Employers are waking up to the important role that an engaged workforce can have on company performance, new research from Startups shows, in findings that could finally signal a detente in the long-running boss versus worker cold war.
At the end of last year, we asked 531 SMEs to tell us what they thought had been the biggest contributors to their success in the last 12 months. 52% of business leaders named a talented and motivated workforce as a key factor.
The findings represent a 12% uplift on the same period last year, when just four in ten business leaders said that their workforce had played a role in business growth. The shift could mark the start of a new push in the war for talent.
Despite a slowdown in hiring last year, 2025 is poised for a resurgence in competition for hiring right. Almost nine in ten firms also told us they also plan to grow their teams this year.
Why have workers and bosses been drifting apart?
One cause for the boss-employee divide has been the poor economy. Last year, many cash-strapped firms ditched employee benefits to keep costs down and limited rewards and bonus schemes, leaving staff with positive performance reviews feeling underappreciated.
Research by jobs site CV-Library found that 47% of companies skipped the Christmas party in 2024 in order to save money. Of the firms that did go ahead with a festive do, one in four frugal bosses made their staff cough up for the Christmas celebrations.
Another factor has been the changing world of work. After years of embracing flexible working, many large employers have rolled out return to office (RTO) mandates to force remote or hybrid staff back to the workplace, despite employee protests.
The rapid rollout of AI in UK workplaces has also raised concerns about job displacement among workers. Large corporations have added to these fears. In 2023, IBM’s CEO last year publicly declared that the firm would stop hiring for roles he felt AI could do better.
Combined, these challenges have created a management-worker rift. In 2023, consultancy firm Gallup found that the UK had one of the least engaged workforces in the world.
Now though, as the Startups data shows that more leaders are linking employee talent and happiness to the bottom line, we will likely see a surge in initiatives designed to re-energise and re-engage the workforce this year.
Hiring boom ahead
Reflecting the growing appreciation for a talented and motivated workforce, the Startups data also reveals that a significant number of organisations are planning to increase their headcount this year.
The research suggests that many companies will put an end to the hiring pause they instilled last year. Overall, 88% of businesses told us they would recruit new staff members in 2025, with the majority (30%) planning to take on between one and five new employees.
Startups are also still prioritising team size growth. 75% of microbusinesses (firms with fewer than 10 employees) told us they planned to increase their workforce this year by up to 50%.
In fact, a significant percentage of new businesses reported highly ambitious recruitment goals. One in three business leaders told us they were aiming to double their workforce in the next 12 months, compared to just 22% in 2023.
Will you be taking on new hires in 2025? Get ready for the interviews with our guide on how to build a smooth and compliant recruitment process.
