Cracking the code: Strategies to tackle employee turnover in small businesses
Retaining employees often means balancing limited budgets with employee needs. Here are a few strategies for reducing employee turnover in small businesses.
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As the world of work continues to evolve, employee turnover in small businesses remains an ongoing challenge. Voluntary turnover rates are on the rise, jumping from 12% in 20221 to 15.4% in 2023.2 Over 66% of organizations experienced a labour shortage in the past year3 — a trend expected to persist in 2024.
So, how can your business not only weather this storm, but emerge stronger? How do you inspire unwavering loyalty in your employees for the long haul? In this blog, we'll explore five approaches that can stem the turnover tide and transform your workplace into a bastion of loyalty and success.
Strategies for retention success
Employers play a pivotal role in shaping the work environment, and a positive employee experience is critical to talent retention. By using the following strategies, you can strengthen the relationship between your employees and your company, creating a stable and happy team.
1. Match compensation to the wider market
Small businesses often operate with limited budgets compared to their larger counterparts. However, it's crucial to allocate resources to match market rates for salaries and benefits to retain employees enticed by higher income elsewhere. Compare job descriptions within your company to similar roles in the wider market, benchmarking compensation packages against similar-sized businesses. You’ll gain valuable insights that you can leverage to create an attractive salary and benefits package, putting you above the competition.
[Check out How to Pay Employees In a Small Business: Eight Rules to Follow for valuable advice on remuneration.]
2. Maximize flexibility
Workplace flexibility is not just a popular trend, it’s practically non-negotiable in today’s world. According to a Cisco survey, “81% of Canadians said that flexible work policies impacted their job choice.”4 Other research indicates that 60% would choose to stay in a job with a lower salary if they had flexible work options.5 Despite this, "less than half of leaders said their internal mobility program allowed employees to move around the organization or try out new roles.”6
Offering flexibility in work hours, tasks, internal mobility, or remote work choices contributes significantly to employee satisfaction and retention. Explore options such as variable working hours, remote work, or compressed workweeks. This will give employees the flexibility to manage their work-life balance and foster a positive work experience.
3. Measure employee engagement
While employee engagement is critical, measuring it in a small business setting can be tricky. However, understanding your employees' sentiments about their current work experience and identifying pain points are vital to implementing the right changes.
Consider implementing regular surveys or feedback sessions to gauge employee fulfillment and engagement. Create an open communication channel where employees can express concerns and provide suggestions for improvement. The information you gather can be illuminating — and provide cost-effective tips you can use to significantly raise satisfaction levels.
[Learn more about creating effective engagement surveys and the essential questions to ask to boost results.]
4. Recognize and reward top performers
Recognition is a powerful tool that motivates employees and contributes to a positive workplace culture. Acknowledging and rewarding top performers fosters a sense of appreciation and encourages a culture of progression within the organization. Dayforce’s 2023 Pulse of Talent survey showed that "88% of flight-risk employees said they would consider staying if their employer offered them internal career opportunities."
Consider implementing a reward structure based upon performance metrics that align with key performance indicators (KPIs). This not only recognizes individual achievements but also communicates the organization's commitment to valuing and rewarding excellence.
5. Upskilling is key
Investing in employees' professional growth and career development is a win-win situation. While small businesses may not always have the capacity for rapid promotions, providing tools for upskilling and career development demonstrates a commitment to employees' long-term success. A Gallup study showed that "nearly half (48%) of workers would consider switching jobs for better learning opportunities."7
Initiate internal training programs, workshops, or online courses that align with your internal business needs and employees' career goals. Learning stimulates the mind, creating curiosity, engagement and excitement. By encouraging a culture of continuous learning and development, you can foster a sense of progress and advancement, and employees will feel empowered and connected.
[Learn more about HR strategies to help small businesses improve the employee experience.]
A holistic approach to minimizing turnover is essential
Reducing employee turnover in small businesses requires an all-encompassing strategy that addresses the various facets of the employee experience. Insights from recent surveys emphasize the importance of these strategies in the current employment landscape, where labour shortages and the desire for internal career opportunities and learning opportunities are prevalent. By aligning compensation with market rates, maximizing flexibility, measuring engagement, recognizing top performers, and investing in skills and career development, small business owners can create a workplace that not only attracts top talent but also retains and nurtures it for long-term success.
[For more tips on operational efficiency, check out our Powerpay small business software to streamline your HR processes — and gain more time to focus on what you love most.]
[1] Zachary Junkin, “CFOs and the Talent Retention Crisis,” Kassen Recruitment, March 2023.
[2] “How much turnover is too much?,” Mercer, September 2023.
[3] 2023 Executive Survey: The power of mobilizing the boundless workforce, Dayforce.
[4] “No Longer Just A ‘Perk’: Cisco Survey Finds Canadians Now Expect Flexible, Hybrid Work,” Cisco via GlobeNewswire, February 2023.
[5] Robert Half, “Workplace Trends of 2023, Predictions for 2024,” Robert Half Canada Inc., November 2023.
[6] 2023 Executive Survey, Dayforce.
[7] “The American Upskilling Study: Empowering Workers for the Jobs of Tomorrow,” Gallup, 2021.
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