Navigating a
Path Forward
Workforce and Workplace Impact and Plans
The COVID-19 pandemic has disrupted any notion of business as usual. From mid-June to early July 2020, SMB Group fielded our SMBs: Navigating a Path Forward study to better understand how small and medium businesses (SMBs) that have managed to sustain their operations are faring amid continuing uncertainty.
We surveyed decision makers and infuencers in more than 750 North American SMBs (1 to 1,000 employees) and midmarket organizations (1,000 to 2,500 employees). (Note: For brevity, we refer to the entire range of businesses surveyed in this study as “SMBs.”) At the time of the study, respondents were working for companies that were still in business.
In this infographic, we share key highlights about COVID-19’s continuing impact on the SMB workforce as well as workplace planning.
SMBs are struggling with staffing volatility
Since a declaration of emergency for COVID-19 was issued on March 13, 2020 small business (1 to 500 employees) employment has dropped by more than 17%.
Source: SBA, Small Business Employment Plummets
17
%
Have you furloughed, laid off or reduced hours for salaried employees since March 1, 2020?
(Select all that apply.)
14%
12%
9%
25%
7%
9%
41%
Furloughed
Laid off
Plan to lay off
Reduced hours
Plan to reduce hours
Reduced salary/pay
None of these actions
27%
17%
18%
11%
42%
Bring back workers
Hire new workers
Increase hours for employees
Increase pay for employees
None of these actions
Do you plan to bring back workers, add new workers or increase hours for salaried employees in the next six months?
(Select all that apply.)
COVID-19 impact varies signficantly by industry
The larger the SMB in terms of number of employees, the more likely it is to have taken actions to reduce payroll, and the more likely it is to plan to bring workers back.
However, there are significant variations by industry. Industries that have had to shed a lot of jobs—such as hospitality, healthcare/medical/dental, education and nonprofits—are also most likely to plan to increase payroll in the next six months.
Have you furloughed, laid off or reduced hours for salaried employee since March 1, 2020?
Top five industries most likely to have cut payroll
Do you plan to bring back workers, add new workers or increase hours for salaried employees in the next six months?
Top five industries most likely to increase payroll
Hospitality
Manufacturing
Financial
Services/
Banking/
Insurance
Life Sciences
Wholesale/
Distribution
Life
Sciences
Education
Healthcare - Medical & Dental
IT Services
Utilities/
Communications/
Telecom
The churn continues with contractors
SMBs are also dealing with churn among their contractors/1099 workers—albeit somewhat less than with salaried employees. 47% of SMBs have taken actions to reduce contractor contracts, pay or hours. The resulting roller-coasterride presents unprecedented workforce management challenges that many SMBs are ill-equipped to handle.
(Select all that apply.)
16%
28%
9%
53%
Terminated contracts
Reduced hours
Reduced pay
None of these actions
Have you terminated contracts, reduced hours or reduced pay for 1099 workers/contractors since March 1, 2020?
16%
14%
14%
6%
57%
Bring back workers
Hire new workers
Increase hours
Increase pay
None of these actions
(Select all that apply.)
Do you plan to contract with, increase hours
for or increase pay
for 1099 workers/contractors in the next six months?
Uncertainty is the #1 challenge facing SMBs
As a whole, SMBs rank dealing with uncertainty as their top challenge in the current environment.
38%
35%
34%
33%
29%
28%
23%
22%
22%
16%
16%
Dealing with ongoing uncertainty/changing
market conditions
Operating under new social distancing and safety requirements.
Sustaining revenues
Attracting new customers
Supporting employees in new work conditions
Retaining existing customers
Improving cash flow
Pivoting our business to new market conditions
Improving employee productivity
Reopening our business
Obtaining funding to stay in business
Workforce-related challenges loom larger as business size increases
Employee-related issues dominate the list of the top three concerns of medium and midmarket businesses. This is not surprising, as these companies have more employees and more complex staffing decisions to make.
Midmarket business (1,500 to 2,500 employees)
Small business
(1 to 99 employees)
Medium business (100 to 999 employees)
1. Dealing with ongoing uncertainty/
changing market conditions
2. Sustaining revenues
3. Attracting new customers
1. Dealing with ongoing uncertainty/
changing market conditions
2. Sustaining revenues
3. Attracting new customers
1. Operating under new social distancing and safety requirements.
2. Supporting employees in new
work conditions
3. Dealing with ongoing uncertainty/
changing market conditions
Working from home (WFH) is working for most SMBs
Two-thirds of SMBs have instituted WFH programs. 52% said that WFH is having a positive impact on employee productivity, while 31% said the impact is neutral. More than half plan to increase spending in this area.
However, many SMBs are challenged by new security threats posed as company information travels over more home networks and is living on more personal unmanaged devices. It remains to be seen how security, WFH burn-out, juggling childcare and virtual education schedules, and other variables will evolve. But we believe that SMB support for a more flexible, hybrid work environment is here to stay.
67
%
52
%
57
%
Top three security challenges SMBs face in managing a remote workforce:
of SMBs have established (for the first time) or expanded (an existing) WFH program due to the COVID-19 pandemic.
of SMBs said WFH has significantly or somewhat improved employee productivity.
of SMBs plan to increase budgets to equip WFH empoyees over the next 12 months.
Home/public network Wi-Fi security
Employees accessing apps from personal, unmanaged devices
Lack of visibility and control
SMBs plan to invest to better support employees
SMB investment priorities start with customer-facing areas, such as sales and marketing, website and ecommerce, and customer service.
But about 20% of SMBs plan to invest in solutions to support employees, such as remote IT support, HR and talent management, and cloud collaboration solutions, network connectivity and client devices.
Plans to beef up infrastructure are also part of the mix,as SMBs strive to provide employees with secure, higher performance devices and solutions to further address productivity and security challenges.
Sales and marketing
Website and ecommerce
Customer service
Remote IT Support
Human resources and talent management
Cloud collaboration solutions
Financials, accounting and related
Analytics and planning
Network connectivity
Security and identity and access management
Backup and business continuity
Client devices
Server, storage and infrastructure
31%
29%
28%
21%
20%
20%
19%
18%
18%
18%
17%
15%
15%
15%
Over the next 12 months, what are the top three technology areas that your business needs to invest in to recover and prepare for growth?
(Select the top three only.)
Perspective
Most SMBs that have been able to weather the COVID-19 crisis to date have already made significant adjustments to their workforces and workspaces.
From trimming payroll to adding headcount, and from establishing and expanding WFHprograms to reconfiguring physical spaces to conform to social distancing and safety protocols, SMBs have reacted quickly to survive and address the new realities that the pandemic has forced upon all businesses.
No one has a crystal ball to predict how much longer the health crisis will last or when we’ll come out of the economic tailspin. Therefore, SMBs will need to continue to adapt to the ups and downs on a tactical basis.
However, SMBs should also seize the moment to identify potential opportunities to reshape the workforce and workplace for the future. From mitigating location-based work recruitment barriers with WFH programs to upskilling and reskilling employees, now is the time to put technology, data, people and processes to work for the next “normal.”