A STUDY ON EMPLOYEE ENGAGEMENT IN MSME DURING

COVID-19
(Special reference to MSME in Bangalore)

1. K Divya Murthy 2. Dr. Shubha Muralidhar

Asst. Professor Asst. Professor
RR Institute of Advanced Studies BMSCE, MBA Dept.
Bangalore-90 Bangalore-04

Abstract

Abstract

COVID-19 has acutely changed the entire environment in terms of the economy,
employment, employee engagement, health, technology, education, and much more. The
whole world has witnessed the adverse impact of the pandemic that completely disturbed the
normal lives of organisations and people at large. The pandemic offered horrendous
challenges to MSMEs, especially in the workplace, and employee engagement. In MSMEs
most of the employees are from the weaker sections of the society, coupled with the poverty
level. The dilemma for these MSMEs is whether to lay off their employees or to engage them
productively. This study aims at understanding the issues relating to employees such as salary
cuts, layoffs, and unemployment. This study focuses on the need for engaging employees of
MSMEs as MSMEs play major roles in the development of our economy, financial stability
of its employees, and day-to-day survival of lakhs of people.

Keywords: Economy, MSME, Covid-19, Unemployment, Employee engagement.

INTRODUCTION

COVID 19 according to WHO it is an infectious disease caused by a detected version of

coronavirus. This pandemic has enormously affected the work-life balance of human lives
and also rapid changes in the economy, employment, and day-to-day activities of all. Over a
span of 60-70 years past such an imbalance in human lives and the ease of spreading the
disease has not witnessed. This Descriptive study is essential because MSMEs are a business
community in India, especially in growing cities like Bangalore, which it has a large

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community, contributes to high GDP, and is an organization that is prominent in supporting
large employment at every level of society.

The occurrence of the pandemic considerably changed the way of functioning of MSMEs.
They suffered huge losses because of the market collapse. They were forced to delay the
payments both for the employees and creditors. Business plans were to be deferred, and
production schedules were hampered. Because of all these, MSMEs were not in a position to
engage their employees to their capabilities. This impact took away the peaceful life of the
common man. The usual lives of people suffered to a greater extent. The decision to lock
down the industries was one of the major decisions that have adversely affected the lives of
thousands and thousands of employees of many companies. MSMEs were no exception to
this phenomenon. Employees of many companies lost the hope of their survival as their jobs
were at stake. There was the uncertainty of the revival of production and earnings. The
financial strengths of many companies were badly affected. Many companies struggled hard
to manage their financial obligations. Several companies were forced to close their business
operations because of their weak financial resources. Some of the employees of the
companies were affected by the virus and found unable to meet medical expenses. Though
the state government was making all efforts to help people to fight the virus, it could not
manage to help everybody. The continued adverse effect of the virus, made most of the
working community weak mentally, physically, and monetarily. Though companies suffered
from the pandemic, several organisations took initiatives to engage their employees, and
made them feel proud to be a part of the organisation.

It is observed that a total of sixty percent of the business activities were stopped because of
this pandemic. Unemployment across the globe increased to an extent that it is not possible to
repair immediately. Over 7.5 million small business houses were affected by the pandemic.
They were almost on the verge of closure. These organisations wished for early recovery of
market conditions so that they could return to their normal business life. The main purpose of
this research paper is to analyse the impact of the COVID-19 pandemic on MSMEs in
engaging their employees.

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Objectives of the study

1. To understand the scenario of MSMEs during the pandemic.

2. To understand how MSMEs managed the welfare of employees during the pandemic
3. To understand how MSMEs motivated the employees for achieving their best

Review of Literature

Blustein et al. (2020) illustrated that lockdown due to COVID-19 created lot of global
challenges like financial crisis, emotional imbalances, unemployment, sustainability and
much more. The research explains how and why pandemic time has brought drastic changes
in industries especially in MSME, industries have stopped functioning at various work
culture of all units, and also the major sufferers are micro scale, small scale enterprises. This
pandemic- lockdown was implemented to all countries that spontaneously halted all business
and transactions. The migration of people from their homes towns was banned and few
penalties were imposed in the rule, such that everyone adheres the rules and regulation of
their respective government. The companies were running under loss and stop functioning
over a period of 8 months this disturbed the performances and working environment to the
worst. Food, Automotive industries and other essential commodities manufacturing
companies rested the workplaces. Uncertainties tripped the mischance of the influence of the
work renditions of the companies, It’s been accounted that due to the lack of basic needs,
mental traumas, lack of financial support unemployment, layoffs, loss of salary all these
made people to suffer in all aspects. The decision of government to control this contagious
disease was lockdown, it is mandatory because contagious disease was spreading across the
world, though government also went under loss as no revenue generation happened. Since
pandemic most of the unemployed employees perpetrate to suicide as it became impossible to
survive (Kniffint et al., 2020).

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All MSME’s initiated low revenue because they started curtailing staffs of different levels.
With respect to Study of meta-analytics, it is proved that staff curtailing decrease the
cumulative performances and productivity of the organizations. In India nearly 6.1 million
youth lost their jobs and in Bangalore nearly 60% were unemployed. And in this 60% of
people 40% were the sole care taker of their family. In March 2020, the unemployment rate
in India reached 8.7% as per the research carried by CMIE. Since lockdown, the entire
business/transactions was immobilized that captivates and other economic, and social,
psychological impact’s. For instance, Richard Branson’s Virgin Australia is the airline
company that looked up great blackout due to COVID-19, it has been estimated that the
company failed to implement necessary changes in the working environment because of
which the company ceased to sustain the market changes. Due to contagious disease
lockdown was inevitable, the migration of people from one country to another was strictly
prohibited by the governments of all countries.

Because of larger economic imbalances to all countries, (Blustein et al., 2020) MSME”s
suffered unpleasant financial losses due to which the complete work situations, performances
were restore uncertainly. Because of lockdown and strict rules, Work from home was made
compulsory and people lost the social connectivity (p & Shahid, 2020). Disastrously, the
imposition and switching from working station to WFH was a drawback to those individuals
who are driven technically active, and the non-tech savvy people suffered from social life and
salary. Despite, unsympathetic impact of COVID-19 are economic imbalance, social living,
unemployment and isolations, devastedness, and strained financial debt burnout, fixations,
feeling of unnoticed, etc. constant monitoring says that to streamline social distancing, it will
be obligatory for the working employees to work from home (Lane et al., 2020). When the
factories in which the onfloor job of employees are required are shut down for the betterment
of maintaining the social distancing. Through this it is clear that social distancing is one of
the basic necessities that acts as one determinant factor that bestow to the unemployment.

Impact of COVID-19 on Employees

With the impact of COVID-19, workers experienced a drastic change in their workplace that
disrupted their work experience since January 2020. Many studies during COVID-19 on
employee engagement in MSMEs demonstrated the pathetic situation of employees working
in these organisations. Nearly 60% of employees are jobless and are struggling for the
survival.

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The history of small entrepreneurs is more diverse than micro-entrepreneurs, though their
economic differences are also the main reason, some others have a more realistic context by
looking at future business growth with restricted capital constraints. One of the main
phenomena of Micro Small Medium Enterprise (MSME) in India and its states, is that they
are usually the same group of industries, located close to each other in an area.

Karnataka, considered one of the most industrialised states in the country, is home to over
7.6 lakh MSMEs of which 2.6 lakh are in Bengaluru alone and the sector employs nearly
2.6 crore people. Bangalore alone accounts for 70% of state GSDP.

The lockdown hit 60 percent of industries, and only less than 20 percent of these have
reopened. The business turnover for MSMEs is back to where it was 10 years ago
(Srinivas Asranna, president, Peenya Industrial Association. (Source: The New Indian
Express, Published: 21st October 2020)

The Peenya Industrial Area, on the outskirts of Bengaluru, has 8,500 MSMEs. Around 80
percent of them, except those supplying essential goods, had shut during the lockdown,
and nearly 10 percent of them are unlikely to open again. After the lockdown was lifted,
many industries could not operate because of the unavailability of labourers, who had
returned to their hometowns

More than 81% MSMEs are self-financed with only around 7% borrowing from formal
institutions and government sources (Economic Census, 2013). Credit market interventions
(cheaper loans, increased limits on NPAs) therefore may not benefit this sector directly. As
most of the MSMEs primarily operate on cash, they require immediate liquidity to cope with
adverse events. Moreover, many micro-enterprises are small, household-run businesses

Since a year back Industries are not able to pay the salary for the employees as the industries
are not functioning, most of the MSMEs are production-based and required on-floor job and
unable to adopt work from home. This was also one of the major drawbacks to MSMEs. In
spite of this, many sole proprietorship companies, and micro-scale industries who had set up
their business at home with limited labour could somehow manage to survive the shock of the
pandemic to an extent. But in the long -run even they had to suffer because of accessibility
and mobility of raw materials, infrastructure and, transportation.

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India does not have labour force data covering the period quarter 4, 2019, to quarter 2, 2020.
However, the PLFS 2017–2018 estimates that 77.1% of employment in India is either self-
employed or casual workers. There is a further 13.7% in regular but unprotected jobs.
Pandemic has also exposed the vulnerability of urban casual workers, many of whom are
migrants. They were among the first to be affected by the lockdown measures as economic
activities were halted threatening the survival of many small urban units and jobs of these
workers. In most urban units, the jobs are linked with accommodation at workplace and the
unemployment may have forced these workers to vacate their shelters as well. With little
choice, they are forced to return to their village in desperation. With limited data available on
inter-state migration and employment in informal sectors, it is difficult to figure the numbers
of migrants who lost jobs and accommodation during the pandemic and returned home.

Research Methodology
To address the objectives of this research, a sample of 100 employees, from 10 MSMEs
located in Peenya industrial area of Bangalore was collected. The data was collected through
a structured questionnaire. A convenient sampling technique was adopted to collect the
required data. The collected data were tabulated and descriptive analysis was done.

Analysis
To understand the extent to which the selected companies were able to engage their
employees, questions were asked on salary, health support extended by the company,
supportiveness of the supervisors, workplace motivation, feel of belongingness, fruitful
engagement, professional growth, and maintenance of morale

Q1. My Organization supported me with full pay during the pandemic

The responses about whether their organisation supported them with full pay are summarised
in the following table.

Table 1: Response for full pay (Percentage)

Strongly Agree Agree Neutral Disagree Completely Disagree
21 14 25 21 18
Source: Compiled by the researcher

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It is clear from the above table that 21% of employees strongly agreed that organisation
supported them with full pay during the pandemic, 25% were not interested in revealing the
real fact with their pay, and 18% of employees completely disagreed that the company did
not pay them full salary. On the whole 35% of the employees agreed that the company paid
full salary during the pandemic
Q2. My Organization supported me when I needed health support during the pandemic
The responses about whether their organisation gave health support during the pandemic are
summarised in the following table.
Table 2: Response for health support (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
18 21 18 21 21
Source: Compiled by the researcher
Based on the employee responses, 39% of the respondents felt that the organisation extended healthcare
support during the pandemic. About 18% of the employees did not want to respond to this question.
Close to 42% of the respondents were unhappy with the healthcare support extended by their
organisation.
Q3. Supervisor/s of my organization was/were supportive to us in the workplace during
the pandemic

The responses about whether their supervisor gave required support during the pandemic are
summarised in the following table.
Table 3: Response for Support of the supervisor (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
17 17 20 23 23
Source: Compiled by the researcher
Based on the responses, nearly 35% of the employees felt that their supervisors were
supportive at the workplace during the pandemic. 20% of the employees did not want to
comment on the support extended by their supervisors. Close to 46% of the employees were
not at all happy with the support that they got from their supervisors during the pandemic

Q4. I was kept motivated to achieve to the best of my ability during the pandemic

The responses about whether they could feel that they are motivated at the workplace during
the pandemic are summarised in the following table.
Table 4: Response for workplace motivation (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
11 26 25 18 21

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Source: Compiled by the researcher
According to the responses of employees, only 37% of them felt that they were motivated at
the workplace to perform their duties during the pandemic. About 25% of the employees did
comment on this question. Close to 39% of the employees felt that they did not feel
motivated at the workplace during the pandemic.

Q5. Despite disturbances, my organization treated me to feel that I belong to the

organization

The responses about whether their organisation treated them to feel that they are belonging to
the organisation during the pandemic are summarised in the following table.
Table 5: Response for feeling belonged to the organisation (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
18 15 12 24 30
Source: Compiled by the researcher
Based on the responses of the employees, about 33% of them felt that the organisation treated them to
feel that they are part of the organisation. Close to 12% of the respondents were silent on this question.
Close to 54% percent of the respondents did not feel that they belong to the organisation during the
pandemic.
Q6. The organization was able to engage us at its best

The responses about whether their organisation engaged them fruitfully during the pandemic
is summarised in the following table.
Table 6: Response for feeling engaged (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
19 16 19 22 25
Source: Compiled by the researcher

From the responses of employees, it is clear that 35% of them felt that their organisation engaged them
fruitfully during the pandemic. Close to 19% of the employees did not wish to comment on this
question. Close to 47% of the employees felt they did not feel engaged by the organisation during the
pandemic.

Q7. During the pandemic, the organization supported us to grow professionally, by

motivating me to take additional courses

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The responses about whether their organisation supported their professional growth during
the pandemic are summarised in the following table.
Table 7: Response for professional growth (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
12 19 19 27 23
Source: Compiled by the researcher
Close to 31% of the employees felt that the organisation supported them to grow
professionally by motivating them to take additional courses. Close to 50% of the employees
responded that their company did not support them for their professional growth. Roughly
19% of the respondents did not make any comment on this question.

Q8. During the pandemic, the organization conducted an awareness programme for the
safety of me and my coworkers.

The responses about whether their organisation conducted an awareness programme for the
safety of them during the pandemic are summarised in the following table.
Table 8: Response for awareness about safety (Percentage)
Strongly Agree Agree Neutral Disagree Completely Disagree
21 18 18 18 24
Source: Compiled by the researcher
It is observed from the responses that nearly 39% of the employees said that their
organisation conducted an awareness programme about safety measures during the pandemic.
Roughly about 18% of the employees did not comment on this question. About 22% of the
employees responded that their organisation did not conduct any awareness programme about
safety during the pandemic.

Findings
The majority of the employees of MSMEs did not receive their full pay during the pandemic.
This is mainly because of the financial instability of these organisations. None the less 35%
of the employees received their salary during the pandemic

Close to 40% of the employees received healthcare support from their organisation. These organisations
demonstrated employee friendliness, share, and care behaviour towards their employees. Few of the

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MSMEs could not support their employees because of their financial resources and uncertain market
conditions
Supervisors of some of these MSMEs were very supportive during the pandemic. They were
flexible. This demonstrated the leadership qualities of some of these organisations. Few of
the employees responded that the moral support from their supervisors was appreciable
during the pandemic

A moderate percentage of employees felt that their organisation motivated them to be

mentally strong because of which they did not feel the pressure of the pandemic to a greater
extent. They felt happy for the warmth extended by the organisation

A moderate percentage of the employees felt that the organisation treated them to feel that
they are part of the organisation. Sense of belongingness encourages employees to work to
their full capacity for the benefit of the organisation

A moderate percentage of employees felt that their organisation engaged them fruitfully
during the pandemic. If the employees are engaged, they feel proud to be associated with the
organisation for more number of years.

A moderate percentage of employees felt that the organisation supported them to grow
professionally by motivating them to take additional courses. The organisations encouraging
employees to grow professionally will create future leaders and managers for their
organisations.

A moderate percentage of the employees said that their organisation conducted an awareness
programme about safety measures during the pandemic. Organisations should be proactive
enough to address unforeseen business circumstances. Guiding and assisting their employees
when it is needed, will bring positivity to the minds of employees.

Suggestions
After going through the responses from the employees of the selective MSMEs, the
following suggestions are worth mentioning

Uncertain and unforeseen business events are more common these days. Therefore, MSMEs
are required to change their traditional mindset and adapt to the modern outlook

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Financial independence is the demand of the time. Building a resource base within the
organisation is of paramount importance

MSMEs should be watchful about the emerging market conditions and changing demands of
the consumers. This is the only way in which they can be in the competition

Keeping the customer at the center of all the decisions taken by the company, they cannot
forget the important roles played by the employees in the organisations

Companies should have career growth plans for their employees and support them to grow
professionally

Engaging the employees more productively, keep the employees busy fruitfully. This helps
organisations to keep their employees motivated and stay with them for more number of
years.

Future Scope
Uncertainties are common in the business environment. Problems are inevitable and suffering
is optional. Therefore, organisations should be vigilant and be prepared to face the
consequences of such uncertain events. Organisation should be proactive in dealing with
such irregularities in business operations and earnings. Prudent organisations will always
strive to retain their employees for number of years and engage them productively. They
offer challenging jobs to their employees to utilise their capacity to a greater extent. The
researchers can further extend this study for any such eventualities and to know how
companies managed them and engaged their employees more productively.

Conclusion
COVID-19 has impacted all parts of life and employees have witnessed ups and downs in
their earnings, financial stability, and health issues. Employees need support from their
organisations. It is the responsibility of the employees to support their organisations by
working to their fullest capacity. Both the organisations and the employees should work in
harmony for the common good of the organisations. Companies should plan for employee
engagement, growth, and happiness. The government should help the stability and growth of

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MSMEs through supportive policy formulation and implementation. MSMEs should also
conduct market research to understand the pulse of the market. This helps MSMEs to produce
the right product needed by the consumers in the market.

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