How to Improve Employee Retention in a Small Business

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How To Improve Employee Retention In A Small Business

For a small business, every resource is a critical resource. Learn to retain employees so that your business can get the maximum ROI (return on investment) on each member of staff.

Understanding why employees leave the business

In a small business, every employee counts, and if a valued employee quits, it impacts the operations and sometimes the entire business. An unexpected departure not only leads to loss of revenue but also lowers the morale and productivity of the remaining employees.

It is most likely that the unfinished work of the employee will be left behind and the employer might need to assign this unfinished work to the rest of the employees. This extra workload will be a distraction and cause more sensitive projects to fall through the cracks.

A business needs to hire reliable and motivated employees to build a formidable team. That said, the work is not over even after the employer hires a strong candidate. For a successful business, retaining valuable employees (both new and old) is fundamental.

For a small business, employee turnover can be extremely troublesome, not only is employee loss expensive, but it can also affect the long and short-term business goals. Losing an employee might also put the clients and customers in a strange spot, especially if the employee was their direct contact.

Why do employees leave?

Employee resignation is a messy business, so it is better to avoid it from the start. For employee retention, detailed research needs to be done, and needs to understand why they are leaving the business in the first place.

Unfortunately, there is not a single reason employees decide to go, but some of the common ones are:

  • Relocation
  • Medical reasons
  • Career changes
  • Resigning due to some personal issues.

Under the above conditions, it is common for most employees to leave, however, some employees may choose to leave the business for reasons that can be prevented such as:

  1. Limited career opportunity in Business: Every employee has an aspiration to grow in a business and lack of growth options is one of the top two reasons why employees leave the job. If they see no clear picture in the long run with aspects to their career growth, then the employees will tend to leave.
  2. Feeling Underpaid: Another top reason for an employee to leave is salary/wages. Employees do understand their market value accurately by knowing their peer salaries in other companies. Once they are aware of what other companies are offering, they start to feel that they are underpaid, and this will lead to the resignation of employees.
  3. No Challenging Work: A good employee will not prefer mindless work, they like to be challenged, engaged, and need to feel like they are continuously learning. Lack of goals and innovative ideas can lose an employee’s interest in the job.
  4. Undervalued feeling: Every employee wants recognition for their work done. When a company ignores the employees’ accomplishments, they start seeing value elsewhere such as with a new job.
  5. Business culture no longer fits: This is the most difficult thing to fix. Other reasons centre around an individual but this is a management issue.

Employers need to have a conscious lookout for the tell-tale signs of an employee leaving.

It is important for 3 reasons:

  • It helps the employer to address the problem at an early stage and hopefully can change the employee’s mind.
  • It allows managing the resigning employee’s negativity from affecting the other employees.
  • It allows the employer to have more time to put a recruitment strategy in place.

The key is looking for signs of discontent, working with the employees and approaching them in a timely way to find out what is going on. With that knowledge in hand, you can then offer solutions and hopefully convince the person to stay and continue to be a productive member of the team.

Few points to consider for preventing retention

  1. Talk: If an employer/manager notices any signs that the employee is not happy and is ready to quit like – the employee is disengaged, shows up late, takes calls outside the office or leaves work at unexpected hours (for a job interview) then the employer needs to approach the employee directly. During this conversation you will find out more, for instance –the employee might be dealing with personal issues, they just need to be heard or they do not want to quit, and they just have an issue that can be easily addressed.
  2. Set up a clear expectation for an employee (effective communication): Employees may feel lost and incapable if the employer/manager does not give them a clear picture of the role and responsibility of the job. They need to give them a clear list of expectations about what, how and why they should complete tasks as part of their job.
  3. Improve employee’s recognition and appreciation: Statistics shows that 66% of the employees quit if they feel they are underappreciated. It is particularly important that a small business should consider celebrating the anniversaries and milestones of the employees. In addition to this we need to consider the employees by rewarding them for going above and beyond. This is a beneficial employee retention technique further where appropriate consider giving the employees a tangible award as a sign of appreciation.
  4. Put Career Goal: Most of the employees are interested in advancing at their company, but they also want to grow their skills and level of expertise. One of the best employee retention techniques is developing a channel for career growth and promotion and this practice isn’t the easiest one to do. The employer can give the stronger performers more responsibilities as an avenue to grow their careers. In this way, they will get additional experience, learn new skills, and derive more job satisfaction.
  5. Enhance salary/wages and benefits: Surely a business does not want an employee who is only motivated by money, but an employer should provide their employees with a fair salary that should be commensurate with experience. A regular audit of salaries needs to be conducted by the employer, if the business is under market for the salary, then the business needs to adjust the pay for their employees.

If the business is offering a competitive salary along with fantastic benefits, then ensure to highlight the total cash compensation to the employees. Along with a good salary, benefits packages are another way to retain your good employees.

To conclude, employers should typically prefer to retain a valuable employee than hire someone new, it can be frustrating to lose someone. Employee departures can also be a chance to gain a better understanding of what can be improved in your organisation through feedback that arises from the exit process.

*NETCorp is not an accounting firm, HR specialist, or financial advisors and therefore we encourage you to do your on fact finding research