5 Great Employee Retention Tactics for Small Businesses
Employee turnover is the scourge of small businesses everywhere. Studies have indicated that each employee that leaves their position costs an average 20% of their annual salary to replace. That says nothing of the experience and often irreplaceable knowledge that each departure strips from the business.
It’s a universal problem, as well. ADP reports that 27% of all employees change jobs each year, which means that a constant workforce churn is to some degree just part of the cost of doing business. As a result, small businesses must take steps to keep their turnover rate as low as possible, because even the nationwide average represents a significant portion of operating expenses.
Unlike their larger corporate counterparts, most small business can’t compete based on salaries alone, and many don’t even have formal HR staff to adequately manage the situation. That means that the solution to the problem of high employee turnover for small businesses requires some creativity and flexibility. Here are the five best ways they can tackle the problem.
Professional Development
One of the best ways that small businesses can keep their employees satisfied, and therefore prevent their departure, is to offer opportunities for professional development. Depending on the specific industry, this can include paying for certifications, subsidizing management courses, or creating a mentoring program. These tactics increase the skills of the small business workforce while providing great incentives for employees to stick with the company.
Advancement Opportunities
One of the greatest advantages that small businesses have over larger organizations is that employees often have an easier time working their way upwards within the company. As it turns out, actively seeking to promote employees from within is a great way to retain staff as well. The effect will be organization-wide. Those that are promoted will be less likely to seek other opportunities elsewhere, and the staff as a whole will know that the new position they’re looking for may be right down the hall, rather than with another company.
Creative Benefits
Although small businesses often can’t match the salaries that their employees might find elsewhere, there is one surefire way to overcome that – with great benefits. Surveys have indicated that almost four in five employees would rather have better benefits than a pay raise, so designing an attractive benefits package can do wonders for employee retention. Besides the obvious benefits, like health care coverage and retirement plans, it’s a good idea to consider offering things like flextime, telecommuting, and paid time for volunteering.
Retention Bonuses
Sometimes, the best way for small businesses to tackle employee retention is to create a program to reward long-serving employees. This can be accomplished by creating a bonus system that is attached to length-of-service milestones. Surprisingly, this often costs far less in the long run than dealing with a high turnover rate. This kind of system also has the benefit of total transparency. It’s a way of letting employees know exactly what the company wants, and that they’re willing to pay for it.
Be Ready to Listen
Lastly, the most important thing that small businesses can do to increase employee retention rates is to listen to the employees themselves. This obvious bit of advice is overlooked far more often than you’d think. It’s vital to keep the lines of communication open at all times to gauge the mood of the staff, and that goes double for any that are already leaving. Holding exit interviews with departing employees offers a window into the decision-making process that led to them moving on, and provides valuable clues to guide changes to the way the company operates.
Employing a mixture of creative tactics like the ones mentioned above can help any small business overcome their employee retention challenges and keep them operating at peak efficiency. They also will help to promote a happier, more engaged workforce that will push productivity levels to new heights. It’s a win-win scenario for the business and the employees, any way you slice it.
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