A staggering 95% of UK SME business leaders say the cost-of-living crisis is negatively impacting workplace culture. The research, conducted by Pleo – one of Europe’s leading business spending solutions – has also revealed more than 99% of SMEs say they’ve noticed behavioural changes across the team as a result of financial constraints.

Pleo’s latest State of Spending report has highlighted business leaders have been forced to make tough decisions over the past six months with the majority saying they have had to cut back on spending in 2023 to maintain the health of their business. Three in five have stopped or reduced staff promotions, 61% have curtailed staff bonuses and the same percentage have reduced or put an end to staff socials.

The research showed business leaders across the UK say their number one priority is ensuring job security, and are adjusting budgets accordingly. Nearly half (48%) are swapping out staff “niceties” like gifts, socials and perks and are prioritising what staff really need, including travel expenses, pay rises and training.

The findings also revealed the ramifications of these spending adjustments when it comes to workplace culture. Almost a third (32%) of employees are pushing back against businesses that are urging employees to come back to the office. One of the main reasons cited for the pushback is the overall expense of commuting being too high (35%) which is putting a huge strain on team leaders as they try to combat the growing issue of a disconnected workforce.

And rising inflation is calling employees to make a stand against mounting pressures on their bank balances, requesting additional flexibilities and aid from their employers. Nearly a third (29%) have asked for earlier salary payments to help keep pace with increasing financial outlay. Additionally, over a quarter (28%) said they are now refusing to fork out for business purchases ahead of being reimbursed.

Jessie Danyi, Belonging & Impact Lead, at Pleo, said:

The workplace has faced many challenges over the last few years. But difficult times bring opportunities that we as employers can embrace. It’s promising to see that UK SMEs are looking to protect jobs and spend carefully. I would recommend that right now, business leaders should invest time into building a supportive and flexible workplace culture – so that they can still give employees what they need, even when the purse strings are tighter. For example, a level of spending transparency will bring employers and employees closer together during these rocky times.

Jessie Danyi, Belonging & Impact Lead, Pleo

Editor at Workplace Wellbeing Professional | Website | + posts

Joanne is the editor for Workplace Wellbeing Professional and has a keen interest in promoting the safety and wellbeing of the global workforce. After earning a bachelor's degree in English literature and media studies, she taught English in China and Vietnam for two years. Before joining Work Well Pro, Joanne worked as a marketing coordinator for luxury property, where her responsibilities included blog writing, photography, and video creation.