Almost six in ten small and medium-sized businesses say they prefer a hybrid style of working which combines home working with going into the office, according to new research.
With eye-watering energy rates continue to sting for employees working at home, the cost of living may be forcing millions to balance home and HQ – are they necessarily as happy as they were to work predominantly from their dining rooms and garden offices?
PRISM’s SME Barometer, which polled 2,000 small and medium-sized businesses, suggested some workforces may never properly ‘go back to the office’ in the wake of the pandemic.
The report states there are 400 million SMEs around the world – including 5.6 million SMEs in the UK alone – with companies of this size constituting as much as 99% of the European Union’s businesses. What’s more, SMEs make up three-fifths of the UK private sector’s employment – as well as around half of its turnover.
But, many SMEs were found to be facing the prospect of hiking up their prices for customers due to interest rates and energy costs shooting up – with the situation compounded by raw material shortages and supply chain problems.
Researchers argued the ‘double shock of COVID-19 and the Russian invasion of Ukraine’ has resulted in inflation to soar while growth has slowed down. “Commentators ponder whether we are on the cusp of seeing a return of a 1970s style global stagflation – striking fear into policymakers as there are few monetary tools to address it,” the report adds.
The SME Barometer also states: “Our research shows that SMEs are being caught in the crosswinds and will need to become even more agile not only for their survival short-term, but also so that they can be ready for their future growth”.
Much of this agility, it may be argued, could stem from a careful adoption of hybrid working – allowing employees to split their time between home and the office. However, such flexibility for an SME may come at an expense for the average employee.
Tellingly, while many employees are keen to work from home wherever possible, skyrocketing living costs – such as running electricity and gas from their properties – may force them to seek cheaper daily expenses at the office. Energy prices are outstripping the cost of daily rail fares at present – and those who can walk or cycle to work, of course, stand to save even more money.
Could this mean SMEs have to carefully balance their attitudes towards hybrid working in order to keep their employees on-side? Alternatively, will working from home become popular again should inflation fall and the cost of living decrease?
Such matters are not the sole concerns for SMEs heading into the post-COVID, Ukraine wartime climate. PRISM’S SME Barometer further suggests an inability to safeguard SMEs has powerful consequences on the wider economy – with a thriving SME sector able to wrench a nation out of a recession.
The survey found almost six in ten SMEs say they are prioritising digital transformation, while just over half of all businesses said they felt optimistic their organisation would be able to handle IT issues while building a new digital climate. Many businesses were forced to speed up their digitisation process after COVID forced firms to work remotely.
Over 70% of SMEs said advantages, such as lower costs and boosted revenue, which digitalisation can deliver in the next half a decade, allows them to capture high-margin business via enhanced insights into customer behaviour through data analytics.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said: “Companies and consumers are already braced for further rate rises which run the risk of making the cost of living and business more expensive.
“The toxic combination of high commodity costs, supply chain issues and the fight for labour is already weighing on demand, and the worry is that if rates rise too rapidly it could tip the economy into a downturn”.
The report also explored geographical disparities which pervade the UK – with London and the South East having around three times more investment per head in transport in comparison to the rest of the UK, as well as having the most successful education system and being a magnet for the “best talent”.
Exploring the issue of levelling up around the UK to stamp out geographical inequalities, Robert Colvile, Director, Centre of Policy Studies, said: “The best way to level up Britain’s regions is not to punish the south for its prosperity, but to give every part of Britain the freedom, and the tools, to compete for talent, investment and infrastructure. It’s no coincidence that we are simultaneously one of the most centralised countries in Europe and one of the most geographically unequal.”
Nick King, Head of Business Policy at the Centre for Policy Studies, added: “Whether this is achieved through devolution, infrastructure investment, a revamped approach to skills and education or the introduction of new business-friendly ‘Opportunity Zones’, the only way to close the gap and to bring about economic growth around the country is by giving the private sector every reason to invest and operate in those parts of our country that need investment most”.
While agility may be the order of the day for SMEs striving to succeed post-pandemic, it is everyday employees, too, who need to keep agile. Digitalisation and hybrid working standards may help to bolster these businesses and their staff against future chaos – but current financial crises may force slight stagnation in the race for evolution. The next few years, leading up to mid-decade, will be crucial for all involved.