A high employee turnover rate can bring unnecessary costs to a small business.
So it’s no surprise that human resources experts say retaining high performers should be a priority for any small business. With a small team and often a tight budget, you want to keep those who pull their weight for as long as you can.
There are two main schools of thought out there when it comes to employee retention: those who stress the importance of a competitive pay packet, and those who say you can keep a high performer without dipping into the bank. To help figure out which approach works best for you, here are the experts’ top tips for retaining employees for longer.
HR Anywhere managing director Martin Nally says the most valuable thing a workplace can offer staff is flexibility.
“This is the new fashion,” he told SmartCompany. “What we know is that Gen Y are wanting to incorporate work into their lifestyle, whereas previous generations have incorporated their lifestyle into their work.”
Nally says this means offering people flexible working hours. This could be letting employees go home early to pick the kids up from school, or even negotiating with the worker over when they take annual leave as opposed to telling them when they can or can’t have a holiday.
Nally cites one example where a woman wanted to go to Argentina for a friend’s wedding. She only had four-and-a-half weeks of annual leave to spare, but her trip was going to mean she was away for up to six weeks. The company made her resign and she took them to court, before getting a job with a successful competitor. All of the time and money associated with this issue could have been saved had the employer been just that little bit more flexible.
“If we can offer people flexibility in hours – or even let them work from home – you can retain people.”
Share your company’s vision
Nally also says it’s important to have a strong idea of where your organisation is heading in order to inspire employees to stay for the long term. But that by itself isn’t enough – you have to share this vision with them.
“What you need to do is engage people,” he says. “Authorship builds ownership. If you work for me, and I tell you what our objectives are, they’re my objectives. But if you co-author them there is this level of empowerment.”
Nally is a big believer in not having what he calls “a mortgage” on all the great ideas. If employees are consistently asked to contribute, they will feel like an integral part of the business. Nally says through mutual respect and involvement, people will go above and beyond the call of duty.
“I’ve learnt to be ask-assertive and I’m constantly amazed by the outcomes. One of the greatest satisfactions I have is getting our people talking about our business.”
Our HR Company managing director Margaret Harrison says an employee’s pay check is often not discussed as often as it should be – but it doesn’t need to be this way.
“The hard facts of life are that you do need money,” she says. “It is the elephant in the room and it shouldn’t go unsaid.”
Harrison told SmartCompany of one example where a member of her family hadn’t had a pay rise from her employer for five years. This really frustrated her to the point where she left for a better-paying job. Harrison thinks this is particularly an issue for Gen Y who are just starting to get mortgages and other responsibilities.
“It needs to be a top-of-mind issue that people do care about money. Any time we have been doing training programs and we talk about motivation, the first thing I will do is write money on the whiteboard. You can physically see everyone breathing a sigh of relief.”
Harrison says because both employers and employees are hesitant to talk about money, the conversation often happens far too late to solve the problem.
“I think once a year you need to have performance discussions and salaries need to be reviewed after a person has been there for a year,” she says. “Employers need to be honest with people. We’re all in this together.”
As for employees who are thinking of discussing their wage or salary with their boss, Harrison’s advice is simple: go for it.
“I think you simply have to have an adult conversation. Don’t hold back, it’s a life issue.”
However, Nally is adamant employee retention is not all about the financial reward.
“Organisations lose people not because of money,” he says. “People will leave because of the culture in their workplace. If I am a poor manager and try to retain someone by paying them more it’s not going to be sustainable – they will take the money and leave.”
Nally says if you can create a productive but enjoyable workplace, then everyone wins.
“Money is not always a solution. You can be competitive and look for other ways.”
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.