Most employers think about long-term strategies like raising wages, paying for health benefits, or subsidizing a 401k when it comes to improving employee retention rates. While these are effective, there are other strategies that business owners can take on in the short-term to retain qualified workers. In this article, Pacific Community Ventures shares five low-cost strategies you can take to distinguish your business and improve retention rates without breaking the bank.
1. Offer stable but flexible work schedules
If you have staff that are regularly working long and stressful hours, you’ll likely run into issues with employee retention. Employee burnout is a real issue that many workers face, so it’s critical that you create a workplace culture that values work-life balance. As a small business owner, an easy and cost-effective way you can promote this balance is by offering stable work schedules.
Stable schedules enable your employees to balance their personal lives without costing them a paycheck. Encourage employees to leave when work hours are over and provide work schedules regularly and in advance so your employees can plan their personal lives ahead of time. And if late nights or extend work hours are necessary to wrap up a project, offer late arrivals or an extra day off as compensation.
Of course, it’s important to understand that personal issues arise, such as childcare, health and transportation, that can complicate the scheduling process. We recommend creating a written plan that clearly outlines the policies and procedures you can take to address these unexpected issues. For instance, for employees with an unexpected injury or health issues, you might offer them flexible work schedules so that they can attend doctor’s appointments.
2. Create a paid leave policy
By law, all workers are guaranteed some time away from work. However, extending the option of paid leave for personal reasons, such as the birth of a child or caring for a sick family member, can improve your operations and employee retention in numerous ways.
Studies have shown that businesses have actually reaped benefits from providing paid leave. This is because paid leave policies help your employees balance their professional and personal lives and show them that you care about their health and general wellbeing, and are invested in their future at your business.
3. Focus on employee engagement
Knowing how to engage and motivate your employees is key when it comes to improving staff retention. When employees are not engaged at work, they have little incentive to stay. In fact, even pay increases won’t always keep unengaged employees at a job, especially if they don’t see a promising future or a clear development path within the business.
Given this, it’s critical that small business owners understand how to keep their employees engaged. While there is no one-size-fits-all solution when it comes to increasing employee engagement, focusing on creating a workplace culture that values respect, recognition and growth, is a good place to get started.
4. Consider an employee ownership stake
Offering an employee retirement plan can provide a competitive advantage in hiring and retaining workers. If a more traditional retirement arrangement isn’t right for your business, consider offering another financial incentive plan that helps your employees increase their earning (and saving) potential.
Some small businesses use profit sharing to incentivize productivity and increase employees’ earnings, even structuring it as a formal retirement benefit. An advantage with profit sharing plans is their flexibility: employers get to decide how much and how often to contribute toward employee accounts. Business owners can also contribute to employees’ accounts one year but not the next, depending on how profitable they are from year to year.
If you like the idea of increasing employee buy-in but need a more short-term incentive, consider cash payouts or offering bonuses based on performance. Both are taxed as part of employee income (unlike most retirement contributions), but they offer much greater flexibility to employers.
5. Reevaluate your onboarding process
Effective onboarding processes do more than just familiarize your new hire to their work environment and responsibilities: they reaffirm your company culture and the value of working at your business. Designing an effective and comprehensive onboarding strategy sets your employees up for success, especially during the first few months of employment when turnover is at its highest. Here are some tips for designing a strong onboarding process:
- Provide detailed onboarding materials, such as process guides and manuals, that employees can reference at a later date.
- Keep your onboarding materials consistent with your company culture.
- Have all necessary paperwork printed, organized and ready to present to your new hire.
- Offer new hires a mentor.
- Plan a simple assignment or project for your employee to tackle on their first day or throughout the first week.
- Perform regular one-on-one check ins.
- Plan a social activity for the first day to acquaint a new hire to other staff members. Don’t underestimate the value of a team lunch.
It’s OK to ask for help getting started
Meet with an expert or get advice from a peer. If you’d like additional guidance, various public and nonprofit services can connect you to advisors with personal experience running a small business, including SBA Small Business Development Centers, Pursuit’s free business advisory services and Pacific Community Ventures’ free BusinessAdvising.org platform. It connects small business owners like you from anywhere in the country with experienced pro bono business advisors who can offer ongoing advice on a range of issues, including HR, marketing, IT, operations, and other small business concerns. To find other services in your area, visit the SBA’s Local Assistance page.
About Pacific Community Ventures
Pacific Community Ventures is a nonprofit Community Development Financial Institution (CDFI) that envisions a world of thriving communities where everyone has a fair shake. Our mission is to invest in small businesses, create good jobs for working people, and make markets work for social good. We achieve our mission through a combination of fair lending, free mentorship, skilled volunteerism, social impact measurement and management tools, and field-building research.