Losing your top staff out of the blue is every business owner’s nightmare, landing you with plenty of challenges. On top of the daily running of the business you now have to find time to recruit a new employee as well as deal with the hit to staff morale and lost productivity that comes with someone leaving.
It’s no mean feat in today’s market where highly skilled workers are sought after and may well feel compelled to jump ship if they get a better offer. And staff who don’t feel rewarded, or who are unable to progress within your business, will quickly become disillusioned and inevitably start looking for somewhere better.
Creating an effective employee retention strategy is vital to well-functioning business. It should be high on your to do list if you want to reduce staff turnover and keep productivity flourishing.
What is an employee retention strategy?
An employee retention strategy does exactly what it says on the tin – it’s a series of measures and initiatives designed to encourage and persuade your valued staff members to stay within your business.
It can include everything from the onboarding process, reward and recognition policies and career progression to employee benefits, work/life balance initiatives and training and development. It can even include things such as away days, all-expenses paid holidays, perk boxes and beer Fridays!
Why is it important to retain employees and reduce turnover?
People will leave a company for all sorts of reasons and there will always be some who hand in their notice no matter what you do. That’s just business.
But equally, there will be many more who are preparing to throw in the towel because they’re just not getting what they need from you. And if you lose those people it could hit your bottom line hard.
According to one analysis, the cost of replacing an employee is on average £30,000. This includes the cost of advertising and recruitment, agency fees, using temps in the interim and HR and management time. However, there is also the cost of lost productivity when someone new starts, before they are fully functional and doing the job properly. Another study said it can take as much as two years for an employee to be fully productive.
Employee retention strategies for small businesses
The important thing is to not rest on your laurels and assume your employees are happy. You need to be proactive and build a realistic employee retention strategy that will keep them from trawling job websites.
Provide growth opportunities
People don’t join a business to stay static and stagnate – they join it to give it their best, learn and grow. So make sure you’re giving them the opportunity to do just that. It’s great to provide training centred around their current role but you also need to think about training for their future career, putting them on workshops that will expand their skillset and allow them to move up the ladder.
Create a great work environment
When people feel like they belong and communication flows easily, they are less likely to quit. You need to foster an inclusive environment where your staff feel at ease. There will always be work stresses, clients to see and deadlines to meet but once they’re done it’s good to let your staff kick back and relax a bit. Order them take out, bring them cake or buy them a drink to let them know you appreciate their hard work.
Promote from within
If your staff know that recruiting from within is a strong company policy there is an incentive to stay put and work hard. If they know they’re never going to get any further they’re far more likely to look elsewhere to a company that does offer career advancement.
Sometimes, if a talented staff member is contemplating leaving it’s cold hard cash that does the talking – they want more money and if you value them and can afford it, then it can be an effective way to keep them on board. Instead of a salary increase you can also consider profit share schemes or bonuses to keep staff motivated.
Never under estimate the little things
Much as you might like to give all your employees a pay rise so they stay it’s not always financially possible. But it’s worth remembering that not all benefits are monetary. Don’t underestimate how much your staff value small perks such as free fresh pastries on a Friday, a slightly longer lunch break, a free food cart or a bottle of wine or bunch of flowers for a job well done.
Instil a positive culture
Negativity breeds negativity so make sure your company culture does the opposite. Employees need to feel a deep desire that what they’re doing matters and they are making a difference so create a culture that feeds that. Give them well constructed feedback so they can see the tangible results of their hard work. And have an open door policy – not one which you pay lip service to but one where staff know you are genuinely engaging with them, are happy to listen and give feedback without fear of censure or reprisals.
Learning and development
Training your employees is important but you shouldn’t just stick to their current job. With many small businesses struggling with the skills gap, its important to give your employees the opportunity to acquire new skills, not just get better at what they do.
Your staff want the opportunity to move up the career ladder so make sure they have the chance to do so. Consider setting up mentoring or leadership programmes to help them upskill.
No one wants to feel like the boss is looking over their shoulder all the time. It’s disconcerting and demoralising, leaving employees lacking in confidence and worrying they’re doing something wrong. As the boss or manager, it can be hard giving them more autonomy but it can have positive benefits for both them and the business.
As long as all business bases are covered, allow them to approach the work in a way that suits their skillsets and personalities. It gives employees more responsibility and therefore more satisfaction, and satisfied employees are more productive.
Your employees are human and you can’t expect them to work like robots. Creating a positive work/life balance for them can have a huge impact on their satisfaction and productivity. If work feels like a constant grind they’re more likely to hand in their notice.
HR software can help you to keep track of hours worked and you may need to give your employees a nudge if you think they’re overworking. As the boss or manager it’s up to you to make sure your staff get enough time off to recharge their batteries and come back refreshed and enthusiastic.
Think about allowing flexitime, time back for hours worked, late starts or early finishes and remote working options.