Employee retention strategies for small businesses



Employee Planning Expert

Chris' Philosophy

Investing in your workforce is the most important thing you can do for your business.

Anyone can reach their most ambitious business goals if they have a strong team helping them.

Creating a strong team starts with proper planning. You must understand what you need your team to do to help you reach your goals and then support them along the way.

Why is Employee Retention Vital to Your Small Business?

Imagine paying someone’s salary for up to a year and a half when they NO LONGER work for you!

Sounds crazy, right? Well, that is what it’s like when you lose a valuable employee. It can cost a company as much as one and a half times that employee's salary to replace them! Not to mention the wasted effort and time you spent training and cultivating that employee. Well, maybe it only goes to waste for you, but your competitor that hired your former employee thanks you profusely!

Plus, when a company has high employee turnover it’s a huge red flag to current employees. Employees begin to think that something is very wrong and they may start jumping ship.

That’s why it is so important to reduce employee turnover. Better retention increases overall employee satisfaction because they believe they are part of something valuable. Not many people want to give up something perceived as valuable.

It's worth understanding how to retain your employees for long-term company success.

What Can You Do to Improve Employee Retention?

Determine your current employee retention rate.

Your current employee retention rate should serve as your baseline to making improvements. This is probably common sense to you, but many businesses don’t know what their current employee retention rate is. You might find that you are worried about a non-existent problem, or you might have a lot of work ahead of you. Either way, it’s important to understand where you are starting.

Take a look at your company culture through the perspective of your employees.

How do your employees perceive your company culture? Of course, most companies like to think  they have the “best” culture, but company culture is highly subjective. And, quite honestly, it doesn’t matter what you think your company culture is like. What matters is what your employees think it’s like.

Culture is not choosing a bunch of cliché values (integrity, honesty, commitment, get my drift?), telling people what they are, and expecting people to follow them all while not following them yourself (sorry, Uber!). Instead, culture develops based on how people act, and those behaviors are rearranged as the company values.  Culture is shaped from the top down, and perception of culture begins from the bottom up. This is definitely not the time or place for the “do as I do, not as I say” mentality.

Now that we have that out of the way, it’s important to make sure that you hire people that fit into the company culture you want to create. Employees want to know exactly what they are getting into, and a clearly defined culture can set the framework for adding real worth to the workplace.

Company culture at Google could be one person’s dream and another person’s nightmare. Build a culture that aligns with the mission and vision of your company, be very transparent about it to prospective employees, and hire those that will fit in and add value.

See what employee retention strategies your competitors use.

Let’s face it, if an employee likes their work, but hates their work environment, they are likely to go work for your competition. While we know the grass isn’t always greener, it doesn’t mean that your competition doesn’t have some sort of retention strategy or employee retention plan that excites your workforce. Take some time to really investigate what your competitors do better than you, then find their shortcomings and capitalize on them. Hey, business is business.

Improve the overall employee experience.

Many people say the customer is the most important person because, without them, there would be no business. Think about this though, without your employees there would probably be no business either. Your employees are the people in direct contact with your customers. The happier they are the better they will treat your customers. Here are a few ways to improve your employee experience.

Find ways to increase employee engagement.

Employee engagement comes down to the overall commitment your employee has to your organization, and how dedicated they are to helping you reach your business goals. If you find ways to increase employee engagement, your people will find value in their work and be committed to seeing it through.


Ask your employees what their career aspirations are and then make meaningful connections to what they do for you and what they want in their professional life.

Organizations with a high level of engagement do report 22% higher productivity"

Find ways to increase employee motivation.

Employee motivation and employee engagement are two distinctive things. While employee engagement measures commitment to your organization, employee motivation measures their drive to complete their work.

It’s worth noting that there are different types of motivation. There is intrinsic and extrinsic motivation, and something I like to call holistic motivation. Intrinsic motivation comes from within and extrinsic motivation comes from external factors.

Many businesses offer incentives for their employees to do well, maybe a financial incentive or some much needed R&R. Those sorts of incentives do well in the short term, but are quickly forgotten.

Focusing on holistic motivation, or focusing on the employee/team/organization as a whole goes a long way. This includes things like creating a safe working environment, upholding psychological contracts (either explicit or implied), respecting and valuing what makes each individual unique, etc.

Make sure your employees have a good work/life balance.

Humans are not machines that can work at the same speed all day without breaking down. Our attention span fluctuates, and as a business owner, it's important to think about a healthy work-life balance. The always-on mentality that focuses on work every minute of every day is unhealthy and unrealistic. You'll churn through employees faster than a bird flying through a hurricane.

Give them space when needed and support when necessary.

Many employees want and need autonomy to do a good job. Although results are what matter, think about how your employees spend their time getting them. Do you micromanage every task? Or do you give them the autonomy, flexibility, and creativity to get their work done? Giving them space when they need it builds their confidence and trust for the organization.

When it’s time to support them, coach and mentor instead of manage. When problems arise, ask probing questions and problem-solve together instead of telling them what to do. Take the time to explain the “why” to what you do.Not only will you help your employees feel safe to make decisions on their own, you’ll set yourself up for success as well because you remove the bottleneck you may inadvertently create when your employees don’t feel trusted to make decisions.

Don’t be afraid to shake things up (in a good way!).

Mindless work is a recipe for employee boredom. Instead, create a meaningful company mission, and hire people uniquely suited for the role and care about the goals of that mission. Don't be afraid to do things to spice up the routine. Maybe it's painting the walls a fun color, getting a caterer from a local favorite, or putting some cool office furniture in the break room (your employees will love the bean bags and yoga balls)!

Create an actual employee retention plan

Why is a retention plan important? For starters, it shows your employees that you value their work and are serious about keeping them. And, it helps you develop a systematic and predictable approach to keeping your best talent.

Hire the right people and get rid of the wrong ones, FAST!

There are differing opinions on this. On one hand, you found something special in your employee, so is it really necessary to fire them? Well, it depends. You need to determine if your employee is a wrong fit for the job they are doing, or a wrong fit for the culture you are creating.

Hiring is tough, but a clearly defined culture and job description can help you attract the right talent. Gary Vanderchuk, CEO of VaynerX, also has great and simple hiring advice, “Fire Quickly.” Don't hold on to toxic employees who bring down morale and make everyone else miserable. It can happen a lot quicker with smaller companies.


Ask yourself if it's a training issue, or a personality issue. Many behavioral issues can be solved by good communication, proper training, and good company culture.

Communicate clearly, openly, and honestly.

Learn how to be a better communicator. This is one of the biggest issues my leadership students discuss regarding their work experience. They often state that they are stressed out because of miscommunication and lack of communication.

Information overload is a real thing. Don’t expect your employees to remember every single thing you say, especially if it’s in passing or just vague ideas. Use multiple forms of communication and help them prioritize what is important to you.

Work with your team and not against them. Don’t filter information as a deceptive tactic. Be honest and get feedback from them. Remember, you are all in this together.

Employees should feel comfortable talking with you about their concerns or presenting ideas for improvement. If they don’t talk, or only tell you what you want to hear, it may be time to reflect on how you come across as a leader. You could inadvertently be hurting your workforce.

Show your employees you value them.

Some of the easiest ways to retain employees integrate nicely into your retention program at little to no cost. Greet your team every morning (with a smile), remember birthdays and anniversaries, ask about their family. Value them as people, and you'll be surprised how far that can go. Things like this create deep meaningful relationships and keep your employees motivated and committed to you.


Remember that your employees are people with real lives, problems, and desires outside of work.

What Happens if I Increase Employee Retention? (Even Just a Little)

If you are struggling with keeping your employees, don't expect immediate change. Remember, slow and steady wins the race. Even a minimal two percent increase in retention can significantly improve employee engagement, productivity, and motivation. Employees who stay with you longer are better at their jobs, which means more profit. Plus, employees who stay longer generally want to be there, not because they have to. With greater revenue, you can offer more incentives to employees, creating a win-win situation. The harmonious relationship that develops between you and your employees is a wonderful feeling, and it is a true sign that you've reached the desired outcome.

Final thoughts...

Human capital is the most vital piece to any successful company. Businesses that put peoplefirstcreate a culture that naturally attracts and retains the best talent. If you back up your words with actionable results, you can reduce employee turnover, increase employee motivation, increase employee engagement, and increase the overall employee experience.


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