Effective employee retention strategies for small businesses

The true cost of high turnover is steeper than you might think. Sure, there’s lost revenue. But there’s also a loss of morale with remaining workers. One employee turnover cost analysis study even links losing workers with product failure. That’s why one of your top goals as a growing business should be to create strategies focused on employee retention and staff turnover reduction.  

Here are some benefits to consider when thinking about a retention rate improvement strategy:

• Less turnover means higher productivity – Think about how long it takes to train a new employee, getting them up to speed with responsibilities and processes. Reducing turnover helps keep up productivity and avoids costly disruption in workflows.
• Happier employees connect more – Employees who bond in a supportive work culture collaborate more easily, which can have a positive effect on your product, profitability, or customer experience.
• Better morale – Staff morale is the engine that drives innovation, creativity, and unique problem solving. If morale is low, it can cause even more turnover, which slows down your whole organization. Higher morale with employees who feel a sense of purpose and connection can move your business forward, helping to achieve revenue goals faster.

Understanding employee turnover

There are many different reasons why people leave their jobs. But according to a recent study, the main reason across most generations is work-life balance. In fact, participants ranked it as more important than compensation. Increasingly, workers want to have more time to spend with family, enjoy leisure activities, and pursue personal projects—and they demand that employers understand and respect that.

Other reasons employees leave include:

• A toxic work culture
• Being overworked and underpaid
• Feeling undervalued
• Lack of opportunity and growth
• A general sense of burnout
• No flexibility (especially around remote work)
• Too much micromanaging

As you can see, this combination of factors can negatively affect staff retention metrics. To address this, a more holistic retention strategy is needed—one that’s carefully considered and attuned to the wants and needs of your employees, meeting them where they’re at.

Below are several job satisfaction initiatives to think about.

Building a positive work culture

The importance of building a positive, inclusive work environment can’t be understated. When put into practice, employees will feel trusted, empowered to make decisions, open to sharing their ideas, and have a sense of ownership and pride over their work.

The very first step in establishing talent retention methods is to assess whether staff compensation and benefits are competitive enough. This may seem obvious. But the marketplace for great employees is always tight, so making sure their value is recognized is critical.

Too many organizations put their spreadsheet first, at the expense of attracting and retaining talented and capable workers. It’s important to have a long view and understand that the money invested in your employees pays handsomely down the road with a more committed, engaged, and satisfied staff.

Creating opportunities for growth and development

Helping employees grow and thrive beyond their current role makes them feel like they have a real future with your company. With that in mind, think about creating career advancement paths that foster professional growth and reward worker excellence.  

Employee loyalty programs—like social media shoutouts or awards around key milestones— are a great way to show your appreciation, too.

In addition to staff development opportunities, employee feedback systems and surveys are also key. With these communication tactics in place, staff will have a forum for voicing their concerns and giving input. This can help build company-wide trust in leadership.  

Establishing flexibility in the workplace

In the post-Covid business landscape, more employees than ever expect workplace flexibility options. That’s remote work, a hybrid model, or personalized hours that free them to work on a non-traditional schedule.

Employees who are given this type of flexibility tend to feel that their emotional and psychological well-being are recognized and supported by your company. It also makes it easier for them to practice self-care. If they can take a minute working from home to meditate, make lunch, or go for a relaxing walk in the neighborhood, that can make all the difference.

A flexible work schedule is just one of many work-life balance practices. Work-life balance is something we hear a lot about, especially in the last few years. As the nature of how we work has changed, so have the usual expectations around putting your job first, over family responsibilities and personal development.

Success isn’t just climbing the ladder anymore. It’s achieving a balance by integrating the personal and professional. Companies that adjust to this new reality will be poised to have workers who are loyal, satisfied—and even healthier.  

In fact, Harvard Business Review recently found that businesses with an official work-life policy see a reduction in turnover and an improvement in their employees’ mental and physical health.

Focusing on employee health and wellness

Developing an employee wellness program isn’t just good for your staff—it’s good for business, too. The workplace is often equated with stress, deadlines, and performance demands. That’s especially true now, when many companies are laying thousands of people off and telling everyone else to do more with less. That doesn’t just impact worker performance—it can impact your bottom line.

So, let’s take a look at what some of those organizational culture enhancements could look like. Start with your office space. Is it human-centric and comfortable enough for your workers? Updating furniture, including ergonomic chairs, can make your office environment more inviting and conducive to deep work.

Here are some other ideas for physical and mental health wellness in the office:

• Encouraging breaks throughout the workday
• Starting “get healthy” programs like a stop smoking initiative
• Access to discounted gym memberships or fitness classes
• Providing nutritious snacks around the office
• Making sure your company has an Employee Assistance Program, including access to mental health services
• Conducting refresher employee benefits management seminars to remind workers about what they’re entitled to
• Setting up a financial wellness program with seminars on 401(k)s, investing for retirement, first-time home buying, etc.

Changes like this really do work. A recent study in Finland confirms this, highlighting how a 1% increase in job satisfaction increased productivity by 6%.

Building a supportive and empathetic work environment is also crucial. This is more personal and requires a degree of self-reflection. Ask yourself these questions related to employee communication tactics:

1. Do you communicate openly and honestly with employees?
2. Do you listen with an open mind to their concerns?
3. Are you available when issues arise?  

If you can answer “yes” to all three, then you’re ahead of the game. Leading by example is especially important here.

The simple act of demonstrating empathy in your everyday interactions with staff tells them that they are seen and you truly care. That could be a quick casual conversation or personal check in. Team building exercises and the occasional team excursion are great employee morale boosters too.

Leveraging technology for employee engagement

The modern workplace has become more complex over the years, which can make some workers feel disengaged or lost in the churn. This can lead to decreased productivity or even higher turnover.

Adopting the latest communication technology, however, can help counteract that. Platforms like Slack, Zoom, and Microsoft Teams enable managers to keep up with everyone in their group, especially when they’re all scattered via remote working. Ideas, knowledge-sharing, and goal setting can continue apace regardless of geography or time zone.

You can also gamify projects or tasks and set up a rewards system complete with badges and points.

These staff recognition schemes don’t have to be totally work-focused either. Use technology to help employees upskill or increase their knowledge with webinars, blogs, or even podcasts.

Key takeaways

A few things to remember regarding talent retention methods:

• Employee wellness programs work by making staff feel cared for and supported.

• Employee engagement strategies are a great way to connect with workers on a deeper level.
• Employee morale boosters get staff excited for a future that they feel includes them.

In the final employee turnover cost analysis, a revolving door is a danger to the health of your company. But now you have some solid ideas for making your employees feel more appreciated and a part of something bigger. Just remember, every company is different—so mix and match methods that you think will be the most effective. And involve your employees to get their honest feedback. You can think of it as a team building exercise.