Tips for Small Businesses and Employee Retention

4 Mins read

Whether a business is large or small, the consistent hiring of motivated and talented employees is vital to the building of a successful team.

However, the work does not end even after such solid candidates have been brought on board, as it is crucial to the running of a successful business that new and old employees alike can be retained. Employee turnover can be a major issue for small businesses, with turnover costing up to as much as 213% of the salary of an employee in some cases, according to a Center for an American Progress report.

The continual loss of employees can also be detrimental to the short-term and long-term goals of a business in addition to the health and well-being of the business owners and other employees. The loss of a good employee can be a huge setback for small businesses and result in a number of issues, including unfinished work, making additional work for others, and causing distractions.

The best tactic for a small business is to try to avoid employees leaving to begin with, and it is important to understand why a worker would decide to quit.

The reasons can include employees moving to a new area, wanting a career change, or simply deciding to retire. However, while these are reasons that a small business can likely do nothing about, there are other reasons why employees leave, including poor management, the little challenge in the work they are being given, no fulfillment, and limited career mobility.

These are aspects that small business owners can display some control over, and there are things they can do to avoid losing valuable employees.

Improve your employee retention

A happy employee is not only a more productive employee but also one who will be invested in the success of a small business and therefore more likely to remain at that company.

While no two people are ever alike, there are other common factors that can result in employee happiness, including the likes of proper resources and training, regular management feedback and reviews, clear and achievable company goals, benefits such as health insurance, paid time off, and assistance with gym memberships, incentives and rewards for great performance, and good company culture.

All great relationships take hard work in order to be a success. Personal relationships can suffer through a lack of attention and time, and employee relationships are much the same. It is therefore vital to invest in employees if you want them to stay with your company. The retention of high-value employees also means that the company will retain a wide array of institutional experience and knowledge.

One good tip is to consider using trusted employees to fill internal vacancies, rather than depending on outsiders. However, if finding outside talent is necessary, being able to boast about your company’s high retention numbers will make you look much more attractive and appealing to prospective applicants.

Your company may be in an industry that has historically had a high turnover of employees, and periodically losing workers could be something to which you have become accustomed.

There are very high turnover rates in the hotel and service industry, for example, with a recent report from the US Bureau of Labor Statistics putting it as high as 73%.

However, even if your business is in an industry that has such high turnover, it is up to you to become the exception to the rule given that high turnover can cause poor employee morale.

Setting clear expectations

New employees can feel useless and lost if they begin a new job only to find that they have not been given clear expectations of the tasks they are expected to perform or how to do so successfully.

Up to as many as half of employees do not understand the expectations for the role they play in their companies, according to statistics. The best thing that a small business owner can do is to ensure that clear expectations have been set for their employees.

Work priorities should be set and regularly reevaluated, making it clear to employees which projects are of the greatest importance and that the employee should focus their energy on those first and foremost. Setting weekly meetings to talk about priorities and make sure that everyone is on the same page can be a good idea.

It is also vital to set clear expectations as to when work is expected to be completed, and if necessary, create a calendar to clarify deadlines and the quality of work that is expected. Attainable and measurable milestones and goals also need to be set for employees that tie in with the overall strategy of your company.

The goals should be achievable, understandable, and measurable to ensure that their progress can be easily tracked by both employer and employee.

Improving employee recognition

According to Forbes, 66% of employees would resign if they felt underappreciated at their workplace. It is therefore vital for small businesses to make it clear to employees that their value is recognized.

Anniversaries and other milestones should be celebrated to help improve employee retention rates, with the majority of those who change jobs doing so in their first year, often around their first anniversary in that position. Employees who have gone above and beyond for the company should also be recognized and honored.

This is a great way to retain employees regardless of their position, and it also sends the message to other employees that hard work and excellent results are not overlooked.


The development of a path to career growth and promotion is one of the very best strategies for employee retention.

In some cases, this may not be easy, especially in a small business where there are only a limited number of senior positions. However, there are alternatives that provide upward mobility, such as giving more responsibilities to high-value workers. This provides them with more experience and offers the opportunity to learn new skills.

It can also be a good idea to send high-value employees to workshops, conferences, and seminars, or to help them gain qualifications such as an online MBA degree.

To conclude

Hardworking and knowledgeable employees are the lifeblood of large and small businesses, and retaining them is crucial to the long-term success of your company. Ensuring that your employees are happy with the work they do and feel supported to pursue additional courses and training, especially while still working, is another beneficial way to retain workers.

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