28 March 2023 – New research shows that 95% of small and medium-sized enterprises (SMEs) say that workplace culture is suffering due to the cost-of-living crisis.
Spending solutions firm Pleo has released its newest State of Spending Report, which shows that 95% of small businesses leaders feel that the cost-of-living crisis puts workplace culture at risk.
The move to work from home when the pandemic first hit and restrictions were put in place, has seen many businesses struggle with maintaining their workplace culture. Disjointed teams and online meetings were a necessity but caused issues for many a team leader.
Even though all restrictions from the pandemic have been lifted, many businesses struggle to get their employees back to the office. This disconnected workforce causes issues for managers and the cost-of-living crisis adds to these problems.
Employees Struggle To Afford Travelling To The Office
Pleo surveyed 500 business leaders and its data shows that the financial pressure households are under means that many workers can’t afford to return to the office.
According to the report, costs for travel to the office are so high that 32% of employees can’t justify working from their office. 35% of employees said that commuting costs are too high for them to return to the office.
In light of recent price rises for rail travel, this issue is unlikely to get better any time soon. And while bus fares are capped at £2 for single tickets by most bus companies, this government scheme will end on 30 June 2023.
The Chancellor has announced in his spring budget that the 5p per litre discount on fuel duty will be extended for another year, while fuel duty has also been frozen for another year.
This measure will help employees who commute to work by car. But inflation has risen again in February to 10.4%. According to the Office For National Statistics, this rise was due to rising food prices.
Financial pressures are likely to squeeze household budgets for the rest of the year, forcing many employees to keep away from the office.
With so many staff members unable to come into the office and having to work from home, creating a workplace environment that boosts productivity is a challenge. The lack of the social aspect of working does not just impact on the workplace culture, it also lessens employee engagement.
Other signs that the cost-of-living crisis is biting has also been highlighted by the study. 29% of employees have asked for salaries to be paid earlier and 28% are refusing to pay for business purchases in advance and then claim it back.
99% of SMEs have reported that they have noticed behavioural changes in their staff due to financial pressures.
Our research has shown that workplace culture is one of the greatest casualties of the cost-of-living crisis.Jessie Danyi, Belonging & Impact Lead at Pleo
Training And Pay Rises Instead Of Staff Socials
But it’s not just employees who feel the squeeze. Many firms have to adjust their spending to ensure their business stays healthy.
To support and retain their staff, 48% of business leaders have said they are scrapping perks like gifts and socials to pay for pay rises and staff training.
Pleo’s study shows that 60% of SMEs stopped or reduced staff promotions and 61% have imposed restrictions on staff bonuses.
Staff socials are one of the main casualties, with 61% saying they have reduced or stopped them.
The results of another study, by Nucleus Commercial Finance, confirm that small businesses adjust their budget to weather the storm. About a quarter of SMEs have postponed plans to invest in technology.
14% of the small businesses surveyed by the small business lender have said that they won’t invest in staff training for now. Investing in growing their business is something that 16% have completely given up on.
And 5% have said that they are at risk of having to close this year, due to financial pressures.
Businesses not investing is bad news for our economy. But it’s also a sign of the lack of confidence in it. And the recent announcements in the Chancellor’s spring budget didn’t do much to increase the confidence of small businesses either.
Experts believe that the lack of investment is one of the main reasons why the UK’s economy is stagnating. And the current uncertainty about costs and the lack of support from the government will do nothing to encourage small businesses to invest their money.
This leaves many SMEs with a puzzle. On one hand, they want to support their staff to keep them engaged and productive and from leaving. On the other hand, they feel they have to restrict spending.
Solving this puzzle will not be an easy task. But unless they can solve it, our economy will continue to stagnate, keeping small businesses in a vicious cycle.