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Whether you run a business of 5 people or 100 people, every employee is valuable to you and should be treated accordingly. After all, it’s far easier (and cheaper) to invest in retention rather than re-hiring, so how can you learn to retain your employees for life and ensure they don’t leave you for a competitor?
It’s challenging to find the right person for the right seat, so when you do luck out and find someone who’s got the skills, qualifications, work ethic, and cultural fit to match your business, you’ve got to do everything in your power to hold on to them. It’s not a case of hiring them and thinking your work is over. The reality is that your work has just begun. After all, your business is only as good as your team, so retaining your best employees (new and existing) is essential.
The sooner you can perfect your hiring process and build a business where employees feel nurtured, respected, and inspired, the quicker you can scale and increase your bottom line.
Why is retaining employees so important in your business?
It doesn’t matter if you run a small, local business or a huge multinational company—employee turnover is costly. But the smaller your business is, the more you’ll feel the punch. Not only are you losing talent to your competitors, but you must also spend time and money recruiting and onboarding a new employee to take their place.
The Center for American Progress found that employee turnover can cost a business between 16% to 213% of the lost employee’s salary. The average cost per hire is $4,129, and it takes an average of 42 days to fill a vacant role.
Losing an employee is undoubtedly a huge setback financially to your business. But what about the impact it has on team morale? Customer relationships? Or lost productivity? If your other employees have to pick up the slack, this can have a serious knock-on effect on other projects and deadlines, and subsequently, your revenue.
The benefits of employee retention:
- Higher revenue
- Higher productivity
- Better overall team morale
- Strong customer service
- Reduced recruiting costs
13 ways small business owners can retain employees
Now that you understand the many benefits retaining talent has on your business, how can you play your part in encouraging employees to stay and grow with you?
Design & implement a solid recruitment strategy
Retaining quality employees starts with finding and hiring them. Be sure to invest in a recruitment process that helps you find the best people for the job in question. Ensure your recruitment funnel is automated wherever possible and creates a quick, positive experience for both your hiring team and candidates.
Make sure the job’s key responsibilities and day-to-day tasks are clear in the job description and reinforced during the interview stage. Think about offering a video preview of “a day in the life…” in your business to help candidates gain a better feel for the role. If you hire candidates who have their expectations met, they’re much more likely to stay longer. A poor hiring experience or decision can cost you greatly!
It’s equally important to ensure the person you’re hiring aligns with your company values and mission. Do they understand what you’re trying to build here and where you want to grow? Do they share your ethics and values?
Click here to get a free copy of my Six Winning Strategies ebook to avoid ineffective hiring methods in your business.
Build the right team
Building and leading a high-performing team is so important that I wrote a whole post about it, which you can read here.
If you want to encourage people to stay in your business and grow with you, you’ve got to make sure you have the right people with the right mix of skills. For example, creativity, logic, leadership, innovation, energy, listening, speaking, etc. There’s no set formula here which makes this incredibly hard.
You want people’s strengths to be balanced against each other and for everyone to feed off each other and be a source of support. Your team needs to be cohesive and inclusive—poor team dynamics can quickly push your best talent out the door because they don’t enjoy coming to work.
Don’t forget that as the business owner, it’s on you to lead by example. How do you want your team to behave and treat each other? SHOW, don’t tell.
Set clear expectations and goals from the start
It’s easy for your team to feel lost if they don’t have a clear list of expectations and goals to work towards each day, week, and month. Make sure everyone has a goal to work toward and clear instructions, training, and support they need to reach that goal. Explain why it’s important and how it fits into the bigger picture of the business.
If you want to set clear expectations for your staff, be sure to give them priorities and regularly evaluate these. Ensure check-ins and one-to-ones are happening, either with you or a senior manager.
Use a scorecard system to set attainable and measurable goals. That means that everyone is given a number to work towards each day or week, and everyone’s number is recorded in a company-wide document that can be accessed company-wide. When every employee knows what they’re responsible for, it makes it easier to do their jobs.
Implement the 80/20 Rule
As a business coach, I always encourage my clients to use the 80/20 rule for most things.
At Google, employees spend 80% of their time doing the job they were hired to do, and the remaining 20% is spent working on experimenting with fun passion projects that can help the company. This is a great initiative for employee retention because it gives employees the freedom to be creative and play, helps develop leadership skills, and benefits the business.
This is one of the more creative ways to retain employees, and it can and does work.
Trust your employees to manage their own time
No one likes to be micromanaged. Plus, you don’t want employees in your company who need a babysitter 24/7; you want people who can get the job done within the timeframe given and do not need their hand holding the whole way through.
If you have hired people you trust, there’s no need to manage their time. Let them take charge of their schedule, and work remotely if they want to (as long as that works in your business). Don’t chain them to their desk and force them to work 9-5 unless they absolutely need to. Companies that do this always have lower employee retention rates.
Employees want to feel trusted and be treated like grown-ups—you’re running a business, not a daycare center!
If your team needs a little more help managing their time more effectively, check out this article on time management tips.
Encourage a healthy work-life balance
If you’re a business owner who works non-stop, through weekends and replies to emails at 10 PM on a Friday, you are not setting a healthy example for work-life balance!
Look, I get it, okay. I get that when you’re in the early days of your business, you’re putting a ton of work in because you have to if you want to get things off the ground and have any chance of succeeding. At the same time, if you don’t take care of yourself, you’ll eventually burn out. And so will your employees.
Talk to your team about striving for a healthy work-life balance and what this looks like. Set an example by setting work hours and switching your laptop and phone off before you go home. Discourage your team from checking emails outside of work.
Praise & reward good work
Did you know that Forbes found that 66% of employees would quit a job if they felt underappreciated?
That’s a lot.
So, are you appreciating your staff?
For example, do you offer praise to employees or the whole team when they’ve done a great job? A simple “great job” as you pass in the corridor, a small bonus or thoughtful gift, or a mention in a company newsletter can be all it takes to help an employee feel seen and valued in your business and can go a long way.
Giving a shoutout for good work in front of the whole team is also a great way to encourage more of the behavior and work you’re looking for from everyone.
Not everyone jumps ship because of money these days, especially not millennials. Create a culture where your team feels appreciated and recognized for their contributions, and they’re much more likely to stay.
Praise & reward good work
If you want to reduce employee turnover, you’ve got to be competitive with your pay and perks.
Firstly, make sure you’re not underpaying in your industry. Check out your competitors and the industry average and match it at the very least. Although you may be concerned about keeping staff costs down, offering a competitive package to employees can help you retain them, which will save you money on re-hiring in the long run. To retain employees over time, give them regular raises, even if they’re small.
Benefits are where you can get creative. There are standard benefits that many companies offer, including health insurance or paid time off. Netflix is one of many companies that offer employees unlimited vacation time. This empowers your team to manage their own time and gives them a greater sense of independence.
Regularly check in with everyone
If your business is still small enough to check in with everyone on your team, make sure you do. Schedule one-to-ones to help them feel connected to you and the business. Offer them mentoring and guidance where and when they need it. Talk about career progression and what their personal goals are. Schedule a follow-up meeting if required.
Let them know that you’re always here if they need you, even as the company grows, and management structures change.
Provide opportunities for growth
If you want to know how to retain employees in your business, you’ve got to give them room to grow with you and make sure they’re aware of this opportunity.
Most people aren’t content staying in the same role for five years. They want to grow and advance and take on more responsibility. So make sure you offer plenty of opportunities to do so, whether it’s through training, extra projects, or mentoring. This lets your staff know you value them enough to invest in them.
When a vacancy opens up, offer it to someone within your business if they’re suitable for the role and interested in taking it on. Promoting from within is one of the best employee retention strategies. If there’s too much of a gap between positions, give employees extra responsibilities to bridge that gap. They’ll gain more experience, build new skills, and feel more motivated at work because they’re building towards something.
Nurture your company culture (and have fun!)
If you’re not yet focusing on building an authentic company culture that aligns with your mission, you need to start pronto.
A thriving culture is always one of the top ways to retain employees and keep them happy at work.
For example, are you transparent with your team? Do you keep them in the loop about upcoming changes? Do you make sure that everyone is treated equally and kindly? Is your office a fun place to be? Do you give back to the community? Does your culture match your values?
There are many ways to build a company culture that your team loves being a part of. For example, celebrating holidays, surprising everyone with doughnuts and coffee on a Monday morning, or doing a 5k run together for a chosen charity. Small acts and events like this can have a greater impact than you’d expect.
Make time for team bonding
If you want to retain employees for life, then help them feel like their team is their second family. This is easier when you’re in startup mode and becomes more challenging as your business grows.
Make time for bonding inside and outside of work. For example, encourage collaboration across teams. Have breakout spaces that help people get to know each other. Properly introduce new hires to everyone, and make sure they feel incredibly welcome. Organize away days or company retreats now and then so that everyone can hang out outside of the office.
This is a sure-fire way to build real friendships and boost team morale, which will inevitably increase engagement at work.
Understand why employees leave your business
Even if you’re doing everything in your power to retain your employees for life, there will inevitably be people who leave to pursue new opportunities. But this is a chance for you to better understand their reasons for leaving so that you can reduce attrition rates in the future.
Make sure you conduct an exit interview for all employees that leave your business. Get feedback on why they’re going and what could’ve made them stay. Use your findings to improve anything that needs work. Commit to doing better every day.
Want to retain more employees in your business?
The key to employee retention is to be genuine in your approach. You have to genuinely care about your team and create a great workplace environment for them. Like all relationships, this requires work and investment. Make time for this, and you’re likely to retain your top talent.
Need more help creating a winning hiring strategy for your business that helps you retain employees for the long run? Click here to book a free strategy session with me.
