Employee churn is an increasing problem for businesses. Over the last few years, companies have faced a mass exodus, with more than 42 million employees leaving their jobs in 2021, according to the U.S. Bureau of Labor Statistics.
This trend is especially detrimental to growing businesses. It takes time, money, and hard work to recruit the right talent for your business. And in the early stages of growth, it is vital to take steps to ensure that employees are in it for the long haul.
Why Are Employees Leaving?
To create a successful employee retention strategy, it’s important to understand why workers leave.
Exit interviews provide crucial insights about your company and help you identify blind spots that make employees want to leave. Some common reasons workers cite when they leave their job include:
- Feeling unsupported or overwhelmed
- Inadequate salary or benefits
- Feeling unrecognized
- Better opportunities at other organizations
- Boredom or desire for change
- Concerns about the company’s future
- Unhappiness with management
If you want to know how to reduce turnover, you need first to identify the areas your company lacks and target those with your best employee retention ideas.
What Are Employee Retention Strategies?
Employee retention strategies, simply put, are the ways companies keep their talent. Of course, there will always be some employees who leave but minimizing it ensures your business is as effective as possible.
At the heart of successful retention strategies are worker engagement and job satisfaction. By targeting ways to keep workers enthusiastic and invested in their roles, leaders will end up with employees who want to stay.
How to Retain Employees in Small Business
There are various ways that employers encourage their workers to stay with their companies. Offering above market pay is one, while healthcare plans, stock options, and bonuses are another common strategy. However, these are often not options for small companies with limited budgets.
Thankfully, there are other more affordable options that smaller businesses use to help their team feel engaged and satisfied in their roles and at the company. Here are seven innovative retention strategies. If you start using these strategies for employee retention, you will be able to attract top talent on a budget and improve your bottom line.
The Right Start: Establishing an Onboarding Strategy
First impressions count. Your onboarding strategy is foundational to your overall employee retention. The first week is your team member’s first real experience with your company and culture. A sour one is hard to correct down the road.
Any onboarding strategy aims to get your workers up and running as quickly and efficiently as possible. A best practice is to have a 30, 60, and 90-day plan. By breaking it down week-by-week and month-by-month, you’ll ensure they know what to expect as well as what can be expected from them. The more formalized it is, the smoother the process will be and the easier it will be to refine for future employees. Plus, a set process is easier to scale, so you don’t have to start from scratch each time.
A written onboarding strategy will make your company look organized, prepared, and ready to support your team. It lets your new employee know what they need to do and what they can expect of you, which eliminates confusion, builds confidence, and allows them to figure out if they’re on track.
Create Clear Expectations
Think things are going well when suddenly your employee quits? It might be time to start setting some clearer expectations.
Stating exactly what you want your employees to accomplish from the start sets the tone early on in your working relationship. It also keeps you from having two different experiences where one thinks that everything is great and the other is unsure of themselves and having a terrible time.
If you skip setting expectations, it’s unfair to both employers and employees. Neither has a clear understanding of where things are going or how you plan to get there. It creates a “sink or swim” approach that makes employees run as fast as possible.
for Small Businesses
Create Opportunities for Professional Growth
Employees who envision a better future at their company will stay. You can do this through scheduled, systematic coaching and development.
A scheduled coaching session can happen weekly, bi-weekly, or monthly, but they need to happen often and discuss areas for growth.
Professional growth doesn’t necessarily mean a promotion or raise. Employees want to develop new skills and become more effective at their jobs, such as through professional tools, online courses, or training events. Workers want to give you their skills for you to increase.
GE is an excellent example of this principle. Across their organization, whether appliances, aircraft engines, or financial services, they excel at raising leaders. The majority of their CEOs in the United Statescome from GE. By investing in their employees, GE creates the executive talent that allows them to succeed in each sector of their business.
Improve Employee Recognition
Workers need to know their work matters, and their efforts are rewarded through employee recognition. However, it needs to align with the culture and expectations within your business. For example, public praise may deflate other team members who wonder why they were not recognized or feel they cannot match that level. Choose your kudos wisely to make it an overall net positive for the company.
Your recognition needs to provide a real incentive to your employees, so consider their motivating factors. For some employees, promotions and money are the ultimate motivation. However, it doesn’t always have to cost money. A handwritten note, donuts in the morning, or a coffee break can go a long way to show your appreciation.
Conduct Regular Performance Reviews
Performance reviews on a quarterly, bi-annual, or annual basis are critical for letting every team member know where they are and areas for growth.
Performance reviews are not just about what employees are doing poorly– although that should come up if they lack an area – but rather what skills to develop further. Great performance reviews should be a chance to help them fine-tune their skills from good to great.
Beyond coaching employees, performance reviews are critical to getting feedback on company performance. Ask what employees need from you, how they view the culture you’ve created, see if expectations are aligned, and whether they are hitting their own goals.
Culture is an important part of gathering feedback. A culture of fear will encourage employees to lie rather than open up about their genuine concerns. It might help to conduct third-party interviews for candid input in some cases.
Enhance Compensation and Benefits
It is a workers’ market today, and your team won’t be taking a pay cut to work with you. There is no way around it: you have to offer your employees at or above the market rate. If you don’t provide it, they can quickly find someone who will.
However, benefits and competitive advantage for top talent go beyond base salary, retirement, and health benefits. The more creative and out-of-the-box small businesses will be able to compensate against larger companies’ big budgets. For example, flexible schedules or offering remote work are key differentiating benefits that encourage employees to stay.
Typing compensation to key performance indicators (KPIs) is also a powerful way to keep employees motivated and happy. Reward your team members with bonuses and raises for hitting KPIs that matter most to your business. It provides them more control and will make their job and compensation more satisfying.
Create a Positive and Flexible Work Environment
It’s no longer a question of whether you should create a flexible work environment: you have to do it. It’s time to figure out a flexible work arrangement that aligns with your culture to attract and retain top talent. If it’s not imperative to have boots on the ground, you need to create a plan for flexible work.
Many leaders struggle with accountability when they allow remote work. They worry that employees will slack off and won’t accomplish enough. However, this only reveals a toxic leadership practice if you don’t think your employees will perform without you every day. If your team working at home scares you, it’s time to change your process, what you’re tracking, and your employee’s deliverables.
Remote work is a chance to take away the time component and aligns action with your KPIs. This will enable you to create a leaner and more effective business and is one of the best employee retention strategies for small businesses. The only thing you need to care about as a leader is whether your team produces for the company. How or where they do it is not important.
Retention Management Strategies for a More Effective Small Business
The best employee retention ideas understand and improve the worker experience. When you create a more flexible, open, and helpful space for your team, you increase the chances that they want to stay there.
Contrary to popular belief, the answer to how to retain employees in small businesses is not only increasing pay. Instead, a supportive place where your team is recognized and can grow into larger roles provides the biggest motivators for employee retention.
Need help creating a strong team to help you reach your business goals? Our experts at Cultivate Advisors are here – schedule a free 2-hour assessment to dig into your business and identify a plan.