60% Of UK Businesses Have Seen Revenue Adversely Impacted But Are Optimistic Of A Rebound

How will businesses in the UK fare in the post-COVID-19 landscape? How different will the working world look for professionals up and down the nation?

There has been a lot of coverage about what the ‘new normal’ working world will look like once businesses start returning to their offices and begin to establish a level of stability. Over recent months, we’ve been helping employers and their teams adapt to the constantly-changing work environment through webinars and informational articles on topics such as remote working and conducting yourself during video interviews. 

To provide some real-world insight of what companies perceive their post-COVID-19 working life will look like, we conducted a survey of 256 businesses across the UK and Ireland.

The industries represented by UK respondents were Finance/Banking/Financial Services, Software & IT Services, Business Services, Transportation & Logistics, Health Care, Manufacturing, Legal, Real Estate, Recreation & Travel, Nonprofit, Retail, Media & Communications and Construction.

The impact on businesses in the UK:

Whilst a fortunate, yet relatively slim, 16% of UK businesses surveyed have seen an increase in revenue (0-20% or 20%+ increase), the impact of the crisis has been devastating for most. 60% have seen a reduction in their revenue - Recreation & Travel (which has become largely dormant as an industry), alongside Finance/Banking/Financial Services and Business Services, appear to be the worst hit.

Despite disruption to revenue, clearly most businesses did not have to proactively manage their permanent employees. Whilst any loss of employment is unfortunate, it seems quite surprising that only 21% of UK businesses surveyed had to reduce their permanent headcount - seen across Finance/Banking/Financial Services, Business Services, Transportation & Logistics, Real Estate and Legal. A small but encouraging 10% have actually increased permanent headcount.

Over half (54%) of UK businesses listed how they haven’t had to manage their contractor headcount in any way. If headcount had to be reduced, logically you would think that temporary or contract employees would be the first to go - 25% did reduce their temporary/contract headcount by either 0-20%, 20-40% or 40%+. But this said, as organisations looked to meet requirements, flexible resource solutions were required and 11% have actually increased their contract headcount - the industry, unsurprisingly, which had the most significant increase in contractors was Health Care.

The most frequent impact outlined by businesses was that they had to adjust for their teams to work from home. Hiring freeze and reduced salaries were the next most common responses, suggesting that organisations were taking active, company wide steps to ensure they didn’t have to lay-off employees. Making use of the government’s furlough scheme is another widespread way companies have been keeping costs down to ensure they can ride-out the testing economic times.

When asked to describe their current hiring situation, the most common response was ‘Our hiring has been paused or reduced but we expect it to resume once the crisis abates’ - this shows there is light at the end of the tunnel in terms of the hiring market.

The predictions of a rebound:

We asked how soon (if at all) companies feel they will be able to recover to pre-crisis levels. It’s concerning but not surprising given the widespread influence of the pandemic that almost half (47%) of all UK businesses surveyed don’t think they will recover to pre-crisis levels any time before 2021, or potentially even beyond that. A slim percentage (10%) of businesses are confident of returning to pre-crisis levels before the end of 2020.

As we all adapted to working from home, we quickly became used to communicating via video conferencing - searches for online collaboration technology and how to use them skyrocketed in March. Interviews and hiring processes also followed suit and soon moved to be ‘virtual’. Despite reliance on these tools over recent months, 53% either Strongly Agree or Agree with the statement and are eager to get back to previous interview methods.

Despite the fact that a sizeable number of businesses are keen to get back to using more conventional interview methods, there is no question that virtual interviews are likely to become far more prevalent now that it is a fully tried and tested method. 80% either Strongly Agree or Agree that video interviewing will play a bigger role in recruitment processes of the future.

Of those who are keen to get back to conventional face-to-face interviewing, a significant proportion then went on to Agree or Strongly Agree that video interviewing will become more prominent. Just because it is their preference to interview in person, that does not mean virtual interviews won’t be used - there are likely to be long-term adjustments to how we all live and work so businesses will have to be flexible and make use of the technology available if an interviewee isn’t comfortable visiting the office.

The ability to work from home has historically been considered a benefit - but this changed in an instant. With many employers realising that the majority of their teams can, in fact, work effectively and efficiently despite being away from the office, compounded by the attraction of potential cost-savings from reducing office space, it’s not surprising that an overwhelming majority (90%) of businesses in the UK Agree or Strongly Agree that companies ‘won’t ever return to the same levels of office-based workers as before’.

When working from home wasn’t forced upon us, many professionals saw it as the ideal opportunity to have a better work-life balance. But with lockdown restricting movement and schools temporarily shut leaving children stranded at home, we wondered whether the view of home working may have changed for the worse. That doesn’t seem to be the case: Just over a quarter either Strongly Agree or Agree (27%) with the statement and are raring to return to the office environment, whilst a greater proportion (55%) seem content with their new remote working arrangements - is widespread working from home the future for UK businesses?

Will the requirements of those companies looking to hire be more ‘flexible’? Whilst there has been a fair amount of coverage around how temporary workers or contractors became the chosen resource in the midst of the outbreak, most UK businesses (82%) think the post-crisis hiring mix will return to the usual combination of permanent and contract - the postponed implementation date of IR35 potentially playing a role in reducing the allure of hiring contractors.

Conclusion…

It is clear that the COVID-19 crisis has had negative effects on almost every industry in the UK, and the recruitment market has suffered as a result. The road to recovery is going to be long and difficult for many companies, but there are positives that can be taken away from the crisis - our ability to adapt to new working patterns has been hugely impressive, whilst the technological tools available which enable us to work in these new ways have truly proved their worth.

It can be difficult to look beyond something this historic when you are living and working in the midst of it. For sure, we will look back on the COVID-19 pandemic of 2020 as a tragic global event, but it is likely that we will also look back on it as an event which shaped how businesses function and the way we all work forever.

If you would like assistance with your recovery hiring needs, or you would just like to discuss what you think the working world will look like once we safely return to work, do not hesitate to get in touch. 

How does the picture differ for businesses in Ireland? 

• More reduction in permanent headcount in Ireland but slightly less reduction in contract headcount
• Workplace rotation has been much more common in Ireland but fewer instances of hiring freezes have been seen
• Greater portion of businesses in Ireland reported a reduction in revenue
• Irish businesses are slightly more enthusiastic about getting back to interviewing people in person but agree virtual interviews will become more prevalent in the future
• A greater percentage of Irish businesses believe office-based working will return to pre-crisis levels and are eager to get back to their previous routines
• Hiring has been worse hit in Ireland with a greater portion of businesses citing they don’t expect their hiring to resume even once the crisis subsides
• Irish businesses expect more temporary/contract hiring once the crisis abates than UK businesses anticipate (perhaps due to IR35 considerations for hiring organisations in the UK)
• There is greater confidence from Irish companies that they will recover to pre-crisis levels by the end of 2020

You can read the full analysis of responses from businesses based in Ireland here.