What can small businesses do to retain employees?
- Why preserving employees is so important
- 7 ways for SMBs to improve employee retention
- Happy employees make a successful business
The U.S. job market is continuing to tighten, which affects all businesses, especially small and medium-sized businesses (SMBs). An October report by the National Federation of Independent Business suggests that 43% of SMBs have job openings they are currently unable to fill.
And, even if they could fill these positions, employee turnover involves added costs and drops in productivity. This can be extremely damaging to small businesses that are always more vulnerable to cash flow challenges.
That makes it even more crucial for SMBs to retain the good employees they already have. As a small business, you can’t always offer the big salaries and generous perks large companies can bestow on their employees. But, there are other strategies you can adopt to keep your workforce happy and in place.
Why preserving employees is so important
Building a successful team that can tackle the day-to-day of the business while helping it grow, can be a long process that takes up a lot of time. For smaller businesses with only a handful of workers, every single person can be invaluable.
Retaining your existing employees has multiple benefits to your business including:
- Saving money on hiring and training new people. According to expert estimates, the cost of replacing an employee can range from 50% to 200% of their annual salary. And that’s without taking into account potentially lost profit from botched sales or errors.
- Higher productivity. It can take a new employee at least one or two months to learn the ropes and be able to operate efficiently and independently. During this time, you can expect a much slower delivery rate, fewer sales, and more frequent mistakes that need to be corrected.
- Boosted morale. When employees see their colleagues staying on for years and moving up in the company they understand they can have a future there too. High motivation means employees who are working harder and have the company’s best interest at heart.
- Better customer relationships. Customers like stability and seeing familiar faces when they enter your establishment goes a long way in their willingness to trust and do business with you.
- Building a friendly company culture. We spend about half our waking hours at work, so the connections we form there can be extremely meaningful. If people know they’re going to be hanging out with their friends all day, it makes coming to work more appealing. But if their friends are leaving, they are more likely to follow suit.
7 ways for SMBs to improve employee retention
No matter what you do, some employees are going to leave. Whether they’re moving to a different town, looking for a fresh start, or just don’t feel like they fit in, it’s bound to happen occasionally. That’s okay, but as a business owner, it’s your responsibility to do whatever you can to keep them.
While you can’t pay the highest salaries on the market, SMBs can offer their employees a personal connection and sense of fulfillment that are often missing in larger companies.
Here are seven things you can do to win employee loyalty without reaching too deep into your pockets.
Focus on well-being
Whether it’s an office, a storage facility, or a storefront, you should invest some money and thought into making the workplace as pleasant as possible.
Try these options to build a workplace employees want to come back to:
- Offer good coffee, tea, and some basic refreshments. These don’t cost much and make employees feel welcome and appreciated. Having these things at the office means fewer runs to the store or local cafe, which also leads to better productivity.
- Keep the place well-lit. Insufficient lighting has been linked to strained eyes, stress, accidents, and depression. If you have large windows, natural light works best to improve health and is also more environmentally friendly. If that’s not an option, artificial lighting can also successfully transform a work space from dark and gloomy to warm and homey.
- Decorate. Put some thought into the decor and your choice of furniture. While functionality and price tags are important, your employees’ work areas should also be both visually appealing and comfortable.
- Grow a few plants. Plants are not just beautiful. According to research, they can also improve the air quality in your facilities, reduce anxiety, and sharpen your team’s focus. If you have enough natural light, also consider growing herbs like mint or lavender that employees can use in tea and other beverages.
Encourage professional development
Everyone wants to fulfill their potential and evolve professionally. If your employees feel there’s nowhere to grow within your company, they’ll seek opportunities elsewhere.
Expanding your employees’ responsibilities and trusting them to do a good job helps boost their confidence and sense of pride in the work they’re doing. It can also help you delegate and manage your business more efficiently in the process.
If you have the time, personally mentor team members who show potential so they can take on further responsibilities and learn from an expert.
You can also offer to pay for or at least subsidize online courses or hands-on training that will give them new expertise and advance their careers.
Knowing that they can grow with you and hone their skills will increase your employees’ commitment to the business and their willingness to take on a more significant role.
Create a smooth onboarding process
When you do recruit new employees, make sure you give them enough training and provide all the tools they need to succeed from the beginning.
Assign a team member to mentor them and show them how things work. This person should also be their go-to when they’re facing challenges or have any questions.
Personally follow up with new employees at least once every few weeks to make sure they understand their role and how they’re doing. It’s important that these conversations are open and that they feel free to raise any concerns they may have.
When people know what they’re doing and have a sense of what’s considered success they are more likely to stay on with you long enough to return the investment.
Remember that communication is key
When employees know what’s going on, how the business is doing, and what decisions are being made and why, they’ll feel more committed to the workplace.
Schedule monthly or quarterly company-wide meetings to keep employees informed of important business information. If that’s not feasible, send out an internal newsletter or memo to keep them in the loop.
It’s also a good idea to meet with each of them directly at least several times a year to make sure they feel seen and heard and discuss their future. Encourage them to bring up their own ideas and suggestions and share feedback, whether it’s positive or constructive.
If you have too many employees for one-on-one meetings with you to be feasible, make sure the managers in your company communicate directly with each member of their team.
Share the wealth
When things are going well, offer seasonal bonuses, especially to those employees who excelled and had a larger part in the success.
They don’t have to be huge. Even a small bonus helps create accountability, a sense of pride in one’s achievements, and a connection between the company’s success and the employees’ performance.
Having tangible proof that they’re appreciated at work makes employees more secure in their positions and less likely to look for another job.
Promote a healthy work-life balance
Small businesses can afford to show more flexibility than large corporates. This is a big plus for many employees. If feasible, allow employees to work remotely at least some of the time and be considerate when they need time off to care for other family members.
Encourage sustainable hours and doable workloads and accommodate, as much as possible, employees who need to leave early to pick up a child or attend to other personal commitments.
A balanced life means employees can put in 100% when they’re working and relax and focus on their families when they’re not. This reduces the risk of burnout and adds to their general satisfaction in their work life.
A little flexibility shows you care about your employees’ personal lives and well-being. They’ll reward you by being even more committed to their jobs and the success of the company.
Organize your payroll
While work can (and should) also be fun, no employee can be happy when salaries are late or errors are made affecting their bottom line. Consider digitizing to create a smooth payroll process and utilizing automation so everything goes out on time and there’s more oversight and less chance of error.
While you’re at it, if you also employ 1099 contractors, digitize your accounts payable (AP)Accounts payable (AP)Accounts payable is an accounting term that refers to the outstanding bills or invoices for goods and services already provided to your business but that you haven’t yet paid for. with Melio.
Digitizing payroll and AP means less error-prone manual input of personal and bank information, faster and more convenient payment methods, and a clear record of all your payments.
Happy employees make a successful business
Keeping employees satisfied reduces the need for new hires and improves morale and productivity. By following the tips outlined above, you’ll make your business a place where people feel nurtured and appreciated. This means they’ll be looking forward to building their careers while helping to grow your business.