SMEs report the cost of living crisis is damaging workplace culture

The cost of living crisis continues to sicken business health as 95% of SMEs say it is negatively impacting workplace culture. This is forcing enterprises to reduce staff promotions and office perks.

Almost all (99%) of SMEs said they have noticed behavioural changes across their team as a result of the pressure inflicted by the economic climate

48% of business leaders are replacing staff socials, gifts, and other office ‘niceties’ to prioritise training and pay rises, according to the State of Spending report released by Pleo, a business spending solutions enterprise.

This bleak social business terrain is unfolding against a snowy economic climate that saw a Consumer Prices Index (CPI) rise of 10.4%.

61% of UK SMEs have cut down staff bonuses and the same percentage have reduced or put an end to staff socials.

Jessie Danyi, Belonging and Impact Lead at Pleo says, “Our research has shown that workplace culture is one of the greatest casualties of the cost of living crisis.”

More flexibility needed to support staff in 2023

As workplace culture dampens, employee engagement is taking a hit. 32% of employees say they cannot justify the cost to travel into the office. 35% highlighted commuting costs being too high as the main hurdle to coming back into the office.

This is creating a vicious cycle where maintaining workplace culture becomes harder as team leaders try to resolve the growing issue of a disconnected workforce and low employee engagement.

Besides straining workplace culture, the current economic situation is also multiplying demands for more salary flexibility. 29% of employees have asked for earlier salary payments to help keep pace with increasing financial outlay.

Despite the inevitable negativity these statistics invoke, Danyi points out that employers can still create positive opportunities from these financial challenges. “I would recommend that right now, business leaders should invest time into building a supportive and flexible workplace culture.”

Committing to business transparency can help bring employers and employees closer together, Danyi also suggests, as well as shorter pay cycles and smart spending cards that negate out-of-pocket expenses.

Whilst the Bank of England announced that the recession in 2023 is expected to be shorter than originally forecasted, SMEs will continue to grapple with the consequences of the cost of living crisis.

Our guide to the top employee benefits and perks has more information on how to support your workplace culture, without sacrificing your bottom line.