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We live in a time of seismic change in the workplace, bringing tough challenges and exciting opportunities for small and medium-sized enterprises (SME).

Remote and hybrid working, fast-moving technologies, and a growing focus on diversity are just three trends spurring SMEs to evolve their employees’ roles quickly and significantly.

As a small business owner battling challenges such as Brexit, runaway inflation, and war in Ukraine, responding to workplace developments might not seem an immediate priority.

But you can’t ignore these changes.

The faster you adapt to and build new structures around these trends the better.

Here’s what we cover in this article:

Impact of the pandemic on working structures

The trend towards more flexible working, accelerated by the pandemic, continues apace.

51% of employees now have flexible working arrangements, according to an April 2022 study by the Chartered Institute of Personnel and Development (CIPD).

But this looks set to grow further as requests for flexible working have increased at 37% of organisations in recent months.

Meanwhile, the challenge of finding talent continues to grow for many SMEs.

The post-Covid economic rebound pushed UK job vacancies to record levels. People are also changing jobs in record numbers – dubbed the Great Resignation – as they reassess their priorities.

The push towards technological innovation, also accelerated by the pandemic, has fuelled the talent gap even further by prompting a need for ever more experienced and educated staff.

This gap is a particular challenge for SMEs because many restless workers perceive they are more likely to get the flexible and hybrid working they crave at a larger company.

CIPD research confirms that nearly twice as many large organisations (49%) invest in hybrid working compared to SMEs (25%).

As a business owner, you may argue the move towards remote working works in your favour as it enables you to recruit talent from anywhere and tempt potential recruits away from larger firms.

However, it’s a challenge to compete with the brand power and recruiting resources of larger organisations on that stage.

Impact of technological development

Technology will impact many of your workers’ roles even more than the pandemic has.

A 2021 report from the World Economic Forum (WEF) shows an increase in SMEs seeking technology to overcome pandemic-related challenges in areas such as the industrial internet of things, big data, cloud computing, and artificial intelligence (AI).

Technology changing workers’ roles is nothing new but many of these projects will likely accelerate the transformation of the workplace and threaten more traditional roles over the next decade.

A study from Brookings predicts 25% of all jobs now face a high risk from technology, and 36% face a medium risk.

Routine physical and cognitive tasks will be most at risk.

Jobs in office administration, production, transport and food preparation are vulnerable, with more than 70% of their tasks potentially substituted by technology.

But in the three quarters of roles not at high risk, technologies such as AI are more likely to replace tasks within jobs rather than entire occupations.

More secure jobs will not just be in professional and technical roles. They’ll also include low-paying personal care and domestic service work characterised by non-routine, abstract activities, and social and emotional intelligence.

Why businesses can’t stand still

SMEs face imminent threats if they don’t adapt their workforce skills and structure to these sweeping changes.

Even in late 2019, a British Business Bank report highlighted that SMEs risk losing competitiveness if they fail to embrace new technologies.

They also need urgent action to avoid losing out in the talent war.

November 2021 research from insurer MetLife shows 54% of employees were considering leaving their job in the next 18 months. And 59% said they would start looking if employers didn’t accommodate their work values.

Many SMEs will be challenged to find the time and resources to implement the training, support and technologies needed to thrive in this new environment.

The WEF says the biggest danger is that these technologies are critical to long-term competitiveness, but small and medium-sized companies tend to encounter barriers to adopting them.

Only 23% of SMEs could dedicate resources to such digital tools.

Lack of skilled workers is a key adoption barrier, and in AI, it’s the primary obstacle for most SMEs.

These pressures make it even more important to focus on quickly adopting the values, skills, and technologies workers need in the new world of work.

Embracing new ways to work, including flexible and remote working

Financial remuneration will always be important to some, but impatient employees are also looking for companies that offer flexible and hybrid working, wellbeing days, and more holidays and study leave.

According to the latest Future Forum survey, 68% of workers now prefer a hybrid working model, and 95% want flexibility at work.

Small and medium-sized companies are responding.

2022 research by insurer Aston Lark shows more than half of SMEs have enhanced or introduced flexible working hours and other benefits such as mindfulness classes, education, childcare benefits and gym memberships.

They are planning more of these things too.

But to make new structures such as hybrid and flexible working successful, businesses need to listen carefully to workers’ needs and concerns and help them adapt.

Consultant McKinsey surveyed nearly 6,000 employees to understand what is driving the Great Resignation.

It suggests, to attract and retain staff, businesses should improve the transition to remote and hybrid working by including employees in the process.

McKinsey uncovers several disconnects between employees and employers.

One is that workers are far more likely to prioritise relational factors, but employers are more prone to focus on transactional ones.

Resigning employees said they didn’t feel valued by their organisations (54%) or managers (52%), and felt no sense of belonging at work (51%).

Non-white employees felt less sense of belonging compared to white colleagues.

McKinsey suggests addressing this by promoting inspiring, motivating leaders and managers who are experienced and trained in running remote or hybrid models.

“If your only response is to increase compensation, that says to workers your relationship with them is purely transactional,” adds the report.

“Instead, companies should look at the whole person, for example, by aligning benefits more with homeworking and family needs.”

A great example is Californian clothing firm Patagonia, which has retained 100% of employees who are new mothers by providing on-site childcare and other benefits for parents.

Time to experiment

Bruce Daisley, former Twitter vice president and author of Eat Sleep Work Repeat, says employee feedback should be critical to how you structure hybrid working.

This is because some workers don’t need an office; some are happy to work in an office a few days a week; others want to be there most days.

“Also, it doesn’t necessarily split in expected ways,” says Bruce.

“You might think older generations are more prone to like the office, but often they have home offices and are willing to work in a more relaxed way.

“We have already seen companies bringing workers back into the office three days a week. But employees questioned why, especially if they spend most of the day in video meetings.

“So many companies have moved it back to one or two days a week. This may make it inefficient to rent an office, so they may hire meeting rooms instead. So it’s a time for flexibility.”

Steve Cadigan, talent adviser and author of Workquake, says: “Learnings from remote working are still coming in.

“Many firms are recognising their talent is more productive outside the office and they can win with remote and hybrid models.

“But there is no single answer because all SMEs are different, and they have wide variations within them.

“So experimentation has become best practice – with individuals, teams and departments – to determine where and how they work best and how that suits the culture and performance of the organisation.”

The key is to embrace more variety in how and where people work.

Be open to trying new things.

Then measure, assess and empower your leaders to decide what works best for their teams.

Given the difficulty of finding talent, another inevitable change is to consider using more contingent, outsourced, or gig workers.

This will help the structure of your workforce withstand future onslaughts.

“One of the biggest recent changes I have seen is using more temporary workers and contractors as companies are challenged to find people qualified and willing to work full-time,” says Steve.

The rise of globally distributed models

As understanding of remote working matures, companies of all sizes are moving towards a so-called globally distributed model.

‘Globally distributed’ has come to define what many believe is the workforce of the future – mainly remote, straddling many time zones, and available to customers and progressing goals around the clock.

As distributed teams don’t cluster around a specific time zone, they promote asynchronous communication (async).

Async means replacing inefficient real-time meetings with collaboration tools and transparent audio and video recording and documentation.

This enables people in various time zones to work together without having to be “always on”.

Workplace experts expect the trend toward async collaboration will continue and become one of the most impactful changes on workers and employers over the next few years.

But it’s a significant change from traditional structures and requires a huge culture change with lots of support for workers.

How and why you should create a more inclusive workplace

During the Great Resignation, restless employees are also looking to move to companies with shared values such as inclusion and social mobility.

Many SMEs are recognising that a lack of diversity and inclusion (D&I) will limit the talent they can attract and even drive people out.

Promoting D&I is therefore becoming a vital part of the way firms redefine work.

There is copious research showing how D&I benefits companies by, for example, bringing in fresh perspectives and avoiding ‘echo chambers’ of similar views.

According to the Confederation of British Industry (CBI), SMEs who focus on diversity have attracted more clients, and boosted productivity, staff commitment and brand.

These outcomes are essential for resilience in difficult times, says the confederation.

Steve Cadigan says the shift to remote working can help as hiring people from different countries naturally boosts diversity and allows D&I to take root.

So be as open as you can about where you recruit from.

To attract and retain a diverse workforce, the CIPD recommends systemic methods that includes inclusive approaches to culture, employment policies, practices and personal behaviours.

This includes rethinking everything from advertising to minority groups to ensuring offices are easily accessible for disabled people.

It’s also worth using the recruitment section of your website to show how your business promotes D&I. For example, advertise inclusive application routes from different sectors of society such as through school leaver and return to work programmes.

5 ways cloud HR software can help you

The world of work is shifting so quickly we do not yet fully understand all the challenges and opportunities these sweeping changes will bring.

There are no silver bullets or universal answers, but an experimentation mindset can make your restructure even more exciting.

The key is to show your employees you are listening and doing your best to balance the needs of individuals, teams and the business.

So how can you do that?

Cloud HR software can help here, in a number of ways:

1. Measure employee sentiment

How do your employees feel about your organisation?

By using engagement surveys via your software, you can determine how committed and motivated your people are – and you can take the right steps to act on any feedback.

2. Track progress and celebrate excellent employee contributions

Want to congratulate your people on a job well done? You can do this via your HR software.

But that’s not all.

You can use it to track performance and identify where your employees are succeeding or can improve, then take steps to help them thrive.

3. Easy access to employee info

You no longer have to rely on your computer to access employee details.

By using a mobile phone or tablet, you can easily retrieve important HR documents – and your employees can self-serve to view the likes of online payslips and P60s with ease, and book holidays.

This is ideal if people are working remotely or in a hybrid manner.

4. Easily collect signatures from your employees

This no longer needs to be a chore. Now you can do it with a click of a button, due to eSignature functionality that’s present in the HR software.

The days of having to track down your people in person to get important documents signed can be a thing of the past.

5. Streamline your recruitment process

That’s right, it’s not just your current employees that you need to consider. Include your prospective talent too.

A good HR solution will allow you to speed up the time it takes to recruit new employees.

And with automated tracking and on-demand applicant screening, plus the ability to schedule interviews with ease, you can provide the best chance of effectively finding the right people for the business.

Final thoughts on small businesses leading the redefinition of work

To wrap up, the main takeaway is to recognise your employees’ continuing need for new skills, roles and structures to thrive in the new world of work, and help them get there quickly.

Achieving this could give you a fantastic chance to stave off the many threats and realise the benefits for your workers and your business.

The second article in this series looks in detail at how SMEs can train and support workers through all these changes to achieve a future-fit workforce.

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