One of the greatest difficulties facing small businesses is employee retention. According to Work Institute’s 2018 Retention report, “voluntary turnover is projected to set back U.S. companies more than $600 billion this year, with each lost employee costing a company 33 percent of the employee’s base pay on average.”
Many small businesses struggle with the revolving door of employee turnover at a high cost. Meanwhile, they would like to do more for their employees, but feel they have less to offer because the money is not there.
Why should you care about employee retention?
“When you consider all of the costs associated with employee turnover – including interviewing, hiring, training, reduced productivity, lost opportunity costs, etc.,” you can’t afford not to. For instance, “it costs between 30-50 percent of [an entry level employees’] annual salary to replace them.”
Although small businesses often cannot compete with their larger counterparts in terms of compensation, there are ways to provide other perks employees would appreciate.
Here’s a look at small things you can do to retain employees (when payroll is tight), that often result in big wins down the road.
1. Give your employees extra time off
“The average American worker receives 10 days of paid vacation per year. European countries, by contrast, mandate that employers offer at least 20 days a year. Some EU countries have even upped the requirement to 25 and 30 days.”
“If you always do what you’ve always done, you’ll always get what you’ve always got.”Henry Ford
Perhaps money is tight, but time is something you can negotiate. Instead of the typical two weeks vacation, give them three or four. It’s not an unheard of practice, as there’s a wide discrepancy in vacation days between the U.S. and the rest of the world. Extra paid time off can boost morale and productivity.
2. Give your employees more freedom
As a business owner, you likely understand the philosophy coined by Henry Ford, “If you always do what you’ve always done, you’ll always get what you’ve always got.”
The need to control every aspect of your business can produce a bottleneck and frustration. You hired employees you can trust. Right? If so, give your team the freedom to make some decisions about their area of expertise. The freedom to explore, grow, and develop professionally is an overlooked employee perk.
You may not offer the same level of growth opportunities as larger businesses, but you have something most large enterprises don’t — agility. “Assume people are good. Let workers self-organize. Have team-oriented environments. Give people opportunities to learn and grow. If you think people are good, you let them figure it out,” according to best-selling author and CEO of humu.com, Laszlo Bock.
As a result, employees will feel like they are contributing in a major way. In turn, productivity and business growth are inevitable.
3. Give employees a lot of encouragement
Encouragement is free, but it does go a long way in the longevity and retention of employees. Show sincere interest in their lives, work, suggestions and feedback. Many small business employees feel overworked and underpaid, and many times they are right.
Do your employees arrive early and stays late? Perhaps they perform a number of job functions outside of their main roles? Much of this kind of work ethic generates new and creative ideas for your business. Implement employee suggestions and give them ownership of outcomes. Give the gift of encouragement. While often subtle, it can be a powerful tool to retain employees.
4. Offer professional growth
Research has found that “a lack of professional growth opportunities is an employees’ top reason for leaving a company.” It doesn’t take a lot of extra money to invest in professional growth opportunities, by offering access to online training or to let employees attend conferences at the company’s expense.
An entry-level employee, right out of college, will not have many of the resources he or she will need to build a successful career. By providing outlets for professional growth you can encourage employees to learn and improve. When an employee enhances their skills, it’s an asset to the business.
Purchase gift certificates to a clothing store or bookstore to empower your team with new work attire and learning tools. Gifts like these are little things that make a big difference. Perhaps, clothes and books won’t cut it. “Understanding what drives and motivates your employees means that you can communicate and reward them in different ways, to suit their own personality.”
5. Be a forgiving leader
Entry-level employees are going to make lots of mistakes. One of the best assets of a small business and its leadership is a forgiving spirit. Let your employees know you support them, even when they make mistakes.
You want them to be creative and try new things. Let them know you love them for their effort and creativity. In the history of every great organization that was ever built, someone made a risky decision that paid off. Encourage creativity and forgive when they miss the mark. Employees that work in a fun and emotionally safe environment produce better work and are likely to stick around.
6. Improve employee workspaces
Perhaps you can’t afford company-wide raises this year. Instead, take a DIY and low-cost approach to renovating your office. Buy new office desks and chairs, install fresh new carpet or flooring, order new bookcases, or inspirational wall art.
Outdated office furnishings and equipment can be a real source of discouragement for employees. Remember, they spend a majority of their time in the office. Make it the best possible environment within your means.
Create a culture of hope
Each of these actions produces hope. The minute an employee loses hope for a better tomorrow, in the same minute they will begin looking for their next job.
A few small improvements will go a long way toward building a culture, instilling hope and creating an environment where employees can be productive, successful and grow.
The benefits are clear. The longer a great employee stays with your business, the better off your business will be in the long run. It costs more than money when employees jump ship, so make it an enjoyable voyage.
Ken Gosnell is the CEO and Servant Leader of CXP (CEO Experience). He serves leaders by helping them to have great experiences that both transform them and their organizations that enable to go further faster. He has worked with hundreds of CEOs and leadership teams to enhance strategic, operational and people accomplishments. He is an author, coach, and strategic partner with CEOs. Ken is the creator and facilitator of the Christian CEO Linkedin Group and creator of the CEO Experience Impact Assessment. He is married to Shonda, and they have four children. Connect with @ken_gosnell on Twitter.