Employee retention is one of the most important buzzwords small business owners are likely to hear. Media outlets and industry specialists consistently release guides on the importance of employee retention and how to improve retention for a growing business like yours. But what is employee retention, specifically?
Definition of Employee Retention
According to the Business Dictionary, employee retention refers to “an effort by a business to maintain a working environment which supports current staff in remaining with the company.”
Calculating the Cost of Employee Turnover
Although there is no one industry standard on calculating the cost of losing an employee, some studies (such as SHMR) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses.
But others predict the cost is even more - that losing a salaried employee can cost as much as 2x their annual salary, especially for a high-earner or executive level employee. Significant expenses include cost of hiring, onboarding, and long-term loss of productivity.
Given the substantial costs of hiring and training new staff, employee retention policies geared toward increasing job satisfaction and reducing employee attrition are a top priority for all business owners. The goal of an employee retention program is to have productive and happy employees who want to stay with your company long term.
How to Improve Employee Retention at Your Small Business
So what policies can you implement to improve retention and decrease turnover? Employee retention tips include tracking your current retention rate before setting goals, using established employee retention theories not guesswork, and creating a high feedback environment for employees and managers.
In terms of actionable changes, there are a number of perks your company could implement to boost employee retention and grow company culture. According to a CareerBuilder.com study, the top workplace perks that employees want are:
1. Half-day Fridays
2. An on-site fitness center
3. A casual dress code
Health benefits are also a significant recruiting and retention tool for businesses, small and large. However, for small businesses, the cost of group insurance may make it impossible to offer a group plan.
The solution? Individual health insurance reimbursement (aka a premium reimbursement healthcare program), which gives small business owners a way to control health insurance costs while still providing employer-funded benefits.
Bottom line? Employee retention is especially important for small businesses who are competing with larger companies for top talent, and these tips for retention strategies can both increase workplace satisfaction and create an office culture your employees won’t want to leave.
Do you have questions about employee retention? Leave a comment below.