Four day week rejected by majority of SME leaders

Around three quarters (76 percent) of UK business leaders are either unlikely or very unlikely to introduce the four day work week to their business, according to the latest quarterly UK SME CEO Confidence Index for Q2 2022 from Vistage. The study reports that the SME business confidence index hit 77 points, a 22 percent decrease since the last quarter. The index suggests that small and medium sized businesses overall feel pessimistic about the current economic landscape. 69 percent of SME leaders think that economic conditions have significantly worsened over the last 12 months. Only 5 percent predict that the economic landscape will improve over the next year, while 72 percent strongly believe that the economy will further deteriorate.

According to the survey 57 percent of businesses leaders of small and medium sized businesses across the UK and Ireland have increased headcount, and a further 47 percent are planning to grow their head count in the next year. This is mostly (67 percent) due to labour shortages in meeting the current demand. In fact, one third (33 percent) observed a decrease in employee retention over the last year. What’s more, 67 percent of business leaders states that challenges in the hiring process has directly impacted their ability of operate at full capacity.

When looking at the future of work only a quarter (25 percent) of businesses have returned fully on-site post-pandemic, with a majority (67 percent) favouring a hybrid workforce model. Despite greater levels of flexibility most (76 percent) SME business owners are either unlikely, or very unlikely, to adopt the four-day work week. Vistage found that senior leaders are conscious of the negative impact flexible working has on their workforce citing culture (58 percent), communication (56 percent) and collaboration (65 percent) as the biggest areas of concern.

The latest figures from the Office of National statistics (ONS) have confirmed annual consumer price inflation reached 9.1 percent (June 2022). Vistage reports that more than a third (40 percent) expect their firm’s total fixed investment expenditures to increase during the next 12 months. Respondents attribute increasing costs to a number of variable factors including:

• Increased wages and compensation (86 percent)
• Increased energy prices (77 percent)
• Increased prices from vendors (70 percent)
• Higher costs for raw materials and other inputs (60 percent)
• Change in buyer behaviours (45 percent)

As a result, 76 percent of business leaders anticipate the price of their product and / or service to increase in the near future.