Employee Retention Strategies for SMBs

Finding good employees is hard enough, but keeping them with you for years? That’s a whole other level of difficulty.

And yet, the more effort you put into developing a plan to keep those employees, otherwise known as employee retention, the more money your company will save and the more productive it will be.

Another benefit? Reducing turnover helps maintain productivity, morale, and a strong company culture.

What is Employee Retention?

So what does employee retention actually mean?

In short, it refers to a company's ability to keep its employees and reduce turnover. 

That  may sound simple enough — give employees a decent salary, and they’ll work for you for decades, right? And yet, on average, 13.5% of a company’s employees are leaving annually. Numbers are even higher in some industries, like retail. When employees quit, you have to spend more money on recruitment, training, and lost productivity. The more frequently employees leave, the more money you spend.

Having a strong employee retention strategy can reduce turnover and your expenses.

Why Employees Leave

Before you can create a strategy to encourage employees to stick around, you have to understand why they’re leaving. It’s smart to implement an exit interview when an employee gives her notice so you can understand her motivations for leaving. This way, you will have information that can help you prevent others from fleeing if you can make changes for the better.

Common reasons for leaving include:

Low Salary: Employees may have found better pay and possibly even a lesser workload elsewhere.

Too Heavy Workload: If an employee doesn’t feel capable of handling the amount of work she’s given, she may feel burnt out and stressed, which is a motivator to leave.

Difficulties with Coworkers or Boss: Sometimes, the reason for leaving is a conflict of personalities or an overbearing boss.

Lack of Recognition: If an employee doesn’t feel like her work is valued, she will go somewhere that it is.

Lack of Opportunities: Another reason for turnover is that sometimes employees don’t have any opportunities within a company for professional growth. If a promotion isn’t an option, they may look for it at another company.

The 3 Rs of Employee Retention

Let’s look at three things you should focus on as a business owner to ensure your employees feel valued.

1. Recognition

It’s important to acknowledge and reward employees for their contributions if you want them to feel like their role with you is more than just to earn a paycheck.

There are many types of recognition you can use, such as formal awards, informal praise, and peer recognition programs. You can also create competitions to encourage employees to submit their best ideas and then reward the ones you implement.

2. Respect

Creating a respectful work environment fosters loyalty and satisfaction. Gone are the days when the dictatorial leadership style spurred productivity (did it ever??). Today’s employees expect open communication, mutual respect, and professional growth opportunities.

3. Rewards

Consider offering incentives beyond salary, including benefits, bonuses, flexible work arrangements, and opportunities for advancement. These will show employees that you care about them and want them to find their place in the company.

You can even tailor rewards to meet the specific needs and preferences of employees. For example, if you have a young intern who’s still in college but you’d like her to work for you full-time, you could offer her a stipend to help pay for college.

Strategies for Retaining Employees in SMBs

Let’s look at some ideas you can implement in your own employee retention strategy.

Competitive Compensation and Benefits

Ensure pay and benefits are competitive within the industry. You can check average salaries on Glassdoor.com. Also, consider offering unique perks like wellness programs and remote work options that differentiate your company and entice new hires.

Foster a Positive Work Culture

Emphasize work-life balance, inclusivity, and team collaboration. That means not encouraging staff to work after hours and on weekends (even if you do)! Find opportunities for employees to let their hair down after work, maybe at a monthly happy hour event.

Encourage strong interpersonal relationships and a supportive environment. Realize that employees aren’t cookie-cutter. Each is motivated by different things, and each has his or her own personality. Create a culture that supports and nurtures each one.

Create Career Development Opportunities

Provide opportunities for learning and growth through training programs, workshops, and mentorship. Give employees the opportunity to learn about other departments and roles if they’re interested in expanding their knowledge and skills. After all, 94% of employees say they’d be more likely to stay with an employer who invests in their learning and development.

Encourage promotions from within and offer clear career advancement pathways. Talk to each employee about his or her career goals and find ways to provide a customized solution.

Keep Communication Channels Open

Create opportunities for employees to give feedback, whether through surveys, one-on-one meetings, or open-door policies. Show them that their input is valued by implementing their ideas and making changes based on their feedback.

Provide Flexibility in Work Arrangements

After the pandemic, we all know that we’re capable of being productive when working remotely. Offer flexible hours, remote work options, or hybrid schedules to accommodate work-life balance.

Flexibility can be a significant motivator, especially for SMB employees. Often, employees have a long commute, and being able to work from home, even just a few days a week, can give them a respite from sitting in traffic, not to mention spending money on gas. 

Invest in Employee Wellness Programs

Implement initiatives that focus on physical, mental, and emotional well-being (e.g., gym memberships, mental health days, counseling). Promote these when you are hiring, as more companies are competing to offer the coolest perks to new hires!

Burnout is a real thing, and while you can’t always avoid it, you can show that the company values employees' health and overall well-being.

Create a Strong Onboarding Process

Your journey to reducing turnover and increasing employee retention starts when you hire new employees. Ensure they feel welcomed and equipped for success through structured onboarding.

Get new hires set up Day 1 with their technology, logins, desk, and anything else they’ll need to do their jobs. Pair them with a coworker who can show them the ropes and put them at ease. And find fun ways to make them feel welcome, such as inviting them to lunch on their first day, or leaving a care package on their desk. How companies treat employees from the start has a lasting impact on how employees feel about the brand.

Final Thoughts

As you have learned, investing in a strategy for retaining employees can help reduce turnover, cut costs, and maintain productivity. Remember that recognition, respect, and rewards (the 3 Rs) form the foundation of strong retention strategies and can make employees feel appreciated and valued.

You can tailor your retention strategies to align with your business goals and workforce needs. Understand that, over time, your strategies may change. Be constantly open to feedback and improvement.