Attracting and retaining talented employees is key for the success of your small business. Learn how to improve employee retention with these strategies.
Hiring the best possible candidate is the goal of any employer, and it is even more important for a small business that depends on a strong, stable workforce to survive. There is little margin for inefficiency and poor performance. But small companies can offer an advantage with their "second family" culture: Small-business owners tend to care deeply about their employees, and they are often active in their communities.
The owners' top concerns are keeping valued employees and finding and hiring the right people. In the event of the small-business owner's death, an overwhelming number of owners want employees to keep their jobs and continue the business. Here are some best practices for improving your recruitment and retention:
If a high caliber recruiting firm isn't in your budget, you can try tapping into social media, scouring industry publications for talent, and giving rewards for referrals. The more quality candidates you identify, the better your chances of finding the absolute best fit.
Ask yourself: Who can double for me if I am unable to work, or when I’m ready to retire? Owners reported that it would take three full-time employees to replace them. That's why cross-training is essential. This is also the time to explore key-person insurance, which pays the business in the event of a death of the owner or other principal.
Frequent turnover can hit a small business especially hard. It can take more than a month to fill an open position, leading to additional costs for overtime, new employee training, and reduced productivity during the transition.
That's why it's important to find people who are the right fit from the start and to develop a talent pipeline. You should define your business needs, assess what you can realistically offer, analyze the competition, and understand what's attractive to people in your industry.
Gone are the days when people expected to work for one company for their entire career. Of all the workforce generations, millennials (born between 1983 and 2000) are the most interested in professional development, and the most willing to leave jobs they like in order to pursue better opportunities.1
As a small-business owner, you can be nimbler than a big company when it comes to offering unique benefits, like a mentorship/apprentice program in which you provide training and a path to advancement and the employee learns the job and the industry.
Some of the reasons people leave jobs are out of the business owner's control. But there are elements you can shape that will help attract and keep high-quality employees. For example, unless people are working as first responders, every day on the job shouldn't feel like a three-alarm fire. Workplace culture and safety are important for your employees, and frequent high levels of stress will quickly lead to burnout. Do a regular audit of how your company handles conflict, emergencies, and crises. What can you improve? What can you expand that's working well?
When you give back to the community, you're not only helping people and causes; you are also creating a more attractive workplace culture. There are also reputational and marketing "halos" for your business when you're engaged in the community, so everyone wins.
Most small-business owners are already giving back to individuals and the community. For example, many have joined a booster organization or their local chamber of commerce, and some organize volunteer events for a local school or charity.
When considering your community commitments, find something that aligns closely with your business mission. Is it the arts, the environment, animals, or people? Is it ultra-local, national, or global? When you narrow your focus and efforts, you will have the biggest impact.
A small business may not be able to match a big company's benefits, but it can often provide more flexibility, adding to that close-family feeling. It is not unusual for employers to pay medical expenses for an employee, and some even loan money to workers for major purchases.
What can you share with your workforce? Products, discounts, time off, and remote work arrangements are all enticing perks. Insurance, too, can be a big driver of employment decisions. Companies can offer deferred compensation to fund future benefits through corporate-owned life insurance upon an employee's retirement.
Group benefits, such as life insurance (term and/or individual whole life plans) and short- and long-term disability are compelling to candidates, especially those who are coming from a contract-worker or freelance background.
Studies show that when you expand your talent pool to include people of varying ages, experience, and background, you're more likely to see an increase in innovation and productivity.2 People from different backgrounds can provide new portfolios of tools and perspectives to reach new customers, and they can recruit from their communities.
Even industry diversity is valuable: Perhaps that candidate from the hospitality sector can help improve your customer service. Maybe that candidate from Silicon Valley can usher in a new, more efficient digital age for your business.
Many small business owners hope to get their children involved in their businesses. If family members offer the right mix of personalities, relationship dynamics, and talent, they can help preserve a legacy and protect shared business interests for generations to come. Most small-business owners believe the future is bright for their children.
Cultivating the right mix of staff requires a significant commitment of time and resources. Like any wise investment, getting the right person will pay off down the road as part of your overall business plan, and help ensure that your company's future is a long-lasting one.
1 “Millennials, Gen Z are job-hopping, but contrary to popular belief, maybe not enough,” Samantha Subin, CNBC, 2/28/2021, https://www.cnbc.com/2021/02/28/millennials-gen-z-are-job-hopping-but-maybe-not-enough.html
2 “How Diversity And Innovation Drive Great Cultures In The Future Of Work,” Natalia Peart, Forbes, 3/17/2021, https://www.forbes.com/sites/nataliapeart/2021/03/17/how-diversity-and-innovation-drive-great-cultures-in-the-future-of-work/
This article is for informational purposes only. The ideas, opinions and concepts expressed here should not be construed as specific advice. You should consult your professional business advisors regarding your particular situation.