Tag Archives: measurement

A Toolkit to Measure the Performance and Labour Conditions in Small and Medium Enterprises

Guest post from ILO The Lab

Performance measurement is critical not only to see whether enterprise development projects are making a difference, but so that small and medium enterprises (SME) themselves can continuously improve. As the saying goes: “If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” In other words, the measurement of performance is the first step towards the management of performance.

Enterprise development projects need to measure changes in SME performance, not only to report results to project funders, but also to help SMEs continuously improve. But measuring the performance of SMEs in the context of a developing economy brings special considerations, including:

  • Pressing capacity challenges in record keeping, data collection, and access to modern management techniques – along with the technology that drives it. Most SMEs have some kind of performance measurement system, however, these tend to be very basic.
  • Intensely competitive environments where there is little market differentiation – meaning most SMEs have to tussle just to survive, reducing the incentive to collect and use data. Some countries have 5-year survival rates as low as 10%.
  • Flatter management structures, less bureaucracy and – in theory at least – can be more agile and adaptive to use performance information to improve.
  • SME’s dependence on productivity gains to maximise long-term competitiveness and profitability. In the absence of intellectual property or technology as a source of comparative advantage, labour productivity is often critical to sustaining SME performance.

Moreover, enterprise development projects are facing increasing pressure to demonstrate that their work is leading to qualitative improvements in people’s terms and conditions of employment. As researchers have noted, it is “not only the number, but also the quality of jobs matters to poverty alleviation and economic development”.

For many SMEs in the global south, workers are a critical determinant of business success. Since SMEs often undertake labour-intensive activates, they rely on a supply of labour – with varying skills requirements – to produce their goods and services. Labour and employment issues are frequently included in non-financial performance measurement systems, but they often only focus on the most easily quantifiable elements such as the number of accidents. However, labour conditions refer to the working environment and all circumstances affecting the workplace, including job hours, physical aspects, and the rights and responsibilities of SMEs towards their workers. Many aspects of this work environment are covered by national labour laws, which in turn are shaped by the eight fundamental ILO conventions.

By improving labour conditions, SMEs can improve their business outcomes. Better health and safety practices can boost productivity and employee retention. Companies have shown growth in sales per employee workforce hour following targeted training programmes. As recent research has demonstrated, jobs with decent wages, predictable hours, sufficient training, and opportunities for advancement can be a source of competitive advantage. For many businesses, thinking about employee working conditions has shifted from a way to minimize risk to a competitive advantage.

Conversely, bad conditions can be bad for business: Poor health and safety practices can result in fines and slow task completion. Industrial action and absenteeism can lead to prolonged disruption to operations. An SME owner says, “You have to have an environment where people are happy working, where they cooperate well, interact well. If you have problems in the way people work, it could terribly affect the performance”.

Against this complex framework and challenges, the International labour Organization has launched the ILO SME Measurement Toolkit

This Toolkit is a practical resource for practitioners and and projects to support SMEs decide what aspects of SME performance (productivity, working conditions, etc.) to measure, as well as how to measure them.

  • +250 indicators including a set of actionable metrics drawn from existing sustainability standards, company codes of conduct and international development monitoring and evaluation frameworks
  • Methods outlining different tools and data collection techniques
  • Real-life examples of SME measurement in a developing country context

We’d love to hear your comments, questions and suggestions about the Toolkit. Drop us an email at thelab@ilo.org!

More ILO The Lab’s resources on results measurement:

New Report: Global Innovations in Measurement and Evaluation

All 8 innovationsOn June 26th, New Philanthropy Capital (NPC) released its “Global Innovations in Measurement and Evaluation” report. In it, NPC outlines and elaborates on eight concepts that represent innovations in conducting effective measurement and evaluation of social impact programs. The list of concepts was distilled from conversations with leading evaluation experts about what is exciting in the field and what is most likely to make a long-lasting impact on the practice of evaluation. Below, we feature each of these eight concepts accompanied by brief descriptions of their meanings and implications.

User-Centric

The key to making an evaluation user-centric is to ensure that the service users are truly involved in every stage of the evaluation process. In this way, the power dynamic ceases to be unidirectional as more agency is given to the user. As a result, not only can findings become more compelling to decision makers because of more robust data collection, but also those responsible for the program now become accountable to the users in addition to the funders, a shift that is both ethically important and that is important for the trust it builds.

Shared Measurement & Evaluation

Shared measurement and evaluation requires multiple organizations with similar missions, programs or users to work together to measure their own and their combined impact. This involves using the same evaluation metrics and, at a more advanced stage, developing shared measurement tools and methodologies. Pooling data and comparing outcomes creates a bigger dataset that can support stronger conclusions and provide more insights.

Theory-Based Evaluation

The central idea behind theory-based evaluation is to not only measure the outcome of a program but to also get at the reason why it does or does not work. Typically, this approach begins with a theory of change that proposes an explanation for how activities lead to impact, and this theory is then tested and accepted, refuted or qualified. It is important to apply this concept because without an understanding of why programs work, there is a risk that mistakes will be repeated or that attempts to replicate a program will fail when attempted under different conditions.

Impact Management

Impact management is the integration of impact assessment into strategy and performance management by regularly collecting data and responding to it with course corrections designed to improve the outcomes of a program. This method contrasts with assessment strategies that only examine a program at the end of its life cycle. The objective here is to be flexible and adaptive in order to produce a more effective intervention rather than waiting to evaluate it until there is nothing that can be done to change it.

Data Linkage

Data linkage is the act of bringing together different but relevant data about a specified group of users from beyond a single organization or sub-sector dataset. One example could be a homelessness charity that supports its users in accessing social housing linking its data with the local council to see if its users ultimately remained in their homes. In essence, this method allows organizations to leverage the increasing quantities of data to create comparison groups to track the long term impacts of their programs.

Big Data

Big data is typically considered as the data generated as a by-product of digital transactions and interactions. It is a category that includes people’s social media activity, web searches and digital financial transaction trails. New technology has expanded the human ability to analyze large datasets, and consequently big data has become a powerful tool for helping identify trends and patterns, even if it does not provide explanations for them.

Remote Sensing

Remote sensing uses technology, such as mobile phones, to gather information from afar. This method is useful because it allows one to collect data that may not be typically accessible. Additionally, remote sensing data can be highly detailed, accurate, and in real time. Finally, one of its great strengths is that it is generated passively, which reduces the possibility of introducing researcher bias through human input.

Data Visualization

Data visualization is the practice of presenting data in a graphic form. New technology has made it possible to create a broad range of useful visualizations. The result is that data is now more accessible to non-specialists, and the insights produced through analysis can now be better understood and communicated.

For more details and more examples of real-world applications of these concepts, check out the full “Global Innovations in Measurement and Evaluation” report here.