Employee Retention is a Big Issue for Small Businesses
“Our employees are our biggest asset.” It’s a well-worn phrase, and perhaps to some it’s just lip service. However, more employers and human resource professionals are recognizing the true cost of employee turnover because lower unemployment (4.3% in May) and rising salaries (wages are expected to increase by 3% in 2017) have created more job options. Workers are again willing to research pay grades in their area of expertise and to explore the job market in pursuit of more money. To a small business owner with fewer workers able to step up and cover the vacant slot, the loss of a skilled employee can be especially burdensome. In hard cash, an employer has costs associated with hiring a new person, expenses involving new employee training and development, as well as the cost of time or goods not sold when a position goes unfilled.
Here are what some leading employment professionals are saying about retaining good workers:
• Compensation must be commensurate with the job responsibilities and skills required. Researching pay rates in various professions and in specific industries is relatively easy for anyone with access to a computer. Employment research suggests that compensation is key when it comes to both retaining and recruiting – this holds true across all types of jobs regardless of gender, age, ethnicity or location.
• The expectations of employees – especially millennials – have changed. Many expect advancement and new opportunities to be there on a timely basis. Millennials love to fast-track and are easily bored – once they’ve mastered a task they want to move on to the next challenge. Many employers have discovered that if they cannot offer promotions, lateral moves across an organization or an opportunity to change career focus can be as attractive to their employees as a traditional move up the corporate ladder.
• Employees are individuals with varying personal lives and may be motivated by different things. For some, it may be financial rewards. For others, it could be flexibility in work hours, paid time off, or something non-traditional. You should find out what motivates your employees, but beware of anti-discrimination laws and regulations governing paid time off plans as these can limit your flexibility even if the employees are on-board.
• The workplace has undergone radical change. Telecommuting – once rare – is increasingly popular. The never-ending flow of communication via email and phone calls means most of us work after-hours and weekends – and usually without additional pay. In this type of work environment, employees are often willing to shoulder more demands during off-hours if their employer will allow them some flexibility in return, such as flexible hours, telecommuting, job sharing, etc.
• Beware the burnout factor. Technology has given us the ability to communicate and collaborate across time zones. It has also fueled customer expectations for immediate responses and fast gratification. Many companies are reporting turnover of between 20% and 50% because of employee burnout. Savvy employers recognize when employees are overworked and seek to counter it with ways that enrich the work environment. This might mean investing in continuing education programming, actively encouraging online study and offering off-site training opportunities that entertain while they educate.
In sum, people want to work in an environment where they feel truly nurtured and valued. This can’t be faked. A culture where people respect and appreciate one another is crucial to most employees’ job satisfaction. As a business owner and manager, you are the one who holds primary responsibility for setting the tone and culture of your workplace.