Employee Retention
Dear Readers,
Turnover happens. One small business owner, Samuel, has struggled with retaining good employees and ended up overpaying some of his employees to keep them from going to a competitor. He asked, “how can I retain my good employees?”
Pedro: Employee retention is especially important when you only have a few employees. Your employees and their long-term happiness and commitment to your business can make all the difference.
Josh: The number one reason people leave jobs is because they’re unhappy with their work environment. Keep your employees happy by getting input on what can be done to improve the work environment. Working on your business’ culture is one of the best ways to increase long-term retention.
Pedro: That’s true, but even happy workers may be tempted to explore whether the grass is greener at another company. Losing employees is a concern for most small businesses because there is a cost associated with employee turnover. A study from the Center for American Progress estimated that replacing an employee costs, on average, 20 percent of the employee’s annual salary. So if a worker making $30,000 a year quits, you’ll pay roughly $6,000 to cover the lost productivity costs and then recruit and train someone new.
Josh: That’s definitely a good reason to keep your good employees engaged! We can’t underestimate the value of time and money. Satisfaction and a good working environment are important, but ensure that you’re giving your valued employees an adequate amount of time off for rest and work-life balance. Look at your salaries to make sure they’re industry standard. If you want to reward an employee for excellent performance and can’t do a salary raise, consider a one-time bonus. Salaries and bigger benefits are helpful for retaining your star employees. But for many small businesses, facilitating better communication, making employees feel valued, and creating opportunities for education and growth are equally important. Most importantly, as a business owner, realize the importance of creating connections. Relationships matter. Take the time to develop relationships with employees such as by mingling during lunch breaks and holding internal celebrations.
Pedro: I also think it’s important for business owners to get creative and be flexible. You’re competing with a lot of other companies out there – some of which may be able to offer higher pay than you can. Consider adding non-monetary benefits such as flexible work options such as telecommuting and flex-time. Also, you could consider adding non-medical benefits like vision and dental coverage. Most employees will look at the total overall package.
Josh: You can also create a desirable culture – and there’s no cost to doing that. Recognize good work and acknowledge achievements. Employees want to be appreciated. Show appreciation to employees who go above and beyond. Recognition programs such as employee of the month help, too. Also, listen and encourage communication. No one likes to feel powerless or like they don’t matter. By listening to suggestions and input, you show that your employees are important. When you conduct one-on-one performance evaluations, find out what makes your employees happy as well as how they feel about your business. Ask them what they like and dislike about you and your company and take notes. Make sure you make each person on your team feel comfortable about reporting problems and suggesting improvements. Also, conduct routine company meetings to keep everyone informed and build a spirit of camaraderie. Use the feedback that you receive to improve your workplace and you will earn the loyalty of your team. Thirdly, understand the nuances among different generations. For example, millennials want to engage in something meaningful. They need to feel that they are doing work that matters. This generation wants to have a career of significance with an organization that is meaningful to them. As a business owner, how can you create opportunities to meet different generations’ needs?
Employee turnover can cost business owners time, productivity, money and frustration, so focus on finding the right people and then working to keep those people on your team. We’d love to hear from you. We are offering $100 to the reader whose question is selected next. Please submit your business questions to together@lead.bank.
