Despite the "extreme challenge" of COVID-19's impact, 47% of small and midsize businesses polled by Paycor are "somewhat confident" the US economy will bounce back.
When referencing the US economy, it's common to make attributions to corporate America and big business, but small and midsize businesses (SMBs) actually make up 99.8% of all US business, according to a 2020 report from SMB Group. In other words, despite comprising only 0.2% of US business, that sector makes the most noise. But it's the SMBs that are, according to the press release for a new report from Paycor, a human capital management company (HCM), "the engine of the US economy and have felt the impact of the coronavirus."
According to Paycor's research, 33% of SMB leaders found the first wave of the pandemic "extremely challenging," but 47% are "somewhat confident" the US economy will bounce back—so much so, that 54% of SMBs indicated they plan to hire in 2020.
Referencing the 33% of respondents who found tackling the pandemic "extremely challenging," Karen Crone, chief human resources officer at Paycor, said, "71% of business leaders said the pandemic was 'challenging' and that it disrupted their business."
COVID-19 quickly set the enterprise to innovate, as its impact made many businesses not only shift in-office staff to remote, but taxed the responsibilities and stress of its IT staff.
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The majority of SMBs either furloughed or laid off workers, yet those polled insist team morale only took "a moderate hit." On a scale of 1 to 5, with 1 being no change, here are the responses to how COVID-19 affected team morale:
- (no change) 6%
- (big impact) 5%
To improve team morale, 45% of respondents said there was more frequent communication, 35% said there was more transparent communication, 10% gave financial incentives for performance, and 7% offered other rewards.
Detailing COVID-19's impact on small business
Nearly six months later, nearly everyone works differently, but many unknowns prevail, including how to budget and how to move forward. Paycor surveyed nearly 600 human resources (HR) and finance leaders to "understand exactly how the coronavirus impacted SMBs and its workforce." There was a disruption in productivity said respondents, with the following results on this scale:
- (no change): 27%
- (big impact) 2%
Most SMBs survived the early stages of the pandemic, received government funding, and are cautiously optimistic about the future, and nearly half believe that not only will the economy bounce back, but plan on new hires this year.
"Nearly half quickly transitioned to a work from home environment," Crone said. Respondents (54%) said their staff is split between remote and in-house workers, while 11% said they all work from home, and 35% said they traditionally came into the office.
The SMB new normal
Contrary to other reports, very few SMBs believe working from home will become the new normal, even though 47% moved to remote at the start of the pandemic, 6% temporarily closed, 1% "always worked remotely," 38% classified as an essential business so they stayed open and 9% chose "other."
When things level out, responses were varied: Only 3% polled said remote is the new normal, 40% said they would return to the office, 48% said there will be a hybrid, and 9% weren't sure yet.
The game-changing events of the last few months include government funding, furloughs and layoffs, working remotely and addressing team morale and the now-remote office culture. The SMB workforce had to make adjustments: 6% had reduced benefits, 30% furloughed, 27% laid employees off, 20% reduced salaries, and 32% chose "other."
Most respondents (87%) said their business attempted to take advantage of the government tax or loan program (13% said they did not); 96% said they did receive the requested funds and only 4% said they did not. Those who replied yes received funds from:
- PPP: 67.6%
- CARES Tax Credit: 33.2%
- Other: 4.4%
- EIDL: 3.8%
SMBs (45%) predict the cost of benefits will rise, but are unsure if they will change their current benefits' plans (22% predicted no increase and 33% were unsure).
Paycor's top 7 benefit changes SMBs are considering
- Enhanced access to telehealth
- Waived or reduced payments for COVID-19 testing
- Enhanced leave/paid time-off benefits
- Enhanced wellbeing benefits
- Enhanced healthcare benefits
- Decreasing benefits as a cost-containment strategy
- Expanded reimbursements for over-the-counter medications
The future for SMBs
In addition to the 47% who were "somewhat confident" the US economy will bounce back this year, 14% were very confident, 30% were not confident, and 8% said they had "no idea."
But 54% said they plan to hire full-time employees, 11% said they'll hire part-time people, 35% said they'll hire both, and 35% said they will not be hiring in 2020. A majority (78%) of SMBs expect a less than 10% growth of their workforce, 16% said 11%-20% growth, 3% said 20%-30% growth, and only 1% said 40% or more growth.
Crone said: "Despite these headwinds, we were surprised and encouraged to find that more than half of business leaders plan on hiring before the end of the year. That reveals a fundamental confidence in the short-term future; it's a wonderful piece of good news in a difficult time."
Those surveyed were primarily HR directors and CFOs and represented companies of the following sizes:
- 50-99 people: 36%
- 100-249 people: 44.1%
- 250-499 people: 14.1%
- 500-999 people: 4.8%
- 1,000 + people: 1%
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