Employee Retention Strategies For Small Business | Aparna Sharma | Consulting Editor | The People Management

Whether you are the boss of one or many, each employee is important to your small business.

Would you rather work on retention, or retraining? According to statistics, more than 3 million people quit their jobs every month, with one-third of those quitting during the first month of employment. Millennials, Generation X, Baby Boomer – they all cite the same reasons for leaving a job.

What’s the main reason? If you guessed money, you’d be right, but only partly right.

Employee Retention Strategies

Here are employee retention techniques that work:

1. Money
Agnes was happy with her starting monthly salary and looked forward to her three-month anniversary at work. During the interview process, she’d been promised quarterly reviews and told that a raise was possible after six months.

The three-month anniversary came and went with no mention from her boss. She groused about it to a neighbor friend, who told her about a similar position, with a slightly higher monthly salary.

You already know the answer to this one – poof! Agnes was gone. Regular raises, however small, should be part of your employee retention strategy. If you think you can’t afford to give raises, consider this – how much will it cost you to replace the employee? You’ll spend, on average, 40 days to hire a new employee, with training time varying according to your small business’s particular skill set needs. According to some studies, the cost to train a new employee is about 30% of that person’s annual salary.

2. Appreciation, Recognition and Connection

What if Agnes’s boss would have marked her three-month hiring anniversary on a calendar? “Good morning, Agnes, happy three-month anniversary. I’m very pleased with your work ethic and how well you’ve fit in around here. You’re doing very well so far and becoming important to the company.”

In corporate lingo this exchange is sometimes called “The Stay Interview” which is a good name that can be used as an employee retention technique for small businesses. Although you can think of it that way, it’s the perfect time to connect with the employee about the business itself – how you started, how that employee fits in with future plans and what your hopes are for the future.

“Agnes, now that you’ve learned the ropes, do you have any suggestions? Big ideas, little ideas – I’d love your input. Maybe we can set aside some time in the next few days to sit down and kick around some ideas.”

And then do it. Ask your employee for suggestions on some snacks or lunch, and make room for some friendly, relaxed discussion. You may be pleasantly surprised with the ideas that a pair of fresh eyes has about the company.

3. Flexibility
In my backyard, there’s a specialty food products business that has employed the same three women for twenty years. I asked the owner his secret to employee retention, and his answer was simple – flexibility.

Let’s go back to Agnes, admittedly a made-up character, and let’s give her a school-aged child. Uh-oh, the start of school is delayed today for two hours because of bad weather. The child is too young to be left home alone. Maybe the child has the flu.

Or the cable guy is coming between 8 a.m. and noon. It could be the washing machine is broken, and a repair person is coming.

Employees of small businesses listed Flexibility as hugely important in the jobs. Of course, a boss will find it much more acceptable to allow flexibility to an employee who has been employed long enough to prove his or her worth. In other words, flexibility in work hours may not begin at Day One but be a perk that comes as a reward for job performance.

How can flexibility be part of an employee retention program? If it fits with the type of workload, an employee may welcome the opportunity to work from home, even if only for part of a day or a full day. Maybe Agnes would like to have a longer lunch break, in order to get some errands accomplished that she’d otherwise have to do after work.
Here’s a fact – companies that offer “working from home” have a 25% lower employee turnover rate.

4. Benefits/Health Insurance
Let’s say that your small business has one or two part-time employees and you don’t offer health insurance. If you’re lucky, employees have insurance through a spouse’s workplace, but if they don’t, you can still help.

Remember that the health and well-being of a valued employee should be a priority. Take it from someone who has shopped the health insurance marketplace – it can be frustrating, time-consuming, confusing and frustrating.

If you don’t offer health insurance, what you can offer is assistance navigating through the health insurance marketplace. There are companies who will send a health insurance professional to your workplace to answer questions about various plans.

What about personal days or sick days for part-time employees? As part of an employee retention plan, some employers offer a paid “free day” as part of an incentive plan as a reward for reliable work (not missing work) or exceptionally good work.

5. Opportunity for Growth, or Not?
Is there a career path at your company, or is the employee’s job one that will change very little? Is your position a good “stepping stone” for the employee, with possibility for advancement, or is it a position that will include the same regular duties?

If there is opportunity for advancement, make sure you have those Stay Interviews so that the employee knows how to take the right steps. Give regular feedback and recognize good work.

But what if there is no real opportunity for advancement, how do you retain that employee? How do you keep the person from becoming bored with the job, stale? How do you keep that employee connected and interested in the work, and the company?

If you can, rethink the position. Has this person proved to be reliable and hard-working? Are there responsibilities that you have, that you can delegate to this valued employee? Are there opportunities for on-line courses or seminars that would build the employee’s skills, making it possible for the employee to take on additional responsibilities? In other words, don’t stay locked into that job description you used when the person was hired.

6. Make Some Fun
There is always opportunity to build enjoyment into any job, especially a small business. It can be as simple as springing for Chai and Pakodas on a Friday, or surprising an employee with a small gift card to a chain store or restaurant. Celebrate holidays, seasonal and silly.

Improving the work atmosphere can be as simple as repainting a room, changing the work space layout, or updating an office chair. To focus on employee retention, you need to focus on the employees – valuing their ideas, their needs and their contribution to your growing small business.