Employee turnover is a fact of life as a small business owner, but it can be a costly one. Many small businesses, whether or not they rely on seasonal or local staff, are subject to the whims of their employees, and that can often mean losing valued members of your team. The average UK employee turnover rate is around 15%, but that is significantly higher for industries like retail and catering. In fact, more than 64% of new retail hires last less than a year.
There is more for businesses to consider than just the obvious costs of replacing employees, which are typically 30-50% of their annual salary. Constant change can damage customer relations, lower staff morale, and put a strain on management.
While we’ve previously covered how to handle resignations, prevention is of course the best cure, and so we’ve compiled a list of ways your small business can improve employee retention in the first place. And it all starts before they even join your company…
Make hiring well a priority
There are some new people you’re pretty much doomed to lose not long down the line, and if you can weed these out from among potential new recruits, you’ll fare far better at keeping the ones you do decide to hire. Working on having good hiring practices will save you time and money again and again.
Once you’ve got them in the door, engagement becomes the key factor. While plenty has been said on employee engagement before, the following tips specifically target some of the most common reasons why employees leave a company.
Have an effective onboarding programme
A well-structured and effective onboarding programme has been shown to increase the chances of an employee staying with a company for up to 3 years by 69%. By ensuring that they understand and benefit from the company culture, you lay the groundwork for a far longer stint with your business.
It also helps to get recent recruits up to speed and feeling valued as soon as you reasonably can. Though it’s important to give new starters time to find their feet, remember that they’ll want to contribute as well, so they need to be thrown into the action at some point. This also needs to include an opportunity for both you and the new recruit to share feedback on how their onboarding has gone.
Reward employee performance effectively
There are several aspects to how you reward your employees. Perhaps the most obvious is their salary - yes, costs are a key consideration for any small business, but you need to pay a competitive and favourable rate for the best talent, or unfortunately some other employer will.
Benefits and flexibility are also key drivers that can keep your employees engaged and happy where they are. Look for ways to offer more time-off options and bear in mind that, if applicable, businesses that allow remote working have 25% lower turnover than their more rigid competitors.
Offer training for progression
Very few people want to do the same role in a company forever. Employees want to progress in line with how they feel their skills and experience are growing, and it’s worth your time to make sure they believe that progression can be with you. While 70% of ‘high retention-risk’ employees feel they need to leave their current job to advance their careers, some may be open to and able to do that within your business. They just don’t realise it. Here is where you can make it clear from the beginning of their employment that they will have an employee development plan and that you are keen to open them training and opportunities to progress!
Make sure to set clear goals for your employees’ personal development, which deliver both short-term benefits, to incentivise them on a daily basis, as well as a vision of, and road-map for, how they’ll advance and grow right where they are. Where possible, stick to a succession strategy of promoting from within to demonstrate that opportunities are available. And remember, training doesn't have to be expensive or effort-consuming, here are some great ways to offer your employees affordable training opportunities.
Assess, monitor and review... your own work
While there are plenty of reasons employees quit their jobs, many of which are totally unrelated to you personally and completely out of your hands, some resignations are due to issues with management.
There is no harm, and potentially a lot benefit, in regularly evaluating your own performance to make sure you are sticking to management principles that will encourage engagement and retention: being personable, open, honest, and interested.
With these tips in mind, we wish you success in improving your employee retention. There are always ways to improve, with few businesses able to match photography and imaging firm Kodak’s record - employees there stay with them for an average of 20 years!