OK, firstly, lets get the doom and gloom out of the way and then I’ll put forward some solutions.

Following the Budget my crystal ball (which is pattern recognition and 20 years of dealing with business owners in the real world) tells me we’re about to see:

Rising unemployment, more benefits dependency, more insolvency, fewer job vacancies and slower economic growth, pensioners will be dusting off their CVs to top up their income, entrepreneurs are quietly packing their bags for sunnier shores and corporates are thinking twice before investing here.

When you increase National Insurance and wage costs at the same time, you don’t get magical growth, you get businesses bracing for impact. As we all know, SMEs will cut risk before they chase opportunity – they always do. If business owners can’t predict their costs next quarter, they sure as hell aren’t going to get hiring.

The people who predicted sunshine and rainbows from this budget probably don’t have to make payroll on Monday!

So, now we have that on the table and we’re all bracing ourselves for what could be some pretty tough times ahead, I’d like to look at some of the important trends I’m seeing that may influence our planning and strategy for 2026 and beyond.

Old school management crisis

Day to day, your people experience the business through their manager. If that person doesn’t “get it”, the wheels fall off fast. I’ve already seen companies remove managers who can’t meet the modern standard. Not in a dramatic way, just a quiet “this isn’t working” and I think we’ll see more of that. Strong management is no longer optional. Weak management is expensive.

The “return to office” is still getting push back

I’m seeing more pressure from leaders to get people back in the office but unless the reason is properly explained, all it creates is resentment and higher staff turnover.

Hybrid isn’t going anywhere but it is becoming more intentional. The businesses that will get it right are the ones that are clear on why certain tasks or conversations are better in person. Everyone else will just stir up conflict for no real gain.

DEI tone is changing

DEI fatigue is definitely real – budgets are tightening, people are sceptical and a lot of the more performative stuff is falling out of favour. Instead, respect, fairness and consistency are becoming non-negotiable, so the shift isn’t away from inclusion, it’s just shifting away from slogans and towards behaviours that actually mean something.

Menopause and midlife health will keep rising in importance

People know their rights, and they’re prepared to act on them. We’ll see more claims and more pushback from employees who feel unsupported.

The companies who stay ahead of this will save themselves a lot of headaches.

Tribunal claims are rising and the tone is getting nastier

People are stressed, money is tight and jobs are harder to come by. This is only going to get worse. That combination creates more disputes and more litigation. I’m seeing far more aggressive behaviour from employees who wouldn’t have behaved that way three years ago.

If your sickness management, performance conversations or workload expectations are inconsistent, that’s where you’ll feel the friction most.

Leadership pressure is climbing

The world of work has changed faster than leadership capability. Managers are expected to understand mental health, DEI, employment law, hybrid working, performance, conflict management and culture. A lot of them are simply overwhelmed, understandably but when leadership confidence drops, culture follows. Accidental managers who are running a team AND doing their day job are not going to be effective in the face of the pressures we’re going to be facing over the next few years. We have to train and support our managers better and I’m here for that.

HR’s value will depend on commercial awareness

This is the biggest change I’m seeing and it’s one I’ll keep shouting about because it matters – the HR professionals who can talk risk, revenue and strategy will thrive. Anyone clinging to old school “best practice templates” without understanding the commercial reality will struggle.

There is no space in a modern business for HR that creates obstacles instead of solutions.

There is no space for HR that doesn’t understand margins, growth plans or commercial pressure.

So, if you’re a business owner relying on HR that’s stuck in 2014, still quoting ACAS like a bible and applying rules without helping you assess the risk first, you already have a problem brewing for 2026. Good HR should be your commercial copilot, not a blocker. If they’re not helping you protect culture, reduce risk, develop leaders and move the business forward, it’s time to review your service provision.

Solutions for 2026 and beyond

I see two strategies emerging for SMEs to consider.

Go lean and outsource

Keep only your core value generating staff. Everyone else? Make redundancies or don’t re-recruit when natural attrition happens. Move your non-core workload to UK or overseas providers. That way you have no PAYE, no employer NIC, no pension, no 28+ days holidays to pay – you just pay for the output and get on with it.

Forget recruiting young people, juniors, grads because the expense of paying them and adding on training time means they’re no longer the low risk headcount they used to be.

Recruit older experienced pros instead because they don’t need hand holding and are frankly grateful someone is hiring.

Use AI to fill the gaps – there’ll be no wages, no Monday meltdowns, no loo breaks, no lunch and no sick notes! It does the admin whilst your people deliver the clever bits.

This is your low risk, high resilience strategy to wait it out until things ease and get better. You can flex more easily by outsourcing and work with your budget as it shifts.

Get intentional with productivity

Those businesses not planning to downsize next year will only stay resilient if they get crystal clear about how they manage and measure productivity and profitability. This isn’t about micromanaging the life out of people, and it’s not about tracking keystrokes or obsessing over who’s online. It’s about clarity – proper role definitions, measurable outcomes, realistic workload expectations and targets that actually mean something.

When everyone knows what good looks like and what they’re accountable for, performance becomes easier to manage and profits become easier to protect.

If you want to ride out rising costs and whatever restrictive legislation rolls in next, you need a solid people framework. Clear expectations, consistent management and simple measures that keep your business on track. In my opinion that’s what builds resilience and reduces risk, especially when the economic landscape is this uncertain.

Final thoughts

For me, the message is simple – you can’t deliver next year’s goals with this year’s behaviours.

Businesses that will do well next year are the ones who:

• Review their strategy and either go lean and outsource or get a robust people framework in place
• Stop firefighting and build proper structure
• Get consistent in how they lead and manage
• Fix issues instead of avoiding them
• Align expectations with productivity
• Invest in their managers and leaders, upskilling them in HR and people skills etc.

It’s about getting the basics right so people can actually perform.

This is the space where I do a lot of work behind the scenes with CEOs; tightening up culture, leadership, expectations and accountability so they’ve got the capacity to survive the next few years. Ok so it’s not sexy work, but it’s genuinely transformative!

Before you plan 2026, pressure test your culture

If you want to know where your organisation is strong, where it’s wobbling and where you’re quietly leaking performance or profit, take 5 minutes to benchmark it properly.

👉 https://workplace-culture.scoreapp.com

It’ll give you a personalised breakdown and some straightforward insight into what needs strengthening before you press ahead with your 2026 plan.

Employment Rights Bill update: what’s actually changed?

In case you missed the announcement… the Government has already started watering down parts of the Employment Rights Bill before it’s even properly landed.

The big one everyone was panicking about? Day one rights to unfair dismissal.

That has now been revised so instead of day one, the qualifying period will move to 6 months. Here’s what it means in real terms for SMEs:

Your probation periods now matter more than ever

A 6 month qualifying period puts huge weight on how you manage probation.
You will need:

• clear expectations
• documented feedback
• evidence of support or performance issues
• the ability to make a clean decision before month six

You’ll need stronger recruitment decisions

A rushed hire becomes a much bigger risk. Businesses will need to slow down a touch and avoid the classic “hire fast, regret faster” pattern. In my opinion this will expose managers who rely on gut feel and charm rather than proper selection. I would highly recommend considering using psychometric testing, especially for critical hires. This is something I can discuss with you.

Managing poor performance early becomes non-negotiable

No more ignoring red flags in the first few months. No more “let’s give them another chance”.

If the person isn’t meeting expectations, you must act promptly and document everything.

For most SMEs this doesn’t change your world overnight. It just means you need to get your house in order. Which, frankly, you should be doing anyway!