Examining the impact of employment equity amendments on the business performance of small and medium companies in Durban.

Abstract

The universal concern about tenacious stagnation and amplified dramatic economic downfall associated with acute poverty and unemployment levels has prompted a look for the root cause of the dilemma and search for mechanisms which would promote the revamping of economic activities in various economies. The rapid closure and decline of small and medium companies take centre stage amongst the contributors to the shrinkage of economies. This is due to the fact that small and medium companies mainly form the base in which activities of entrepreneurship unfold. In South Africa, the business performance of small and medium companies have drastically declined. In particular, the manufacturing sector has a diminished production of 5.9%. This huge decline has taken place yearly since 2014, the year in which the amendments to Employment Equity legislation were put into effect. Since 2014, the motor vehicle industry, which is considered as a job creator, plunged by 25% in its annual services. Small and medium companies in Durban face growing difficulties in improving and maintaining business performance while managing the pressure of complying with the new amendments to Employment Equity legislation. Adjusting organisational performance strategies to tally with the new amendments of employment equity remain a challenge, especially for small and medium companies. This study was predominantly motivated by a quest to improve the business performance of small and medium organisations. The study primarily sought to find the extent to which the employment equity amendments affect the business performance of small and medium companies in Durban. The study adopted an exploratory research design and utilised a mixed research approach because such a methodology provides adequate data that answers the research questions of the study. For the purpose of this study, the mixed methods research design was utilised, adopting concurrent triangulation. Since concurrent triangulation was adopted, the same sample of 226 (respondents) industrial relations representatives of small and medium companies registered under the Durban Chamber of Commerce and Industry were chosen for both quantitative and qualitative methods, in which each selected company had only one respondent. For the quantitative part, a simple random sampling technique was employed to select a sample in which computer generated random numbers were utilised in selecting the sample. For the qualitative part, theoretical or purposeful sampling was adopted. For this study, primary data was collected utilising a structured closed-ended questionnaire and an open-ended questionnaire. Two methods of analysing data were utilised, namely statistical analysis and thematic analysis. Both inferential and descriptive statistics were utilised to present and analyse quantitative data. The key findings of the study indicated that the most amendments to Employment Equity legislation are adversely affecting the business performance of small and medium companies. Another key finding of this study indicated that small and medium companies are currently forced to hire semi-skilled local citizens as skilled citizens are few and the available ones are grabbed by large companies. The findings of the study indicated that there is high labour turnover of employees who hold permanent resident status as they are leaving South Africa for western countries because of low prospects of career growth that comes with new measures in relations to the Employment Equity amendments. A further finding revealed that a sense of motivation is experienced from ‘equal pay for equal work’ or work of the same value as all employees feel valued and they are getting the same treatment in their jobs. The study recommended that small and medium companies and government should strike a balance and be sensitive in executing the amendments to Employment Equity legislation in order to mutually stimulate business performance whilst simultaneously affording people from designated groups a chance to benefit from the legislation. Special development programmes should be given to employees from designated groups in order to assist them to cope with the appointed positions, thereby correcting the under-representation of these employees in small and medium companies. The current emphasis on transformation should be intertwined with the development of critical skills. This study developed a model which tracks and monitors the impact of the Employment Equity amendments on business performance. The research significantly contributed to the existing body of knowledge in respect of amendments to Employment Equity legislation and its impact on business performance through revealing new information. The study also gave direction for future research.