5 Effective Ways to Help Retain Staff for Small Businesses
By no means are we recruitment and human resources experts but over the years of business ownership, and being so involved with other small businesses, we’ve learnt a thing or two. There’s nothing groundbreaking about this read but it serves as a good reminder for business owners to do a quick mental checklist: are you doing the below five things for your team? And if not, is it time to change that?
Recruiting and retaining good team members is arguably the most important and most difficult aspect of business ownership and success. Here are a few things you could be doing to help that process.
Table of Contents
Why is Staff Retention Critical for Small Businesses?
What is Staff Retention?
Staff retention refers to the strategies and efforts businesses implement to retain their workforce. It involves adopting retention programs, fostering a positive workplace culture, offering career development opportunities, and introducing flexible work policies. A successful retention plan reduces employee turnover, enhances workforce stability, and supports sustainable business growth.
What are the Key Benefits of Staff Retention?
For small businesses, staff retention has an important role and here are 5 key benefits to consider:
1/ Enhancing Business Efficiency: Employee retention ensures workforce stability, which directly impacts organisational growth. Long-term employees possess a deep understanding of the company’s workplace culture, vision, and operational processes. This familiarity minimises the time and cost associated with onboarding and training new hires, thereby improving business strategy and overall efficiency.
2/ Reducing Recruitment Costs: Employee retention helps achieve recruitment cost efficiency by minimising the need for frequent hiring cycles. The expenses tied to advertising, screening, interviewing, and onboarding new staff can be significantly reduced, freeing up resources for other key business areas.
3/ Boosting Employee Morale and Loyalty: A stable workforce leads to better workplace morale and fosters workforce loyalty. Retention initiatives that focus on inclusivity, career growth, and performance-based rewards help employees feel valued and motivated. This sense of belonging enhances employee engagement and commitment, reducing the likelihood of attrition.
4/ Cutting Operational Costs: Employee retention helps businesses avoid additional costs associated with replacing employees, such as recruitment, onboarding, and training expenses. Programs like career development plans and employee satisfaction improvement initiatives demonstrate commitment to employees, creating long-term value for the company.
5/ Improving Customer Experience: Tenured employees are often better equipped to deliver a superior customer experience. Their in-depth knowledge and skills allow them to address customer concerns quickly and confidently, fostering trust and satisfaction that supports long-term business growth.
What Causes Low Staff Retention?
Low staff retention can have serious consequences for businesses, affecting everything from productivity to company culture. The survey below shows that for more than half of employers who regularly replace staff, the impact on their business is largely related to the constant recruitment needed—including the costs involved and the time lost through training new employees each time.
Understanding the causes of low employee retention is crucial for addressing these challenges and improving workforce stability.
- Low staff morale: Employees with low morale are less likely to stay with the company. A negative workplace culture, frequent layoffs, or a poor company reputation can all lead to a decrease in employee engagement.
- Ineffective team engagement: When employees feel disconnected from their teams or the decision-making process, they are more likely to look for other opportunities. Sometimes, employees can struggle to engage with senior leaders or HR departments, impacting overall workforce retention.
- Boredom: Employees want to feel that their work is meaningful and contributes to the company’s goals. If they feel their role lacks purpose, it can lead to high turnover rates.
- Work-life balance issue: When employees are overworked and stressed, workplace morale suffers. Chronic stress can lead to burnout, which is a major factor in employee turnover.
- Lack of clear advancement opportunities: Employees expect opportunities for career advancement. If managers do not discuss career development or provide clear paths to promotions, employees may feel stagnant and start searching for jobs that offer growth.
- Inadequate salary: Employees who feel underpaid or who have not received salary increases may look for new jobs that offer better compensation. This highlights the importance of competitive salary packages to improve staff retention.
- Inadequate benefits: An insufficient or unappealing benefits package can drive employees away. Benefits like health insurance, paid time off, and retirement plans are key components of an attractive compensation package.
5 Employee Retention Strategies To Improve Retention Rates
1. Offer flexibility
We all know the demand for flexible work arrangements has grown significantly since the pandemic. The elusive work/life balance has become somewhat of a non-negotiable for many Australians, and small businesses that offer flexible schedules stand out in the job market. In our case, two of our values flow directly into flexible working conditions: family comes first and ‘one team’. A great example of putting your money where your mouth is.
- Flexible working hours: Offering flexibility with start and finish times where possible, or part-time or job share options for those with other commitments means you won’t be automatically disqualifying any working parents with school or daycare drop-offs and pick – better for workforce loyalty and for business
- Remote work options: Hybrid WFH and office hours arrangements are essentially an assumption now. Requiring employees to be in the office five days a week will guarantee you get a much smaller pool of talent to interview!
But how? We understand that WFH and hybrid roles come with their teething issues – most of which can be solved by leveraging tech. Embracing the latest collaboration tools and cloud-based platforms means you can offer flexible working arrangements without compromising on employee satisfaction or productivity. Slack, Teams and Loom are three tech options that we rely heavily on for this reason.
2. Foster a supportive and inclusive workplace culture
Workplace culture feels like such a buzzword that’s often all talk and no action. People want to work in an environment where they feel supported, included, and valued as part of a team. Respect and integrity go hand-in-hand with this point and the way we talk about culture internally is creating a ‘Future Family’. Family takes work! It means getting to know each other in the true sense of the word rather than on the surface level people often find in the workplace. Supporting each other’s strengths and weaknesses, creating trust and ultimately treating others how we want to be treated.
- Create a sense of community: Small businesses have the advantage of creating close-knit teams. Organise regular team-building activities or informal catch-ups to strengthen relationships and improve communication. We organise regular team-building activities and informal catch-ups to strengthen relationships and improve communication. Monthly team lunches and virtual coffee breaks are another way we help to keep our team connected, even when working remotely.
- Supportive leadership: Leaders should be approachable, open to feedback, and willing to support their staff through challenges, both personal and professional.
- Diversity and inclusion: Embrace diversity in your hiring practices and create an inclusive workplace where all employees, regardless of background, feel welcome.
3. Provide opportunities for growth and development
A common reason employees leave is a lack of career advancement. While small businesses may not have as many formal promotion paths as larger organisations, offering opportunities for growth can significantly improve employee retention.
- Upskilling and training: Invest in your staff by offering training programs or access to online courses. Not only does this improve their skills, but it also demonstrates your commitment to their professional development. You can leave the ball in their court to be proactive so that they’re genuinely invested in the training – for instance, every team member gets a budget to spend and hours they need to complete for training purposes. They bring the suggestions to you for discussion! At Future, we encourage each team member to identify professional development and learning opportunities they want to pursue and we provide a budget to pay for the training, course or conference. Empowering the team to choose what their professional development looks like means they actually *want* to do it and it’s a win-win scenario for everyone involved.
- Mentorship: Provide mentorship programs where senior staff can guide and support junior employees, fostering their growth and helping them navigate challenges.
- Internal promotions: When possible, promote from within. Rewarding loyal staff with advancement opportunities can encourage them to stay long-term.
4. Competitive salary and benefits
While salary isn’t the only reason people stay in a job, competitive compensation is essential. If small businesses can’t always compete on salary with larger corporations, they can offer other valuable benefits to retain staff. The wellbeing of your team is crucial to them and to your business. It should be an absolute focus of any business owner – no matter how big or small your operation is.
- Regular pay reviews: Ensure that your pay rates remain competitive within the market by conducting regular salary reviews and offering bonuses where possible.
- Tailored benefits: Offer non-monetary perks that are meaningful to your staff, such as extra leave, flexible work benefits, or contributions to professional development.
- Workplace perks: Even small gestures, like providing free lunches, team outings, or wellness benefits (such as gym memberships or mental health support), can make a big difference in employee satisfaction.
- Wellbeing specific initiatives: offering benefits like access to an Employee Assistance Program, mental healthy days, wellness programs or flexible schedules shows employees you trust them, you value them and you care for their health (mental and physical) above all else.
5. Recognise and reward employee contributions
Acknowledging and rewarding your employees’ hard work and achievements is essential for keeping them engaged. Employees who feel appreciated are much more likely to stay with a company long-term.
- Frequent recognition: Recognise small wins, not just big accomplishments. A simple “thank you” or public acknowledgment of a job well done can boost workplace morale and loyalty.
- Reward systems: Consider implementing a formal reward program where employees are recognised for their contributions, whether it’s through financial bonuses, additional leave, or other perks.
- Celebrating milestones: Celebrate work anniversaries, birthdays, or the completion of significant projects. This helps employees feel valued and strengthens their sense of belonging. It’s important to celebrate team milestones too – recognise collaborative efforts and strengthen the sense of unity and shared purpose. We like to send birthday presents to everyone, celebrate work anniversaries with morning tea, do quarterly culture days that take days to plan so they’re genuinely fun and valuable, take the team to Xerocon, CPA retreats… the list goes on.
By implementing these staff retention strategies, small businesses can create a supportive and dynamic work environment that not only retains top talent but also attracts new team members eager to contribute to a forward-thinking and innovative company culture.
