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A Guide to Employee Retention for Small Businesses

5 min read | 16 July, 2021 By Breathe Australia


Staff turnover is an inevitability and in small doses can be healthy. However, there is no magic formula that guarantees employees will stay at a company– even if that company has achieved “world’s best employer” status. There are simply too many factors at play.

If you’ve found that voluntary staff turnover is at its highest at the beginning of the New Year, there is a reason for this. Turnover typically spikes in the months of January and February because:

  • Employees wait until after the holiday season to commence a job search
  • Employees use the New Year as a milestone in which to seek new opportunities
  • Employees wait to receive year-end bonuses
  • Companies ramp up hiring at the beginning of the calendar year
  • Seasonal employees come to the end of their contracts

Regardless of the time of year, high stuff turnover is a problem – not only does it damage productivity and morale, it’s also expensive - especially for small businesses. According to ELMO’s 2019 Benchmark Survey Report, it costs a business $18,982 on average to hire a new employee. Other qualitative costs arise as result of high staff turnover, such as negative client-employer relationships, team burn-out and harmed reputation.

By boosting retention efforts, a business can increase the likelihood that its employees will stay long-term. All it takes is an understanding of employees’ wants and needs.

Below are seven common reasons why employees leave their positions that are totally in an employer’s control.


Lack of recognition and appreciation

Recognising and rewarding the efforts of employees is critical – especially when times have been hard. Recognition doesn’t have to be expensive or ground-breaking – for instance, a simple “thank-you” during a one-to-one meeting can be highly motivating.

An absence of recognition in the workplace is a common driving force behind employees deciding to leave a company. In fact, 66% of employees say they would likely leave their job if they didn’t feel appreciated. This percentage jumps to 76% among millennials.

Rewarding high performers sends the message that hard work and positive attitudes are appreciated. Having a rewards & recognition program in place will help to ensure that the right people are rewarded appropriately – whatever “reward” means to that company.


Poor management

There’s a common saying: “Employees don’t leave companies, they leave managers.” A Gallup study found that turnover is a management issue. According to the study, 75% of staff who quit their jobs voluntarily did so because of a bad boss.

Examples of poor management are as follows:

  • Undervaluing employees
  • Overworking employees
  • Failure to tap into employees’ talents
  • Failure to respect and empathise with employees’ personal lives
  • Poor attitude towards employees, or instances of bullying and harassment
  • Lack of flexibility
  • Inconsistent performance management processes

The final point – inconsistent performance management processes – stings hardworking employees the most, because it indicates that input it not effectively recognised company-wide. Without a sound review process, performance standards become unfair and biases form. This damages morale and job satisfaction and causes employees to check-out mentally – and, eventually, physically.


Little or no learning and development opportunities

Learning and development is a huge retention driver – especially for younger generations who want career growth. Garter found that 40% of departing employees cited lack of future career development as a main reason behind their decision.

Employers can support career advancement by investing in learning tools and software. Providing employees access to various training programs and initiatives will encourage professional development and demonstrate that upskilling, cross-skilling and re-skilling is important to the company. Another option is to run role-sharing schemes, where employees can opt in for short-term job rotations to build on their skill set.

Succession planning is a key component in professional development. It demonstrates to high-potential employees that their efforts and acknowledged and appreciated, and they have been marked for career advancement. This motivator can enhance retention efforts tenfold.


Low engagement

Employee engagement is tightly linked to productivity, and high productivity yields better business outcomes, so it is a hot topic for business leaders. Unsurprisingly, COVID-19 put engagement to the test.

Forbes looked at three levels of engagement in employees: engaged, disengaged, and over-engaged. While “disengaged” is typically a gateway to resignation, it is arguably “over-engaged” that has most prevalence in these current times, as many employees have worked themselves into the ground during the pandemic and are subsequently burnt out.

Burn-out is also a symptom of bad management that leads to disengagement and, eventually, resignations. The AFR uncovered how burnt-out employees were in 2020, compared to 2019: in Australia, almost three in four workers suffered burnout and the average worker’s overtime nearly doubled from 236 hours in 2019 to 436 hours in 2020.

Indeed, the circumstances of the past 12 months have intensified – or, shall we say, muddied – the expectations on workers, especially considering remote working has blurred work-life balance. A good manager understands that boundaries are crucial and that employees are not machines. Indeed, downtime is a key ingredient of success.


Unfair remuneration

Remuneration is a sensitive topic for many employees, especially since many companies have had to cut remuneration budgets in order to weather the storm of COVID-19, which for many meant decreasing employee salaries. Already, 37% of Australian workers feel they are not paid a fair salary.

Despite a company's financial standing, the absence of fundamental remuneration management can damage employee engagement and retention. Ultimately, remuneration processes should help and not harm engagement.


Lack of empowerment

If employees feel disempowered and disenfranchised at work, they will walk. Empowerment can be cultivated in multiple ways by management and leaders. They should:

  • Afford employees autonomy of their work
  • Regularly survey employees to check the “pulse” of the company and uncover employees’ wants and needs
  • Provide employees with the necessary resources to do their jobs
  • Recognise and reward hard work
  • Provide meaningful feedback
  • Promise communication and transparency from leadership team
  • Set clear goals (KPIs and OKRs, etc.)

When employees feel respected and a part of the bigger picture, they are more likely to stick with a company on its growth trajectory.


No flexibility

Flexible work has been a workplace trend that has slowly gained momentum over years, but since COVID-19 has been thrust onto the agenda of business leaders the world-over.

Ultimately, people want flexible working opportunities, and after almost 12 months of on-again-off-again working-from-home, it can be presumed that flexible work in the future will be more than a nice-to-have, it’ll be an expectation.

The University of Sydney surveyed Australians on their remote working preferences. The study found that most Australians want to work from home an average of two days per week post-COVID, and 75% of respondents think employers will support remote working into the future. The sentiment is similar in New Zealand – when asked in a study whether they would like to continue to work from home, 67% of respondents said they would like a mix of home-based and office-based working, perhaps working remotely a few times a week or month.

The continuation of remote working means that companies will need to adjust fundamental employee experience strategies. This includes fine-tuning remote practices to aid digital collaboration long-term and changing performance goal setting and employee evaluations for a remote context.

There’s no quick fix when it comes to employee retention, and there’s certainly no one-size-fits-all approach. However, if a company tackles each of these seven elements, they can keep hold of their employees and, in turn, achieve good business outcomes.

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Posted on 16 July, 2021

By Breathe Australia

in Employee Performance

Tag Employee Performance

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