Seven Powerful Retention Strategies
for Small and Midsize Businesses
Excerpts from a white paper by BambooHR which works with Selected to provide online, human resources software to its members.
If businesses are to thrive in today’s economy, finding and retaining qualified employees must be a top priority. Frequent turnover can damage a company’s productivity, negatively affect employee morale, increase costs and damage overall organizational performance. Conversely, retaining skilled workers who are committed to the company’s success—who feel a sense of ownership and satisfaction with their jobs and who contribute the exceptional effort that delights customers—create true competitive advantages. Those powerful payoffs make employee retention a compelling imperative for the leaders of small and midsize businesses (SMB).
There is good news, though, for SMBs. The Society for Human Resource Management confirms that the top driver of job satisfaction for employees in smaller firms is the opportunity to apply their skills and abilities. And it reports higher levels of job satisfaction for workers in small companies compared to larger corporations. Smaller organizations tend to offer greater flexibility for personal or family needs.
Technology Provides a Robust Tool. HR and business leaders in SMBs need every available tool, if they are to achieve the kind of exceptional results that spell lasting success. Efficiency is important, and technology is a leading enabler of faster and more efficient methods of accomplishing work. But for SMBs, the latest technologies can be unreachably expensive.
The cloud-based HR management system from BambooHR is a flexible, easy-to-use, affordable tool with a wide range of capabilities to help SMBs achieve success with retention programs. BambooHR uses software-as-a-service (SaaS) technology, making it possible for SMBs to enjoy all the benefits of a high-performing HR management system without investing in costly equipment and specialized personnel. The system puts reliable technology in place to support HR processes and employee data management, freeing managers to focus on building and retaining a talented, productive workforce.
Seven Powerful Retention Strategies
Before beginning retention efforts, it is wise to establish some baseline measures. This makes it possible to track progress and provides measures needed to fine-tune retention programs for maximum effect and return on investment. Often, companies choose to start with a few key metrics and then expand their tracking as retention efforts grow. Some of the measures useful to capture at this stage include:
- Number of employees
- Employee tenure
- Average age of employees
- Turnover, both voluntary and involuntary
- Turnover rate
- Turnover rates for specific segments of employees (high-performers, those with specialized skills, hard-to-replace positions, etc.)
- Replacement or hiring costs
- Retirement rate
- Promotion rates (by employee segments, if applicable)
The most successful retention strategies are those an HR or business leader chooses based specifically on the unique needs of his or her organization. The following list describes some popular options that lend themselves to the financial and staffing challenges that characterize SMBs.
1. Recognition Programs. To be effective, recognition must be available to the entire staff, and every employee must understand what he or she needs to do to earn recognition. In other words, clearly communicate the desired performance or behaviors. Recognition reinforces the behaviors and provides motivation for employees to excel, but they needn’t be expensive or complex. Cost-conscious companies award special parking places, lunch with the boss, a framed certificate of appreciation, a day off or any number of innovative and inexpensive rewards. Tracking recognition is as easy as a brief entry into the BambooHR system, enabling HR to print on-demand reports listing honored employees and the awards they received.
2. Learning and Development. Opportunities to learn new skills and to grow are powerful tools that drive up employees’ levels of job satisfaction and engagement. Consequently, learning and development are top choices of many companies when it comes to retention strategies. Training doesn’t require a costly investment. It can be as simple as offering job-shadowing opportunities or pairing an employee with another who can teach new skills. BambooHR’s customizable fields provide complete flexibility to add records of new skills, licenses and certifications as employees earn them. Recording development progress is just as easy, and the system can deliver reminders when training sessions are due or solicit feedback from participants to ensure that offerings are effective.
3. Coaching and Mentoring. Closely associated with learning and development, coaching and mentoring speak to methods of delivering training but provide their own rewards. They are favored retention tools because both coaching and mentoring enable organizations to provide personalized learning experiences for employees. Coaching is more formal and focuses on improving aspects of performance. Usually a coach is assigned and may be a training professional, but in smaller firms, experienced managers or skilled employees can act as coaches. Mentors often are chosen by the employee seeking growth. Managers or company leaders frequently step into mentoring roles. Careful thought should go into designing programs, and training may be required to prepare coaches and mentors for their roles.
4. Time Off. Who doesn’t find time away from work rewarding? Offering paid time off (PTO) enables employers to compete for desirable talent and retain current employees. It also motivates employees and contributes to improvements in work/life balance and morale. While there is a cost to the business to pay staff who are not on the job; the rewards of increased productivity, better retention and more satisfied employees provide substantial return on the investment. PTO may include vacation, sick, personal or bereavement leave as well as time off as a reward for special achievement. BambooHR provides an ideal means of tracking PTO and affords managers and employees immediate access to up-to-date information about accrued and used leave time.
5. Telecommuting. The option of working remotely is a popular retention tool. Enabled by technologies that keep at-home workers connected with their employers, telecommuting increased by a reported 66% between 2005 and 2010, with more than three million Americans regularly working from home. Certainly, every job isn’t appropriate for telecommuting, nor is every employee suited to the remote work environment. But in many cases, telecommuting can be a very effective retention and recruitment measure.
6. Promotions and Advancements. Lack of growth or advancement opportunities is one of the top reasons employees consider leaving their jobs. No wonder then, employers who want to retain valued talent promote them or provide new opportunities. This actually saves SMBs significant time and money associated with sourcing, hiring and training. A reputation for promoting from within also provides a powerful draw for job candidates, enabling smaller organizations to compete for talent in the marketplace.
7. Bonuses and Incentives. SMBs may offer modest cash bonuses or award small on-the-spot bonus payments for especially good work. Incentives other than cash also encourage employees to stay with their employers. Recognition, learning opportunities and time off are examples. But other non-cash incentives benefits include meals, merchandise, gift cards, holiday parties, potlucks, monthly gatherings to honor workers’ contributions, fresh fruit and snacks in the break room, and praise from company leaders. The customizable tracking capabilities of BambooHR provide efficient documentation of bonus and incentive programs. The system’s automated reminders help assure correct timing of rewards—a crucial aspect of effectiveness.