As many SMEs say “yes” to a return to the office, Stuart Morrison, research manager at the British Chambers of Commerce, examines the data and discusses what it means for productivity and retention.
After years of hybrid working becoming the norm, new research has shown that momentum could be shifting among SMEs.
A survey published last week by the British Chambers of Commerce (BCC), looking primarily at small and medium-sized businesses, found that 41% of firms in the UK have increased their requirement for onsite working over the past year, while 55% reported that they have not increased their in-person requirements.
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The findings suggest that a growing number of businesses are bringing employees back into the office and planning to keep them there.
The data marks a shift in sentiment compared with the early post-pandemic years, when remote and hybrid models became widespread.
Looking ahead, nearly half (48%) of firms say they expect all working days to be in-person within the next 12 months. Just over a year ago, only 27% predicted that would be the case even within five years.
This follows other research from McKinsey and Company showing that the share of employees working mostly in-person doubled from 34% in 2023 to 68% in 2024, while hybrid and remote work slid sharply.
Meanwhile, there have been a number of high-profile names signalling a shift. Firms like Deloitte in the US are even linking office attendance to bonus eligibility, escalating pressure on employees, but also highlighting the growing weight companies place on in-person visibility.
The direction would seem to be clear: businesses are becoming more confident in, or insistent on, physical presence.
One size doesn’t fit all
However, the data is far more nuanced. For example, not every sector is moving at the same pace. The BCC’s survey found that manufacturers (62%) and business-to-consumer (B2C) companies (61%) are the most likely to require full-time on-site attendance in the coming year. In contrast, only 27% of business-to-business (B2B) service firms plan to do the same.
These differences likely reflect operational realities: manufacturers rely on physical production lines, while B2B firms often have more flexibility in how and where work gets done.
Much of the debate around office returns comes down to productivity. Nearly half (49%) of manufacturers say remote or hybrid working reduces productivity, a concern echoed by 41% of businesses overall.
Still, the picture isn’t entirely negative. A quarter (25%) of B2B service firms report that remote working actually improves productivity, compared to just 17% of all firms. It’s a reminder that the effects of hybrid work are far from universal and depend heavily on the nature of the job.
In addition, research in 2024 led by Stanford’s Nicholas Bloom found that hybrid schedules had no negative effect on productivity or promotions, yet substantially improved retention rates.
Retention risks on the rise?
So far, the shift toward the office hasn’t caused a mass exodus, but there are signs of friction. While most businesses (67%) that require onsite working say it hasn’t hurt recruitment or retention, one in ten (9%) relevant firms report that employees have quit because of it.
That’s not a huge number, but it’s a warning signal. As competition for talent remains fierce, even small losses can make a difference – especially for SMEs, which made up 94% of the firms surveyed.
With responses from over 500 businesses surveyed between April and May, the data points to a possible trend, particularly amongst SMEs. UK companies are shifting back toward on-site working. That said, the approach won’t be uniform. Flexibility will remain key, especially in sectors where hybrid models are not only feasible but productive.
Amongst all this, companies will also be thinking about another big change coming down the road. AI has the potential to lead a massive shift in working patterns and productivity, something else for companies to consider when planning ahead.
The broader message is that the tug-of-war between flexibility and physical presence is far from resolved, but the pendulum looks to be swinging back toward the office for many. Organisations that navigate this thoughtfully, aligning policy with role, workforce expectations, and operational needs, will likely fare best.
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