Is “flexible working” helping UK SMEs cope with wage pressures?


It sounds like a simple and perfectly logical proposition. The United Kingdom is facing a labor shortage. Even against a background of static or negative growth, there are approximately one million unfilled vacancies in the economy and with demand exceeding supply, wages rise. Small businesses are hesitant to start a paycheck war against their bigger and often better competitors, so they look for alternative ways and means to attract and retain people.

And one way to do that is by offering something of value that doesn’t automatically translate into higher staff costs. But what exactly?

One answer seems to be a greater degree of workplace

flexibility. And according to a study titled The Future World of Work, that’s exactly what large numbers of SMEs are doing. But what does flexibility mean in practice? does it really make a difference to small businesses’ ability to hire the people they need?

The research was commissioned by Sonovate, a company that provides a technology solution for recruiting and consulting firms that place temporary workers with clients. Essentially, the company offers invoice financing. If an employment agency places a number of freelancers with a third party, Sonovate pays the freelancer’s wage costs as soon as an invoice is drawn up. This benefits the temporary employment agency’s cash flow position and may also pay the self-employed more quickly.

So, as Chief People Officer Elise Lockyer explains, the company commissioned the study — collecting submissions from 500 SMEs and 4,000 employees to understand where the world of work is heading.

So what did the research yield? Well, some of the findings may not be surprising. 49% of responding companies say they need to be more creative in attracting and retaining staff and nearly three-quarters (70%) say they face a situation where candidates only take jobs when the circumstances are right for them.

Money clearly plays a big part in determining whether a job is considered suitable by a candidate and 43% of employers have increased wages. Others, however, say pay increases are unaffordable in the long run, so they’re instead trying to get people on board by rethinking work practices.

But this is where it starts to get complicated. As you might expect, more than half of employers are offering hybrid working, which ties in nicely with employees’ post-covid awareness that working from home for a certain number of days each week is a very attractive prospect. A majority of employers who do this offer internet grants.

A switch to temporary?

All well and good, but according to the figures, the number of permanent employees who want to switch to temporary positions is increasing.

I explained to Elise Lockyer that this seems counterintuitive. At a time when workers are facing higher interest rates (including on mortgages), rising rents and sharp increases in the general cost of living, why would people ask to trade a steady job for something more precarious?

“What we’ve seen is that you have to manage employees as individuals,” she says. “Some people look around and see companies laying off their employees. They may feel that the flexible work route offers more control over their own destiny.”

So instead of holding a permanent contract with one employer, another approach would be to take a portfolio model. Perhaps freelance for two or more employers for a week or a month. “They get paid without dedicating themselves full time to a company. With gig and portfolio work available, there’s an opportunity to work for multiple companies,” says Lockyer.

What do employees want?

It’s easy to see the benefits for some employers. For example, Lockyer says Sonovate recently hired someone to do specific tasks two days a week. The necessary work is done, without the company having to pay for time it doesn’t actually use.

But is this really what employees want? Well, maybe they have reasons. If someone wants to run their own business, it may make perfect sense to work for an employer two days a week and spend the rest of their time getting the business started. Or if an employee is well paid and has a range of in-demand skills, then working for a number of employers, sequentially or simultaneously, can make financial sense while providing a way to add experience to a resume. It is conceivable that having several employers also offers more security than putting the eggs in one basket. Or it could just be that someone only wants to work a few days a week.

The research does suggest that there is a demand for a range of work opportunities, albeit from people who already freelance. For example, 30% of freelancers want to determine for themselves how many hours they work and how many and which days they work. Three in ten (27%) would like to be able to work part-time if they want to, and 25% would like to work from home when they want to.

But it will really depend on the individual and the circumstances. Lower-paid workers on short-term contracts may simply feel exploited instead of enjoying the benefits of flexibility.

Meanwhile, small businesses — many of which take pride in their culture — can struggle to motivate teams made up of individuals with widely differing contracts and hours. Lockyer says this is something companies should take very seriously. “You need to know your values ​​and behaviors and embed them in the company, whether the staff is part-time or full-time,” she says.

Lockyer says the world of work will continue to change. That is probably true and it is also likely that more and more employees will look for more flexibility. The question is whether the flexible practices offered can work for both the company and the employees.