Media releasePublished on 20 July 2022

Talent shortage in UK impacting mental health of small business employers

Xero reveals true scale of talent shortages and increasing wage demands on small firms

London — 20 July, 2022 — Managing a workforce in the current environment is taking its toll on small business employers, with half (49%) admitting it's negatively impacting their mental health. The new findings in the Changing world of work report from Xero, the global small business platform, shine a light on workforce challenges and how technology is playing an important role in supporting employers to navigate them.

The report was released today at Xerocon London, where Xero shared its commitment to employee management and showcased for the first time its workforce management suite including Xero Payroll, Xero Me (employee app) and Xero Expenses. Xero also unveiled new updates to its powerful Xero Payroll integration with Planday, a new acquisition to Xero to help small businesses feel more in control and automating tasks such as payroll, time and attendance management.

Anna Curzon, Chief Product Officer at Xero, said: “We know that technology is critical to easing the stress business owners face in managing employees. As we enhance our connected suite of tools so small business owners can access all the employee information they need in one place, we’re helping to tackle workforce challenges identified in the report through the automation of laborious admin tasks which help them stay compliant and prevent costly errors. Additionally, we want to make it an empowering and positive experience for employees so Xero and Planday customers have another tool to win the war on talent.”

Navigating an evolving job market is a top priority for employers

The current talent shortage is a major concern, and over the last 12 months, 23 percent of bosses were unable to find enough staff to roster at short notice. In fact, 19 percent of them even had to reduce opening hours due to staff shortages. This is driving demand for workers, with the average small business employer planning to hire six additional people in the next year.

At the same time, one in four (23%) employees plan to change jobs within 12 months. Fair compensation is the main driver, with 27 percent of employees leaving their previous workplaces due to low pay and 77 percent ranking pay and bonuses as a top factor when considering a new role.

Alex von Schirmeister, EMEA Managing Director, said: “Small business employers play a vital role in the UK economy and they are in the midst of one of the biggest workplace disruptions we’ve experienced in recent history. Adding to that, money matters for small business employees, amid the rising cost of living. This could put more financial strain on small businesses, with one quarter reporting that candidates’ salary expectations are too high and they’re unable to afford perks offered by other businesses.

“Employers will need to find other ways to compete for talent such as improving the employee experience. This provides an opportunity to use the power of technology to support employers, and in doing so, play a role in stabilising the economy and contributing to GDP,” von Schirmeister said.

Workplace regulatory changes causing stress among employers

Managing a workforce in an uncertain and ever-changing business environment is also taking its toll on employers, with more than half (56%) feeling that managing staff in the current regulatory environment is stressful and confusing. Almost half (49%) felt that managing employee processes and compliance such as payroll, expenses, time and attendance is taking its toll on their mental health.

To address future regulatory changes, such as the recent changes to increase the national insurance threshold in July 2022, one third (33%) of employers are planning to introduce technology over the next 12 months. More than half (58%) of small business employers agreed that technology that could help them budget and forecast payroll costs would make them less stressed about their business.

More than half of employers report that software is helping with various aspects of workforce management, including eliminating manual paperwork (47%), speeding up processes (44%) and making processes more efficient (43%). One quarter also said that software reduces their stress levels. However, many employers still use spreadsheets, even pen and paper, to manage some critical tasks.

Supporting retention by empowering employees with self-service tools and technology

When it comes to completing admin processes and tasks at work, slow and outdated technology (21%) is the number one cause of frustration among employees. This may be due in part to not feeling empowered in the workplace, with only 29 percent of employees able to submit and manage their own leave requests, and only 22 percent having the ability to swap their own shifts with colleagues without notifying managers.

“When employees aren’t empowered in the workplace, it can have a direct impact on their productivity, engagement and even mental health,” Curzon said. “Thankfully, two thirds of bosses realise the benefits of enabling staff to make changes to the rota or submit expenses themselves, through the use of self-service tools and technology, which will help lead to more thriving workplaces.”

Xerocon London is one of the world’s premier events for cloud accounting leaders. Taking a fresh perspective, more than 2,000 accounting and bookkeeping partners and the Xero app community have gathered over two days to hear the latest from industry leaders. They’ll also gain expert insight into the newest Xero tools and features to help save time, grow their business and have a greater impact on their clients’ success.


Media Contact

Clemmy Perlmutter | +44 (07779) 982378 |

About Xero

Xero is a global small business platform with 3.3 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also provides access to financial services, and an ecosystem of more than 1,000 connected apps and more than 300 connections to banks and other financial institutions. Through Xero’s open platform, small businesses can connect to a range of solutions that help them run their business and manage their finances. For three consecutive years (2020-2022) Xero was included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero has been named as a FIFA Women’s Football partner under FIFA’s new commercial structure.

About Planday from Xero

Planday from Xero is a workforce management platform with more than 400,000 employee users across Europe and the UK that makes it easier for managers and hourly workers to communicate, collaborate, and get work done. Planday’s vision is to power the global workforce marketplace by connecting people to relevant and meaningful work, and to help businesses build an engaged, flexible workforce. Planday was founded in 2004 and is headquartered in Copenhagen, Denmark and currently operates in Denmark, Norway, Sweden, the UK, Germany, Australia and the United States. Planday was acquired by Xero in March 2021.

About the Changing World of Work Report

The information and commentary in this report is based on the responses from a 37-question online survey completed by 344 small business employers and 551 small business employees in the UK. For this report, employers are defined as owners and managers of small businesses with up to 50 employees, while employees are hourly paid casual employees in businesses of the same size. Responses were collected between 2 March 2022 and 4 April 2022. The surveys were distributed throughout the UK, including both capital city and non-capital city areas. After interviewing, data was weighted to the latest population estimates sourced from the Office of National Statistics, Stats, and NSIRA.

For all media enquiries, please contact the Xero media team.

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