Why the toolkit?

Many enterprise performance measurement resources already exist. However, these often focus on larger enterprises, or are only relevant for SMEs who are part of global supply chains. Aspects of labour standards and job quality also tend to be overlooked in traditional performance measurement tools, or are only measured at the macro or sectoral level. This toolkit, in contrast, focuses on cost-effective measurement for individual SMEs, helping organisations providing supporting services to SMEs to track concrete changes and incremental progress. In doing so it draws on ILO’s long history of supporting national governments, employers and workers organisations to unlock the potential of creating more and better jobs in small businesses around the world.

Are the KPIs sector-specific?

While KPIs can vary from one industry to the next, many performance indicators are applicable across all SMEs, regardless of the sector. The Inventory focuses on multi-sectoral KPIs, only including sector-specific indicators where there is a particular concentration of SMEs in an industry that is important to a developing economy, such as agriculture.

What is the unit of analysis?

The Inventory contains voluntary indicators that can be used to measure profitability, productivity and working conditions in individual enterprises. Macro indicators – capturing the performance of industries or the wider economy – are not included. However, the enterprise-level KPIs in the Inventory can be aggregated to measure portfolio-wide performance if the same set of measures are collected across multiple SMEs.

Are these new indicators?

No. The indicators are all drawn from those used by existing sustainability standards, company codes of conduct and international development M&E frameworks. We have not made up any ‘new’ indicators, but simply made it easier to find the indicators that people are already using.

How can we attribute changes in SME performance?

Attribution is the extent to which changes in SME performance can be credited to any one activity or factor. As with any other indicator, the KPIs in the Inventory can be used in the research designs that are required to isolate causality. For further guidance, see the Donor Committee for Enterprise Development’s Results Measurement Standard.

What type of SME is this relevant for?

The ‘SME’ category covers a broad range of enterprises – from the smallest family businesses to some of the world’s best-known Silicon Valley Start-Ups. Given the spectrum of sophistication in SMEs, we have included a range of indicators that may be applicable to all types of SME, from large to small. For example, to measure commercial debt, we have included a KPI that asks for the specific dollar value of current/ liabilities as well as a KPI that asks for a simple coding of status of the business with respect to debts.

Is this a new standard or a code of conduct?

No. Codes of conduct are developed by industries and stakeholders to detail expected practices in supplier companies. A comprehensive set of binding International Labour Standards, national laws and voluntary sustainability standards already set out minimum requirements, particularly with regards to labour conditions. The toolkit integrates relevant indicators from these codes and standards where applicable.

Is the toolkit aligned with standards and codes?

Yes, and these are signposted throughout the toolkit. Standards and codes are aimed at influencing the social (labour and environmental) performance of companies and their supply chain, which is often made up of SMEs. The Inventory is aligned with ILO conventions, which are in turn the basis for corporate codes and labour standards. Many of the indicators are drawn directly from leading voluntary sustainability standards. The nine ILO Core Labour Conventions are:

  • No. 29 Forced Labour Convention, 1930
  • No. 87 Freedom of Association and Protection of the Right to Organise Conventions, 1948
  • No. 98 Right to Organise and Collective Bargaining Convention, 1949
  • No. 100 Equal Remuneration Convention, 1951
  • No. 105 Abolition of Forced Labour Convention, 1957
  • No. 111 Discrimination (Occupation and Employment) Convention, 1958
  • No. 138 Minimum Age Convention, 1973
  • No. 182 Worst Forms of Child Labour Convention, 1999
  • No. 190 Violence and Harassment Convention, 2019
Is the Inventory exhaustive?

No, it focuses on the most ‘actionable’ indicators that can be used to measure continuous improvement. For example, binary (Yes-No) indicators are excluded, except those related to policies.

Are all aspects of SME performance included?

Everything except for environmental performance and external factors (such as the macro-economic context) is covered.

Is this a performance measurement framework?

No. But the metrics that can be used to populate many of the most popular performance measurement frameworks, such as the Balanced Scorecard, the Performance Prism, the EFQM Business Excellence Model and Integrated Performance Measurement, among others. They can also be integrated into many performance tools, such as Total Quality Management.

Can the KPIs be used to benchmark performance?

The KPIs are designed to be used to benchmark performance within individual SMEs, as the basis for performance diagnosis and improvement. If the KPIs are repeated across multiple SMEs, they can be used for performance benchmarking and comparison among companies as a means of identifying the best performance in a specific industry. Performance benchmarking, however, does not work well across industries as comparisons become less meaningful due to contextual factors.