ORIGINAL RESEARCH

 

A business continuity model for manufacturing SMMEs underscoring talent management

 

 

Gladys B. Zake^I; Petronella Jonck^{II, III}; Anna-Marie Pelser^II

^IBusiness School, North-West University, Potchefstroom, South Africa
^IIGlobal Innovative Forefront Talent (GIFT), Faculty of Economic and Management Sciences, North-West University, Mafikeng, South Africa
^IIIDepartment of Industrial Psychology and People Management, University of Johannesburg, Johannesburg, South Africa

Correspondence

 

 

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ABSTRACT

PURPOSE: Small, medium-sized and micro-enterprises (SMMEs) are a key catalyst in poverty alleviation and job creation in most economies. The global pandemic adversely impacted this sector even though many SMMEs implemented mitigating measures to curb the effect thereof. The purpose of this study was to explore the impact of the COVID-19 pandemic on organisational performance and talent management practices in the manufacturing SMME sector, specifically in the Gauteng province.
DESIGN/METHODOLOGY/APPROACH: An embedded mixed-methodology research design was implemented in the study. A self-developed survey was conducted on a sample comprising 395 participants. Structural equation and mediation modelling were performed to analyse the data inferentially. Thematic analysis was used to interpret narrative responses related to business continuity measures implemented during the pandemic.
FINDINGS/RESULTS: Results indicated that COVID-19 did not statistically significantly influence organisational performance or talent management facets. Moreover, the impact of COVID-19 on organisational performance was not mediated by talent management practices. Results of the narrative responses revealed that most of the SMMEs did not have a business continuity strategy in place, and they reactively modified offerings, revenue models and sales procedures while reducing human capabilities.
PRACTICAL IMPLICATIONS: Small, medium-sized and micro-enterprises in the manufacturing sector could utilise the findings to develop a business continuity model underscoring diverse offerings, talent management and revenue measures to foster resilience amid an external shock.
ORIGINALITY/VALUE: This study is among a few empirical studies conducted on the impact of COVID-19 on organisational performance and talent management in the SMME manufacturing sector contributing to extant literature.

Keywords: talent management; business continuity; organisational performance; mitigating strategies; manufacturing sector.

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Introduction

The role of small, medium-sized and micro-enterprises (SMMEs) in economic growth and poverty alleviation in underdeveloped or least-developed countries (LDCs) is of paramount concern to policymakers, academics and all stakeholders concerned (Elijah & Usaini, 2021). The rationale is that SMMEs play a vital role in job creation, especially in underprivileged countries (Maksimov et al., 2017). As such, SMMEs contribute to the gross domestic product (GDP), reduce unemployment and poverty, and stimulate entrepreneurial activity (Sitharam & Hoque, 2016). Global economic changes (e.g., a global pandemic) are confirmed structural transformations that impact the way economic sectors operate, irrespective of the level of socio-economic development (Soud, 2020). The global coronavirus disease 2019 (COVID-19) pandemic and the lockdown measures taken by governments constitute a significant disruption to business operations (Gülseven, 2021). Muriithi (2021) opines that, in Africa, the pandemic led to a negative economic growth of -5.1%, plunging the continent into the worst recession in 25 years. Reflecting on previous research, You et al. (2023) note that the COVID-19 outbreak affected social and environmental factors, impeding the organisational performance of SMMEs particularly. In response to the outbreak of the COVID-19 pandemic, SMMEs incorporated measures to counter the impact thereof to ensure business continuity (Muparadzi & Rodze, 2021). In the post-COVID-19 scenario, novel approaches are essential underscoring, for example, new business models, redefining customer bases, identifying new business opportunities and developing sustainable income sources (Muriithi, 2021). Even so, innovative approaches should be founded on empirical evidence emphasising the influence of the COVID-19 pandemic on organisational performance, in addition to leveraging the business approaches employed during the pandemic to inform future business continuity models. However, a paucity of empirical studies or reports have been carried out to investigate the effectiveness of the mentioned mitigating measures (Anakpo & Mishi, 2021).

A review of extant literature identifies various aspects deemed principal for business continuity post-COVID-19. Bano et al. (2021) emphasise the need for emergency succession planning during and post-COVID-19 pandemic to ensure business continuity, underscoring the paramount importance of human capital. Chatterjee et al. (2023), reflecting on previous research, expound that human capital is essential and organisations ought to manage talent, especially during the post-COVID-19 situation. Therefore, the efficient utilisation of human resources is principal to contemporary business strategy (Sohel-Uz-Zaman et al., 2022). Ocampo and Ylagan (2023) state that leadership is a keystone in organisational success, especially in the post-COVID-19 scenario. To remain competitive, an organisation must identify keystone employees as a critical business process (Cardigan, 2017; Sommer et al., 2017). Organisations that are successful at managing talented employees tend to excel in the competitive market (Baharin & Hanafi, 2018). Therefore, from the literature, it would seem that talent management is deemed vital post-COVID-19. Cardigan (2017) argues that despite the growing popularity of the field relating to talent management, there remains a lack of consensus relating to the definition thereof. For the sake of clarity, talent management in the research reported on is defined as a strategic and holistic approach to human resources and business planning to ensure organisational performance (see, e.g., Sohel-Uz-Zaman et al., 2022).

 

Problem investigated

As SMMEs account for a vast portion of new employment opportunities, stimulate growth, create social cohesion, generate income and are known as a primary driver for GDP growth (Nketsiah, 2018), it is pivotal to investigate aspects related to organisational performance. Various authors (see, e.g., Darlington, 2017; Masocha & Fatoki, 2018) opine that SMMEs face an overall lack of prudent leadership and managerial capabilities, which is critical for day-to-day management and strategic planning. Organisations experience a leadership gap ascribed mainly to the inability to develop potential leaders (Frederik & Julia, 2020; Opoku & Williams, 2019; Whysall et al. 2019). It has also been recognised that the biggest challenge faced by SMMEs stems from a lack of talent management practices (Chung & D'Annunzio-Green, 2018). Krishnan and Scullion (2016) expound that notwithstanding the crucial role of SMMEs, research relating to talent management within the SMME context is scarce. From the literature, it would appear that SMMEs lack an understanding of what talent management entails and the usage thereof to enhance organisational performance and improve competitiveness (Cardigan, 2017; Hilman & Abubakar, 2017; Latif et al., 2020), especially post-COVID-19 as part of a business continuity model.

Furthermore, limited research has been conducted to explore the influence of talent management practices on organisational performance in the South African manufacturing SMME sector. Collings et al. (2018) concur that a key limitation in the research on global talent management has been a failure to develop empirical insights emphasising the nexus between talent management and organisational performance. Garg and Van Weele (2012) conducted a study on SMMEs within the manufacturing sector in Johannesburg, underscoring two facets of talent management, notably succession planning and talent development, in addition to taking the business strategy into consideration. However, it has been proposed that more empirical research should be done on strategic talent management in different industrial settings and different countries to further investigate the generalisability of findings (Hilman & Abubakar, 2017).

Another lacuna in the body of knowledge relates to the hypothesised impact of COVID-19. Fernandes et al. (2023) opine that COVID-19 exacerbated the implementation of talent management practices, while Tomcikova et al. (2020) assert that COVID-19 had an impact on talent management. However, limited research could be identified within the South African context relating to COVID-19, specifically within the manufacturing sector. Furthermore, a paucity of empirical studies or reports to date have investigated measures implemented by businesses to mitigate COVID-19's impact (Anakpo & Mishi, 2021). To this end, Cai and Luo (2020) note that exploring the countermeasures employed by manufacturing SMMEs is pivotal for business continuity.

Against the stated background, the proposed study attempts to contribute to the corpus of knowledge by addressing three identified gaps: (1) a lacuna of empirical studies focusses on talent management practices tailored to the unique needs and challenges of SMMEs in the manufacturing industry; (2) a dearth of research explores the impact of the COVID-19 pandemic on talent management strategies, particularly within the context of the South African manufacturing sector; and (3) there is a need for empirical research examining the measures implemented by manufacturing SMMEs to mitigate the impact of the COVID-19 pandemic on internal operations and organisational performance. The study objectives subsume:

• Assessing the impact of COVID-19 on organisational performance and talent management practices.

• Investigating the potential mediating effect of talent management practices on the impact of the COVID-19 pandemic on organisational performance.

• Exploring the business models utilised by SMMEs in the manufacturing sector to mitigate against the impact of the COVID-19 pandemic.

 

Contextualising of the research

Small, medium-sized and micro-enterprises within the African context provide employment to approximately 70% - 90% of the population. Consequently, the influence of the COVID-19 pandemic has been considerable, with 87% of SMME owners uncertain about the prospects of enterprises (Muriithi, 2021). Specifically, the manufacturing sector has been significantly influenced by the COVID-19 outbreak with an extrapolated 85% experiencing supply chain disruptions (Udofia et al. 2021). The impact of COVID-19 specifically on the manufacturing sector subsumes production disruption because of an inadequate supply of raw materials and spare parts, disgruntled market demands ascribed to logistical interruptions, increased bankruptcy risk for SMMEs and demand fluctuation increases (Cai & Luo, 2020). Consequently, Udofia et al. (2021) refer to the emaciated state of empirical evidence relating to the impact of COVID-19 on organisational performance. Cai and Luo (2020) propose that for the recovery of SMMEs in the manufacturing sector, it is crucial to analyse the impact of COVID-19 in addition to exploring the countermeasures applied. Muparadzi and Rodze (2021) opine that the relevance of business continuity to mitigate potential risk and promote business recovery remains pivotal post-COVID-19.

Potential risks faced by SMMEs in the Gauteng province include (1) lack of leadership skills; (2) lack of finances; and (3) lack of skills development and training, for example, financial management (Mhlonga & Daya, 2023). This sentiment was substantiated by Moos and Sambo (2018) when identifying challenges faced by manufacturing SMMEs specifically in the automotive sector in Gauteng, inter alia, (1) skills shortages, notably managerial skills; (2) access to finance; (3) inadequate business development services referring to mentoring and coaching; and (4) an unfavourable regulatory environment. Against the stated, it can be deduced that the absence of leadership and managerial acumen, skills development and training, part and parcel of talent management practices (viz., recruitment, retention and talent development) are identified challenges faced by SMMEs in the Gauteng province.

 

Literature review

Organisational performance

Zumitzavan (2022) defines organisational performance as the level of productivity that the organisation can accomplish towards attaining its goals, increasing organisational resources, meeting customers' needs and improving internal processes. Conţu (2020) indicates that organisational performance refers to the degree to which the organisation, with informational, financial and human resources, positions itself effectively in the market. The previous author further contends that organisational performance relies on the adaptation of a specific corporate culture to the changes within the external environment. According to Nene and Pillay (2019), organisational performance is defined as the measure of the outcome in comparison with inputs within an organisation towards the achievement of internalised goals. Organisational performance is also defined as the outcome of organisational actions that increase the worth of goods, services or even a business. The key basis for performance in an organisation is that all inputs from intangible assets to value creation should be measured without ambiguity (Chowdhury et al., 2019). Additionally, organisational performance, as a construct, also refers to growth in sales, market share, increase in profit margins and return on investment (Rehman Khan et al., 2022).

Various theories have been proposed linking human resources, for instance, talent management to organisational performance. According to Dininni (2017), the Chris Argyris theory underscores organisational and employee learning and development, resulting in employee motivation, accountability and empowerment, which impact SMMEs' growth, effectiveness and adaptability. On the contrary, the resource-based theory states that SMMEs' competitive advantage and superior performance originate from their specific resources and capabilities of which human resources are part and parcel (Kiyabo & Isaga, 2020). In the same breath, the social capital theory (SCT) emphasises the importance of the acquisition and retention of valuable and scarce resources for SMMEs to gain competitive advantage and therefore identifies social or human capital as a key component to entrepreneurial activities (Kanini & Muathe, 2019).

Talent management

Talent management is defined as integrated human resource management strategies aimed at attracting, retaining and effectively utilising employees with the requisite aptitude and abilities to meet current and projected organisational needs (Lesenyeho et al., 2018). Human capital is regarded as a critical asset, and organisations are continuously searching for mechanisms to inform decision-making and create platforms with the view of sustaining competitiveness (Alziari, 2017). Harsch and Festing (2020) expound that talent management entails ensuring that there is a sufficient supply of keystone employees (talent) to appoint the correct applicants in available vacancies at the right time with the intention of attaining strategic goals. Therefore, talent management is analysed in terms of processes and systems put in place to acquire the right employee for the right job at the right time (Cappelli & Keller, 2014). Various authors, see, for example, Collings et al. (2018), and McDonell and Wiblen (2020), opine that there is a lack of clarity in the definition, latitude and overall strategic agenda of talent management in SMMEs. Although there is no agreed-upon definition of what talent management encompasses, it can be deduced that talent management is concerned with how best SMMEs anticipate and meet the need for talent in strategic jobs. Therefore, talent management has a delineated focus on being a strategic process that must be propelled by senior management as an across-board responsibility (Cappelli & Keller, 2014).

Whereas talent management is deemed a strategic and holistic approach to human resources and business planning to ensure organisational performance (Sohel-Uz-Zaman et al., 2022), human resource management is related to (1) recruiting, (2) training, (3) evaluating and rewarding employees, (4) fair labour relations, (5) health and safety and (6) employment equity (Dessler, 2017). Talent management consists of three major components, namely, the process of attracting, developing and retaining employees (Harsch & Festing, 2020). According to Abdullahi et al. (2021), talent management practices comprise succession planning, promotion and performance appraisal, which are thought to have a significant effect on employee performance. There appears to be a synergy between talent management and human resource management. As such, Sohel-Uz-Zaman et al. (2022) expound that talent management, in essence, is characterised by customised and dedicated human resource management functions and practices to achieve organisational objectives, and therefore organisational performance. Human resource management has evolved, ascribed to a growing demand to link employees with organisational performance giving rise to constructs, such as talent management, human capital management and competency-based human resource management (Sohel-Uz-Zaman et al., 2022).

To comprehend the theoretical underpinning linking talent management and organisational performance, the value proposition of talent management for the organisation should be elucidated (Sparrow & Makram, 2015). Previous authors expound that literature contends that the mentioned value proposition is associated with unique sets of knowledge, capabilities, contributions, skills, competencies and aptitude possessed by organisational talent (viz., employees) and the utilisation thereof to achieve a sustained competitive advantage for the organisation (viz., manufacturing SMMEs). Therefore, talent management literature relies upon human capital thinking to advance an organisational value proposition (Sparrow & Makram, 2015). This brings to the fore three perspectives on talent management, inter alia, (1) exclusive employees (viz., key high-performing employees with potential); (2) exclusive positions (viz., appropriate candidates in strategically pivotal positions); or (3) inclusive employees (viz., employees across the board are deemed to have innate potential given opportunity and direction) according to Iles and Preece (2010, as cited by Sohel-Uz-Zaman et al., 2022). The mentioned three perspectives are partially aligned with the four talent management philosophies to enhance an understanding of the value proposition for the organisation. Collings and Mellahi (2009), as cited by Sparrow and Makram (2015, p. 251), outline the four talent management philosophies, inter alia, (1) talent management as a categorisation of individual employees; (2) talent management as the presence of key human resource management practices; (3) talent management as the identification of keystone positions; and (4) talent management relating to succession planning.

The talent management philosophy operationalised in the research reported on is the practice approach; therefore, talent management is the presence of key human resource management practices. The rationale for the stated approach is based on the contextualisation of talent management in the SMME milieu. Krishnan and Scullion (2016) explain that job functions are evolving in SMMEs, and therefore, the identification of key strategic positions is less imperative, negating the position approach. Furthermore, talent management, as categorisation of high-performing employees, is a dominant approach in multinational enterprises (Cappelli & Keller, 2014). Nevertheless, according to Krishnan and Scullion (2016), SMMEs underscore inclusive talent management practices. Lastly, Garg and Van Weele (2012), reflecting on previous research by Martin et al. (2002), expound that SMMEs are vulnerable to succession failure, which would impede talent management relating to the succession planning approach.

Business continuity model

A business model can be defined as a description of an organisation and organisational functioning towards achieving organisational goals, inter alia, profitability and growth, that is, organisational performance (Massa et al., 2017). A business model consists of fundamental elements, inter alia, strategy, structure, offerings, revenue mechanism, sale process, delivery and culture to name a few (Kindström & Kowalkowski, 2014). In terms of organisational performance, the dynamic capability theory emphasises that, to maintain competitive advantage, SMMEs need to be capable of dynamically and proactively identifying and responding to opportunities and threats that arise from operating in a non-static environment and sustain competitive advantage (Elisa et al., 2022). Therefore, sustaining organisational performance amid an external shock, such as COVID-19, would require modifications to existing business models and the development of a business continuity model. As such, Massa et al. (2017), reflecting on extant research, opine that organisations respond to disruption (viz., an external shock) by adding an adaptive business model to an existing business model.

Based on the literature review, the conceptual framework presented in Figure 1 underpinned the study.

 

 

In summary, a paucity of empirical research has been conducted on the impact of COVID-19 on organisational performance underscoring the business models utilised to mitigate the external risks (Anakpo & Mishi, 2021). Massa et al. (2017) furthermore note that most firm-based business model research is quantitative in nature, focussing on hypothesis testing. Another limitation in extant research relates to a dearth of talent management research within the SMME context (Krishnan & Scullion, 2016). The talent management philosophy is mostly absent in reported research. Lastly, the link between talent management and organisational performance should be elucidated, especially in various sectors (Sohel-Uz-Zaman et al., 2022).

 

Hypothesis development

Organisational performance and talent management practices

Organisational performance can be linked to human resources, and in the post-COVID-19 scenario, challenges include recruitment, selection and development (Ahmed et al., 2020). Fernandes et al. (2023) found a positive nexus between talent management practices and organisational performance. Bano et al. (2021) suggest that organisations should implement both long-term and emergency succession planning to overcome challenges faced by organisations during and after the pandemic. Organisations in the post-COVID-19 era should explore recovery strategies and put in place relevant policies to be implemented when the crisis has been averted, according to Paul et al. (2023). The following hypotheses were formulated for the study:

• H₁: COVID-19 had a statistically significant negative influence on organisational performance of SMMEs in the manufacturing sector, notably the Gauteng province.

• H_2a: The negative variance in recruitment and retention can statistically significantly be attributed to the impact of COVID-19.

• H_2b: The negative variance in succession planning and promotion can statistically significantly be attributed to the impact of COVID-19.

• H_2c: The negative variance in performance appraisal can statistically significantly be attributed to the impact of COVID-19.

• H_2d: The negative variance in talent development can statistically significantly be attributed to the impact of COVID-19.

• H_3a: The impact of COVID-19 on the organisational performance of SMMEs in the manufacturing sector, notably the Gauteng province, can statistically significantly be mediated by recruitment and retention.

• H_3b: The impact of COVID-19 on the organisational performance of SMMEs in the manufacturing sector, notably the Gauteng province, can statistically significantly be mediated by succession planning and promotion.

• H_3c: The impact of COVID-19 on the organisational performance of SMMEs in the manufacturing sector, notably the Gauteng province, can statistically significantly be mediated by performance appraisal.

• H_3d: The impact of COVID-19 on the organisational performance of SMMEs in the manufacturing sector, notably the Gauteng province, can statistically significantly be mediated by talent development.

An acknowledged potential alternative explanation for the hypothesised variance might relate to the mitigating measures implemented by the manufacturing sector SMMEs during COVID-19, which will be explored qualitatively.

Considering the aforementioned, the following hypothesised model was proposed (Figure 2):

 

 

Methodology

Research design

A mixed-method approach was utilised where both quantitative and qualitative data were collected, analysed and interpreted. A questionnaire consisting of closed-ended and open-ended questions was used to gather data. More specifically, an embedded mixed-methods design was implemented, which involves the convergent use of approaches (Creswell & Creswell, 2017). The research design was operationalised by means of administering a self-constructed questionnaire in a cross-sectional design. In a cross-sectional research design, the measuring instrument is administered once without repeat measurements (Jonck et al., 2019). The quantitative section inclines towards theoretical positivism (Mertens, 2019). In other words, it is reasonable to assume that organisations would adopt better ways of achieving success. Therefore, a variable such as talent management could be classified into the philosophical realm of pragmatism and support for change in ensuring an organisation's success.

Sample and data collection

The target population was owners, general managers and human resources practitioners associated with registered manufacturing SMMEs in the Gauteng province, South Africa. Manufacturing SMMEs are deemed enterprises registered for value-added tax with their core business relating to the manufacturing of food, textiles, clothing, glass, basic metals, furniture, chemicals, and professional and transport equipment (Statistics South Africa, 2023, p.4). For the purposes of this study, only registered SMMEs were included defined as formal small businesses operating from fixed building structures located on a business lot delineated as such by local municipal town planning regulations (Ligthelm, 2013). The population comprised approximately 468 000 individuals employed in manufacturing SMMEs in the Gauteng province (Statistics South Africa, 2023). A total of 395 (n = 395) participants were included in the sample by means of convenience sampling. According to Orban (2021), a sample of 395 participants is on the 95th confidence level deemed representative of a population of 2.5 million based on a 5% margin of error. Therefore, the sample could be deemed representative of the population.

The final study sample (n = 395) consisted mostly of male participants (n = 279; 72.1%) with the remainder being female participants (n = 108; 27.9%). At the same time, 2% of the sample, representing eight participants, opted not to answer. In terms of the age distribution, 46.3% (n = 179) of the sample were in the 36-45 years age category, followed by participants in the 25-35 years category (n = 128; 33.1%), participants in the 46-55 years category (n = 67; 17.3%), and lastly 10 participants, representing 2.6% of the sample, were categorised in the 56-65 years category. Three participants (0.8%) were older than 65 years. Considering the highest academic qualification, 68% (n = 269) of the sample had a grade 12 qualification, followed by 12% (n = 47) with a bachelor's degree, and 15.6% (n = 61) of the sample selected other. Sequentially, 1.5% (n = 6) of the sample had a doctorate degree, 1.3% (n = 5) held an honours degree and 1% (n = 4) had a postgraduate qualification.

In terms of work experience, 46.3% (n = 179) of the sample had between 6 and 10 years' experience, followed by 36.2% (n = 140) with between 1 and 5 years' work experience, and 9.8% (n = 38) with 11-15 years' experience. Moreover, 3.6% (n = 14) of the sample had between 16 and 20 years' experience. Looking at participants' present rank, most of the sample (n = 302; 83.9%) were middle management, while 3.9% (n = 14) were senior management and 12.2%, representing 44 participants, owned the SMME. In terms of SMME typology, 68.6% (n = 271) of the sample were micro-enterprises, 20.0% (n = 79) small enterprises and 9.4% (n = 37) medium enterprises. A breakdown of the primary item manufactured includes pharmaceuticals and health care objects (n = 46; 11.6%), building materials (n = 42; 10.6%), packaging (n = 41; 10.4%), as well as textile and clothing (n = 48; 12.2%). Most of the sample, representing 45.8% (n = 181), selected other.

Measuring instrument

Primary data were collected by means of a self-developed structured questionnaire designed in accordance with the objectives and purpose of the study. The questionnaire consisted of three sections. Section A underscored participants' demographical information. Section B addressed the key talent management practices, including recruitment and retention, succession planning and promotion, performance appraisal and talent development. Section B also included a sub-section that emphasised organisational performance. Section C focussed on the impact of COVID-19 on organisational performance and survival during the pandemic. A four-point Likert scale was used, ranging from (1) Strongly disagree, (2) Disagree, (3) Agree, and (4) Strongly agree, to measure the variables. Social desirability was controlled for by including positive and negative stated items in the measuring instrument. Open-ended items were included to obtain narrative responses from respondents giving the last mentioned opportunity to explain the additional information in their own words.

Data analysis and software

Structural equation modelling (SEM) and a bias-corrected percentile bootstrap method were computed using the Statistical Package for Social Sciences (IBM SPSS) version 28, SPSS AMOS version 28, and SPSS process macro version 4.3 (model 4). Specifically, data were captured into an Excel spreadsheet, after which the dataset was screened to check consistency and ensure data accuracy by identifying outliers, determining statistical fit based on the assumption of normality and linearity, and identifying missing data (Zina, 2021). Measures of central tendency and standard deviation (SD) were used to summarise the data and to check whether the data were normally distributed. The dataset was scrutinised to confirm reliability by means of Cronbach's alpha coefficients and constructs as well as discriminant validity. To mitigate potential common method bias (viz., utilisation of a similar response scale to measure dependant and independent variables), exploratory (EFA) and confirmatory (CFA) factor analyses were computed. Kock et al. (2021) expound that an unrotated EFA solution accounting for more than 50% of the variance is indicative of common method bias. Pearson's product-moment correlation was used to determine the bivariate relationship between the measured variables. Structural equation modelling with maximum likelihood was performed to test the first two hypotheses, while a bias-corrected percentile bootstrap method was performed to investigate the mediating effect of talent management practices (viz., hypothesis 3), with 95% lower limit confidence interval (LLCI) and upper limit confidence interval (ULCI) ranges exceeding zero (McCallaghan et al., 2019).

Qualitative data were analysed using thematic analysis. Thematic analysis is deemed a systematic process of coding, interpreting and describing social reality through themes (Vaismoradi et al. 2016). The six-phase coding procedure for thematic analysis, proposed by De klerk and Swart (2023), reflecting on previous research, was used, inter alia, (1) familiarisation with data; (2) categorisation of data by generating labels based on frequencies; (3) identifying underlying themes; (4) reviewing themes in accordance with quantitative results; (5) labelling themes according to key messages; and (6) writing up of themes in an analytical narrative. Thematic analysis was performed on 30 transcripts with narrative responses. The sample was sufficient and data saturation, referring to the point at which no additional codes or themes emerge, was in line with the assertion by Guest et al. (2006) that 97% of codes are identified after 12 transcripts.

Ethical considerations

Ethical clearance to conduct this study was obtained from the North-West University Economics and Management Sciences Research Ethics Committee (reference number NWU-00610-22-A4). Standard ethical protocol were observed, namely, informed consent, voluntary participation, confidentiality, anonymity and benevolence (i.e., no psychological or physical harm).

 

Results and findings

The aim of the research reported on was to establish the extent to which COVID-19 influenced organisational performance and talent management practices. It also determined whether talent management practices mediated the postulated impact. The study also aimed to explore business strategies utilised by SMMEs in the manufacturing sector to mitigate against the impact of the COVID-19 pandemic qualitatively.

Factor analysis

An EFA using the oblique factoring method was performed to control for common method bias (Kock et al., 2021). The Kaiser-Meyer-Olkin (KMO) value was 0.936, and Bartlett's test of sphericity was significant (χ² = 12898.535; degrees of freedom [df] = 2850; p = 0.000**). Furthermore, 15 components had an eigenvalue exceeding 1, accounting for 61.484% of the total variance. The first factor accounted for 26.139% of the variance, and therefore, common method bias was controlled for. Confirmatory factor analysis was performed with a forced five-factor rotation based on the results from the parallel analysis, and all measured variables were accounted for.

Preliminary assessment of measuring instrument and model

Reliability and validity were determined and are tabulated in Table 1.

 

 

The results presented showed that the composite reliability scores exceeded 0.7 and ranged from 0.83 to 0.93, whereas the average variance extracted (AVE) scores were 0.5 and above supporting the convergent validity of constructs. Moreover, the AVE scores surpass the maximum shared variance (MSV) scores, which is indicative of discriminant validity. Therefore, the measuring instrument is deemed reliable and valid. Model fit indices revealed that the hypothesised associations between variables are supported (Chi-square = 1228.05; p = 0.000; df = 10; Chi-square/df [CMIN/df] = 122.81; normed fit index [NFI] = 1.00; Tucker-Lewis's index [TLI] = -1.110; comparative fit index [CFI] = 1.00; root mean square error of approximation [RMSEA] = 0.38). The NFI and CFI values exceed 0.90, which is indicative of a good fit, and therefore, the structural model fits the data and is appropriate for further analysis.

Correlation analysis

The intercorrelation, mean and SD of measured variables are presented in Table 2.

The correlation metrics presented in Table 2 indicated that there were statistically significant large associations on the 99th percentile between organisational performance and the talent management facets, inter alia, recruitment and retention (r = 0.588), succession planning and promotion (r = 0.628), performance appraisal (r = 0.545), and talent development (r = 0.549). COVID-19 had a small non-significant correlation with talent management facets and organisational performance. Furthermore, the relationships between COVID-19 and talent management facets were negative. However, COVID-19 seems to have had a non-significant positive correlation with organisational performance.

Structural equation modelling

Structural equation modelling with the maximum likelihood method was computed to test the proposed hypotheses (see Table 3).

 

 

As is evident from Table 3, COVID-19 had a non-statistically significantly positive influence on organisational performance. It was found that 7.8% (β = 0.078; p = 0.124) of the variance in organisational performance could be attributed to COVID-19. Therefore, the first research hypothesis was rejected. Furthermore, COVID-19 had a non-statistically significant negative influence on talent management facets. Specifically, 8.1% (β = -0.028; p = 0.110) of the variance in recruitment and retention, a sub-component of talent management, could be explained by COVID-19. Moreover, 2.8% (β = -0.028; p = 0.576) of the variance in succession planning and promotion could be attributed to COVID-19's impact and 2.2% (β = -0.022; p = 0.664) of the variance to performance appraisal. Lastly, 0.8% (β = -0.008; p = 0.880) of the variance in talent development could be attributed to the impact of COVID-19. None of the talent management practices were statistically significantly influenced by COVID-19, and consequently, the second research hypothesis was rejected.

Mediation analysis

Statistical Package for the Social Sciences process version 4.3 (model 4) was used to test the mediation effect of talent management facets on the association between COVID-19 impact (viz., predictor) and organisational performance as a model outcome (see Table 4).

 

 

The results presented in Table 4 indicate that talent management facets, including recruitment and retention, succession planning and promotion, performance appraisal and talent development, did not mediate the influence of COVID-19 on organisational performance. As such, the reliable bootstrapping bias-corrected 95% lower and upper confidence interval range included zero in the four models presented (McCallaghan et al., 2019), indicative of the fact that talent management facets did not mediate the impact of COVID-19 on organisational performance. As a result, hypothesis 3 was rejected.

To explore a business continuity model for manufacturing sector SMMEs, an open-ended question was posed relating to emergency measures implemented to minimise the impact of COVID-19. In accordance with the conceptual framework (see Figure 1), three themes and eight sub-themes emerged from the thematic analysis, as illustrated in Table 5. Findings are presented sequentially coupled with data excerpts per theme and sub-theme.

 

 

Theme 1: Strategy

The first theme elucidated the mitigating strategies implemented during COVID-19 by manufacturing SMMEs in the Gauteng province. Two sub-themes emerged, namely, a lack of business continuity strategy and modifying of existing business strategies.

Sub-theme 1: Lack of business continuity strategy

Most of the respondents noted that the SMME did not have a business continuity strategy in place prior to the global pandemic. As such, one respondent noted: 'Had no plan but to cut on employees and cancel rental of building space in order to cut costs' (Respondent 1, Male). Another respondent explained that: 'Nothing, we shut down and terminated the lease to save up as much to keep business alive after COVID-19' (Respondent 7, Male). Two of the participants stated that: 'We had none, but luckily we received funds from Government which kept us floating in hard times' (Respondent 9, Male). And: 'We had no plans but to close down' (Respondent 13, Male). Another respondent just stated: 'None - no plan' (Respondent 11, Male).

Sub-theme 2: Modify existing business strategy

Thematic analysis relating to this sub-theme illustrated that some SMMEs modified the current strategy to accommodate the external shock, for example, centralising functions. A respondent to this effect stated: '[…] with the Cape Town branch doing all the work' (Respondent 2, Male). Another explained: 'We had to close one branch unfortunately' (Respondent 10, Male). Therefore, operations were transferred to other branches. Some SMMEs only made prescribed legislative changes to the business strategy, for example, restricting the number of employees etc. One of the participant stated: 'We just continued producing and supplying products because we operated throughout COVID-19' (Respondent 3, Male).

Theme 2: Resources

From the narrative responses, it became apparent that various aspects were underscored.

Sub-theme 3: Offerings

Considering alternative business offerings, a respondent noted that the SMME started distributing parcels, which was not the primary business offering pre-COVID-19. Specifically, 'We had to shut down and stop stock distribution but soon opened as we supplied food parcels' (Respondent 12, Male). Also, a respondent noted that orders that were already paid for kept the SMME in business, referring to pre-existing offerings. For example, 'We already had buyers and paid for orders, so that kept the company floating' (Respondent 11, Male).

Sub-theme 4: Revenue sources

Thematic analysis revealed that SMMEs considered finding alternative revenue sources mostly in the form of government support. Excerpts to this effect include: 'Funding from Government' (Respondent 24, Male). And: 'We received funds from Government which kept us floating in hard times' (Respondent 9, Male).

Sub-theme 5: Sales and deliveries

Under this sub-theme, SMMEs transformed their sales and delivery processes to adapt to the external shock (viz., COVID-19), for example, conducting business on an online platform. A respondent to this effect stated: 'We diverted our business more online and selling on that platform' (Respondent 30, Female). Also: 'We […] operate under strict rules of the Government and online sales' [161]. Considering the delivery process, a respondent noted: 'We had workers working from home and we had mobile delivery' (Respondent 15, Female).

Sub-theme 6: Customer relations

Under this sub-theme, respondents referred to reducing prices to improve customer relations. For example: 'Decreased prices for our rooms to get more customers right after COVID-19' (Respondent 22, Male). In addition to emphasising customer relations to improve sales, one respondent noted: 'Getting recommended by many clients' (Respondent 26, Female).

Theme 3: Capabilities

Under capabilities as theme, respondents explained that the SMMEs reactively reduced the operating cost, which, for the most part, underscored cutting back on core capabilities, notably talent management and operational capabilities.

Sub-theme 7: Talent management

Respondents noted that cutting salaries and downsizing the staff component were implemented, reducing the SMMEs' capability to implement a business model. In terms of cutting salaries, one respondent noted that: 'We did not want to let everyone go rather, we decided to cut salaries by 50% but still keeping them in our system' (Respondent 6, Male). Another stated: 'We just cut salaries and closed for a month then came back and resumed operation' (Respondent 14, Male). And: '[…] cutting salaries only for 5 months' (Respondent 24, Male). Another respondent noted: 'We cut the salaries of employees' (Respondent 1, Male). In terms of downsizing, a participant noted that: 'We let go of few employees …' (Respondent 22, Male). Another excerpt to this effect: 'We had to let go a lot of our trainers and cut half of the salaries to cover rental costs and management of equipment for months' (Respondent 23, Male). And 'Layoff all employees without pay' (Respondent 25, Male). Another excerpt to this effect was: 'Also released 80% of employees to save so that the business could function again' (Respondent 29, Male).

Sub-theme 8: Operational capabilities

Lastly, SMMEs reduced operational capabilities to either curtail operational costs or generate income. As such, a respondent noted: 'Cancel rental of building space in order to cut costs' (Respondent 1, Male). One respondent explained: 'We shut down and terminated my lease …' (Respondent 7, Male). Another said: 'We had to sell big machines and returned cars owed to the bank' (Respondent 4, Male).

 

Discussion and managerial implication

Results of the SEM revealed that COVID-19 did not statistically significantly influence the organisational performance of SMMEs in the manufacturing sector. The impact could be extrapolated to around 7.8%. Research findings by Udofia et al. (2021) reported an 85.0% supply chain disruption, which does not necessarily translate to organisational performance. Moreover, the COVID-19 impact was positive, which might relate to SMMEs diversifying and broadening offerings. Furthermore, 8.1% of the variance in recruitment and retention practices could be explained by COVID-19, whereas 2.8% of the variance in succession planning and promotion could be attributed to the pandemic, 2.2% of the variance in performance appraisal and 0.8% of talent development. Results presented partially confirm research by Tomcikova et al. (2021) in that COVID-19 did influence talent management practices, albeit non-significantly. Also, Fernandes et al. (2023) opine that COVID-19 exacerbated the implementation of talent management practices, which was confirmed in the research reported on. This could be ascribed to organisations, for example, not recruiting during COVID-19. However, talent development in most cases moved to an online platform resulting in only a 0.8% influence.

Results of the qualitative analysis revealed that business continuity models post-COVID-19 should focus on developing relevant strategies, resources and capabilities. Resources should be underscored specifically, notably diversifying offerings, sustained income sources, redefining customer bases and identifying alternative sales and delivery opportunities, which confirmed research conducted by Murrithi (2021). Chatterjee et al. (2023) furthermore emphasised the importance of talent management post-COVID-19, which was also evident from the qualitative analysis. Specifically, results revealed that SMMEs in the manufacturing sector responded to the external shock by reducing capabilities that would impede business continuity. Therefore, it would appear as if SMMEs do not understand the pivotal role of talent management linked with broader human capital management (viz., training and activities to address employee wellbeing). Findings concur with research conducted by Cardigan (2017), Hilman and Abubakar (2017) and Latif et al. (2020) that SMMEs lack an understanding of what talent management entails and the usage thereof to enhance organisational performance and improve competitiveness.

Considering the findings presented, the following business continuity model is proposed for manufacturing SMMEs (see Figure 3).

 

 

Limitations and future research

The research reported on has limitations that pave the way for future research endeavours. A noteworthy limitation centres on the use of self-administered cross-sectional data, which might influence the ability to generalise findings over time. It is recommended to use longitudinal data in future research studies. Secondly, sampling was delineated to a province in a sector, notably the manufacturing sector. Although this research provides sector-specific nuances, future research could be extended to other sectors nationally. Lastly, the use of a first-order composite for organisational performance might oversimplify the complexity of the construct. It is recommended that future research explore the sub-components of organisational performance.

 

Conclusion

The impact of COVID-19 on organisational performance has yet to be fully established, even though it has been assumed to be severe given the economic indicators post-COVID-19. The research study attempted to determine the impact of the pandemic on the organisational performance of a manufacturing sub-sector within the South African context. Literature recommends that a business continuity model should be deemed a priority post-COVID-19, which was the outcome of the research reported on.

 

Acknowledgements

Competing interests

The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.

Authors' contributions

G.B.Z. as PhD student was responsible for conceptualising the manuscript, development of the questionnaire, data gathering and write up. P.J. as the main promotor was responsible for data analysis, methodological rigour and editing the article. A.P. was the critical reader and co-promoter of the PhD student.

Funding information

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Data availability

Data sharing is not applicable to this article as no new data were created or analysed in this study.

Disclaimer

The views and opinions expressed in this article are those of the authors and are the product of professional research. It does not necessarily reflect the official policy or position of any affiliated institution, funder, agency or that of the publisher. The authors are responsible for this article's results, findings and content.

 

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Correspondence:
Petronella Jonck
petronellajonck@hotmail.com

Received: 26 Sept. 2023
Accepted: 24 Apr. 2024
Published: 31 May 2024