NEWS & RESOURCES

Finances impact decision making in 70% of SMEs

This month, we have published our annual SME Business Survey report. In its third year, the survey asks SME business owners ten varied questions in order to understand key themes in what challenges lie ahead for businesses of fewer than 250 employees across multiple industries, including manufacturing, education, care, hospitality, and finance.

With our survey now in its third year, we can see a clear shift in the mindset of SMEs.

The research was aimed at establishing what the top major business challenges are, the biggest financial challenges, the biggest issues that impact on decision making, the most important aspect of people management, and the most important health and safety areas for 2023.

The cost of living, employee retention and rising costs were all highlighted as key themes for SMEs throughout the report.

Here is a summary of the key results:

Top three major challenges to their business in 2023:

  • 51% rising costs
  • 48% recession
  • 33% recruiting staff.

Top three financial challenges to their business in 2023:

  • 49% salary increases
  • 46% managing and controlling costs
  • 46% profitability.

Top three areas that will have the biggest impact on decision making in 2023:

  • 70% available finances
  • 43% profitability
  • 27% inflation.

Top three most important aspect of people management in 2023:

  • 50% employee retention
  • 44% employee capability
  • 39% company culture.

Top 3 most important Health and Safety areas for 2023:

  • 85% mental health
  • 79% statutory compliance
  • 52% home worker risk assessments.

There are several other areas that business owners were questioned about, including employment law and outsourcing roles.  You can read more about these areas in our report, along with further information on the statistics above and our recommendations for how businesses can respond in the year ahead.

You can access the report here.

Employment challenges of 2022

In recent months we have been delving more into what employment concerns are in the minds of our clients and gained a useful insight into the current state of play.

From a recent poll, we found that 48% of respondents found the biggest employment challenge of 2022 was the ability to recruit, whilst 30% believed the cost of living was the second largest.

Other challenges included employee engagement at 29% and employee retention at 18%.

Planning for 2023

We have explored how clients are preparing their business for the year ahead. We identified in a poll last month that 67% of respondents had started planning for 2023, although only 3% said that they felt confident in knowing what employment challenges and changes are for the year ahead.

This perhaps reflects the level of uncertainty that there is in the UK economy at present, as well as ongoing, sustained strike action that impacts on everyone, not just those businesses whose employees are participating in them.

Going by the largest challenge from 2022, planning would need to centre around the ability to recruit and what strategy is necessary to overcome this.

Employment practices

We also ran several polls relating to topical key employment practices: trade unions, organisational change and reward and recognition.

All of which play an important role in maintaining employee relations, employee engagement, employee attraction and effective organisational design.

These all contribute to an efficient and cost-effective business, slicker working practices, high engagement levels, low staff turnover and the ability to attract and retain top talent.

These are the key points from our recent polls:

Industrial relations

  • 39% said that they would likely recognise a Trade Union if they received a formal request for recognition, with 39% equally being unsure.
  • 57% already formally recognise a Trade Union in their workplace, but 63% felt that the relationship between the workplace and the Trade Union needed improving. This area is perhaps one to consider when setting out your 2023 People Plan.

Organisational change:

  • 60% reported that they would be looking to make redundancies in the near future, with the majority looking to make fewer than 20 roles redundant (the threshold for collective consultation).
  • 57% of respondents, however, did not feel confident in carrying out a legally fair redundancy process. Ensuring managers are full trained on managing change is going to be vital at a time like this because to get the process wrong can be costly.

Reward and Recognition

  • 31% of clients have a Reward and Recognition strategy, which was either standalone, or incorporated within their People Plan
  • 48% believed that having a Reward and Recognition strategy could positively impact on employee retention, following by 32% on employee engagement, and then 19% on the ability to recruit
  • 27% would be giving a pay rise to their employees this year
  • The level of pay rise anticipated by respondents were:
    – 18% would offer between 1 – 2%
    – 58% would offer between 3 and 5%
    – 9% would offer between 6 and 7%
    – 6% would offer between 8 and 10%
    – 3% would offer around inflation levels i.e., around 11%
    – 77% would offer a one-off discretionary bonus this year as an alternative to offering a pay rise.

Reward and recognition is vital in attracting candidates when you are already experiencing recruitment challenges. It also supports high engagement levels and therefore aid staff retention.

How can we help SMEs?

The current economic challenges are a prevalent theme across all of our research. To help businesses to manage their people challenges during the cost of living crisis, we’ve created a dedicated hub of resources, templates and guides which have been developed to be used as tools for business development and growth, through this challenging time.

Visit the cost of living hub here.

We can help you to effectively manage your team during the cost of living crisis by offering expert, commercial HR advice, based on your business requirements. With packages starting from just £135* a month, you can access unlimited support and advice on all your HR needs including:

  • Strategic people planning
  • Setting budgets for your workforce
  • Upskilling your team
  • Mental health and wellbeing support and training
  • Performance management
  • Employee benefits and EAP schemes

How can my team transform my business?

Your people should always be at the forefront of your business operation. Building a structured people plan is a great way to ensure that you are getting the most from your employees and also that the employees themselves feel rewarded for their efforts.

A people plan focuses on setting out your vision for the organisation and its people for the year ahead to address the company’s most pressing challenges. It is important that it aligns with the organisation’s business plan for 2023.

We have created a useful template which can be used to create by SMEs or larger corporations to create their own people plan, further strengthening your businesses position in such demanding times economically.

You can download your own people plan template from our HR Document Shop, here.

Webinar resources

We hold monthly interactive webinars to support with the key HR trends and answer the questions that need to be answered most. You can subscribe to all our monthly webinars, here.

We have a dedicated HR Webinar Library which can be viewed here.

In one of our recent webinars, we looked deeper at how reward and recognition strategies can lead to a high performing and engaged workforce.

We are here to help

If you are struggling with the cost of living crisis or would like to discuss our HR, Payroll, or Health and Safety services, please contact us and speak to a member of the team.

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2023/2024 SME BUSINESS SURVEY

Our latest 2023/24 SME Business Survey sheds light on the intricate dynamics shaping the SME sector and unveils critical insights that can guide businesses toward sustainable success.