UK businesses pin hopes on AI and hybrid work to combat low morale and productivity

As the UK government pushes forward with its AI Opportunities Action Plan, British business leaders are increasingly looking towards AI and flexible HR strategies such as hybrid work to tackle low employee morale and dwindling productivity.

Research conducted by Celonis, reveals that a staggering 81% of UK businesses are currently grappling with low employee morale.

The survey of 500 UK business leaders further highlights the detrimental impact of employee stress and burnout, with over a quarter (27%) identifying it as a significant barrier to productivity. The primary cause cited is employees feeling overwhelmed due to insufficient time to manage their workload, an issue many believe AI-powered automation could alleviate.

Looking ahead, business leaders are optimistic about the potential of AI to boost long-term productivity, with 46% identifying the implementation of AI-led technologies as the most promising solution. An even larger majority (54%) believe that government support for technological innovation is crucial for driving overall economic growth.

In the immediate term, companies are turning to HR strategies, with 51% investing in employee upskilling and 46% offering hybrid work arrangements as key tools for retaining valued staff and boosting morale over the next year.

However, the research also exposes a critical challenge: for many, technology itself is contributing to the problem. A significant 46% of senior decision-makers report spending over two hours each week ensuring that their automated processes are functioning correctly. This highlights the need for effective implementation and management of new technologies.

Rupal Karia, UKI & MEA Country Leader at Celonis, emphasizes the importance of context for AI implementation.

“Businesses are facing an uphill struggle to drive growth and regain productivity, thanks to ineffective technology and employees feeling burnt out,” he stated.

“The good news is that leaders can tackle both issues through technological innovations like Process Intelligence and AI which can automate repetitive or mundane tasks and free up employee time to focus on more valuable activities.”

Interestingly, the study identifies Millennial workers (aged 31-40) as the most productive demographic, often demonstrating greater experience and enthusiasm for AI. This suggests that wider and more effective adoption of AI tools could potentially help employees in other age groups match this level of productivity. The findings underscore the urgent need for a strategic and well-informed approach to technological implementation, coupled with supportive HR policies, to overcome the current challenges facing British businesses.

The latest findings build on Celonis research findings published in November, which showed that 87% of businesses feel their productivity is being held back, with most feeling that AI will drive more economic growth than lower taxes or less regulation. See the full Business Productivity Report here.