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For small business owners the cost of staff turnover is a problem which has many faces. Once a member of staff decides to leave it creates a snowball of financial and workload headaches. Initially the firm will experience a loss of output whilst a replacement is lined up, hiring a replacement will also use up valuable resources as will agency fees, job advertising, management time spent interviewing and the training costs involved in getting the replacement up to speed.
A study by Oxford Economics suggests that replacing an employee could, on average, cost SME’s £30k per employee. The study took into account the time it takes an employee to reach optimum productivity which it states as 24 weeks, although this will vary hugely depending on the industry and calibre of employee.
The UK as a whole is currently in a slump when it comes to employee productivity, with levels their lowest since the mid 90’s according to some sources. Now perhaps more than ever, companies need to be proactive in finding effective ways to get more from less and keeping hold of the staff they already have.
Be Wiser Business have compiled a brief guide to help small business owners make the most of their workforce and help ease the burden of staff turnover.
It is no surprise to some that employee retention operates much the same way as attracting staff, often it is a combination of factors that feed into a staff member’s decision to leave a position:
These six factors will highlight one of two problems for any business owner, either you are not meeting the needs of the employee or, a competitor is offering them a better package. To a small operation the loss of a key employee could have catastrophic implications likewise; paying through the nose to keep hold of them could also put a halt to business.
Unfortunately there is no winning formula to staff retention (we’re still working on that one) and it’s up to the CEO to find the optimum balance of the above factors to keep names on the payroll.
The alignment of values
A mismatch of vision, ethics or values can be a big thorn in the side of any working relationship. Ensuring that your corporate ethos is clear to any job applicant can significantly reduce the chance of issues arising further down the line.
Salary and bonus
Often seen as the plaster to cover over the cracks, ploughing money into salary is seen as a quick fix by many business owners. Unfortunately spare cash isn’t something every SME has in abundance but there are opportunities to fine tune your staff remuneration by way of performance related bonuses. Paying employees more as your business revenue increases minimises the risk of your staffing costs causing cash flow issues and can be more flexible than fixed salaries.
Company benefit schemes may seem like the domain of large organisations but small businesses can get in on the act as well. Local shops, gyms and food outlets often grant local businesses a small level of discount for their staff members and its worth enquiring with surrounding businesses.
Recognition of effort and performance can be much more subtle than we are lead to believe, often small tokens of gratitude can go a long way when attempting to boost the morale of your staff. Once again this is an element that can come in many forms, from a small thank you card to ‘employee of the month’ awards, there is a solution to meet every budget.
At the top of every workers agenda is career advancement, and if it isn’t then they probably aren’t the best employees to have in your business. If employees can’t see how they are going to progress in your company then it won’t be long before they begin to look for an environment where they can. It’s important to value the employees you already have and promoting internal staff is the best way to demonstrate career progression, but what if you don’t have any positions to promote staff to? Staff training shouldn’t be overlooked as an alternative to promotions and has the added bonus of increasing your workforce’s skill level.
The lifestyle that a job brings is a large factor in staff retention. Everything from work/life balance to commuting distance and social events feeds into the lifestyle of the job which helps form job satisfaction. The standard 9-5, Monday to Friday working week is becoming less popular as a result of flexible working hours, working from home and employees having more than one income stream. Having a business that allows flexible working patterns will make you more attractive to potential staff but also reduces the risk of your current staff leaving for a company that does offer flexible working.