Creating and developing a small business employee retention strategy is as important as developing your sales, marketing, compensation, and financial planning programs. In the dicey waters that face every small business, a consistent employee base can be the difference between success and failure and stagnation and growth.
Whether your business is established or a startup, commit to revisiting your employee retention strategy at least once per year. And, if a flood of employee turnover occurs, don’t delay! Get to the bottom of the turnover events and remedy challenges immediately.
Never allow yourself to be complacent about employee retention. According to the Society for Human Resource Management (SHRM), the direct cost to replace an employee can reach up to 50%-60% of an employee’s annual salary. An analysis of economic studies by the Center for American Progress estimates the true replacement cost of executives at about twice the individual’s annual salary. These are big numbers that include hard costs of training and related replacement initiatives, including downtime.
Retaining employees is challenging. In fact, a recent survey reports that 82% of surveyed employees updated their resumes in the six months prior to the survey. A stunning 59% of interviewed employees are looking for work all the time.
These statistics make it imperative that small businesses not only implement comprehensive retention tactics but that the program’s success is monitored closely at least once a month. Successful small businesses invest in developing good, reliable, and knowledgeable employees that actually drive the business model.
No matter how much you invest in employee development, there is the chance that you will create an individual who will take their new skills elsewhere. The solution is a multi-tiered employee retention program that includes the following initiatives.
8 steps to small business employee retention
Step 1: good hiring process
At the core of every employee retention program, there is a good hiring process. If your small business is serious about retention, your application process must be thorough and include background information that underscores credibility and loyalty.
Only hire full-time workers who want to work at your business and who will be compatible with the work ethic you are attempting to create. That means having a written employee manual and making sure the applicant reads it thoroughly before they are hired.
This preliminary step can go a long way in ensuring employee retention. If your employee manual does not exist or is outdated, you are creating a formula for disgruntlement.
Step 2: good communication
Employee retention is about communication as much as anything else. Employees want to know management is paying attention. Pivotal gateways to employee retention include meaningful employee reviews with thorough evaluations, employee meetings where suggestions about improvements are welcomed, and open communication lines between management and workers.
Step 3: employee engagement
Systematic engagement of employees makes their work more than a job. Engagement lets employees know they are part of the team, part of the mission, and in the competition. To the right employee, this can make the difference between working at your small business or another.
Make sure employees are properly trained and that they understand their responsibilities. Let them see that you prefer to promote from within the business. When your business faces deadlines and challenges, be upfront with your workers. At your staff meetings, emphasize your vision and clarify your company’s place in the market.
Step 4: workplace flexibility
Because no person’s life is a straight line, try to offer flexible solutions. Telecommuting is one example. If work can be performed at home or in a remote location, telecommuting can increase productivity, reduce overhead, and provide an improved work-life balance. Flexible work programs show management’s concerns for employees’ well-being and are not easily forgotten by the beneficiary.
Step 5: employee development
Ongoing employee development shows your workers that they are not in a stagnant environment.
Encourage continuing education by reimbursing employees for the tuition of relevant courses they complete.
Stay atop industry trends and deploy the latest training techniques. Make it a priority never to lose a key employee by continuously encouraging them to succeed at what they do and showing them where their career can take them. Make sure supervisors and managers are good and patient coaches who reflect your upbeat, “sky is the limit” mindset.
Step 6: thoughtful employee compensation
Put thoughtful planning into your employee compensation program. Offer health benefits, life insurance, stock options, performance bonuses, and IRA contribution programs. To the right worker, these benefits are as important as a raise. Your retention capabilities are only as effective as the overall employee package, which should be detailed in your handbook.
Step 7: offer perks
Perks matter! Instill contests, casual Friday, and periodic free bagel perks that encourage gratitude and friendly interaction. Your small business employee retention potential climbs when your workers know each other and like each other. Offer bonus pay, have employee get-togethers, and always know and use every employee’s name.
Step 8: scale your employee retention plan
Acknowledge your employee retention strategies as your small business grows. The more employees you add, the more time employee retention will take. As you close in on 100 workers, be prepared to hire a full-time human resource professional who can lift these responsibilities from your shoulders.
Avoid high turnover rates
Remember, a recent study has shown that 59% of interviewed workers say they are always looking for another job. Your employee retention best practices should be designed to reduce that figure in your business. Stay the course through engagement, interaction, and incentivizing your employment opportunities even when you have 500 employees and have surpassed your goals.