produce products actually the sme also need not provide a production of greater because any product in the production at home weaver. All resource management of human capital and resources as equipment capable of managed all smes , only organizing and manage financial resources have not been able to overcome perfectly.
3. The Environment Dimensions
The environment is quite affecting the existence of smes .In this d they will look at the how the company be able to apply a process systematic and organized , how the companies have a measuring customer satisfaction regularly and the results used to encourage improvement , how did the company understand technological change. To see procedure with produces product is very perfect is given instructions to weaver and penyulam producing goods in accordance with the design and desired results of SMEs. The owner of smes here have to be creative and understand tastes consumers because the SMEs later that role in determining production .All the sme smes 65 do this because penenundan penyulam only of beneficiaries order. weavers there is no work contract there is only equally agreed to work together on produce products .
To see the relationship between small and pelangan or consumers usually it was only conducted by how to work.For example orders in messages by consumers will be based on the schedule has been agreed upon. But the whole SMEs are able to able to perform production process a nice structured but in thing measure customer satisfaction there has not been done. In total only 4 smes or 6 % did with assessing the customer satisfaction at regular intervals.This will be achieved through survey randomly to some consumers of products in belinya directly. The product which is in produce by sme there are also sold to malaysia and were sent regularly and there was also carried out konsumen.selain satisfaction that , so far the owner of SMEs are also often survey of what the models and design products and this is very influential to the sale of products. For example in terms of the generation of of the craft weaving , the results are sold in large numbers to the other islands as surabaya used for combination other products. This should be made conformed to order to meet customer satisfaction .The big issues that are currently being faced by SMEs is have not been able to conform to technological progress.
The problem of lack of ability of knowledge and a lack of capital in adapt the technology dengankemajuan be the cause of the slow developing smes in terms of technology.
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Based on the description above it can be concluded that performance evaluation of SMEs in the form of non-finansial have not been able to also done well being in the performance assessment in the form of financial performance also could not be done .Thus assess performance and weaving a craft to smes has not been fully provided both by the smes or by pihak-pihak interested parties to SMEs. Based on the description above can be concluded that performance evaluation of smes in the form of non-financial stocks have not been able to was also done to well even though in assess performance in the form of financial performance also could not be done .With such appraisal performance to SMEs craft needlepoint and weaving has not been fully provided good by the owner smes or by the party that interests to SMEs.
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V. CONCLUSIONS AND IMPLICATIONS
Although SMEs craft and weaving this is to businesses that are already managed in a hereditary but performance evaluation of to SMEs has not also capable of being done well .Assess performance based on financial aspects was very hard to do due to the limited to provide information in can financial. But the guilty based on the aspect of performance evaluation of financial have not yet be performance of SMEs. This is due to the low level the ability of the owner and the management of the smes in the understand the importance of assessing the performance of business .As well as poor view of the owner of the importance of SMEs performance evaluation of performance evaluation of the utmost effort this affect. But some businesses has conducted but have not been able to on all aspects.According to the result is not yet one businesses will have filled the assessment based on the least dimension.Some businesses have started by running some dimensions course. Limited research is respondents in an interview still less than the population and policies and implementation so far has been sent to research had been executed for less bersinerji of his government , academics and the SMEs.
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