14-02-2008
Small business secrets to staff retention
By Karen Baldwin
Without even knowing anything about your business, it would be pretty safe to predict that one of the biggest challenges you face is how to attract and retain the best staff.
Why? Because it is the same issue currently being faced by almost every growing small business in the UK.
And it is not a problem that is unique to any specific industries or just to SMEs. A recent survey of more than 200 senior HR managers by a leading talent management company found that 30% cited employee retention as their top challenge for 2008, while 23% nominated recruiting the right staff.
The concern is that the problem is not likely to be resolved any time in the near future. Small businesses have unique difficulties in the recruitment area, such as their limited ability to offer top salaries and benefits, and long-term job security. They also tend to have fewer in-house recruitment resources meaning that they must resort to paying out for a recruitment agency or a human resources consultant.
Small businesses should ensure that they are equipped to cope with the many and varied issues that arise with recruitment and human resources. Take advice from outside resources if you have no in-house HR personnel, and make sure you comply with the legal requirement to have employers’ liability insurance. This is vital for ensuring the business can cope financially if an employee makes a claim against it.
Predictions are that a talent shortage is likely to become an issue for the UK business community in the coming years.
The population as a whole is ageing, causing the available labour pool to contract. In 2006, there were 20 million people aged 50 or over. It is forecast that in 2026, 50% of the adult population will be in this age bracket.
This means that while some older workers may postpone retirement and decide to continue working, most of those workers over 50 will be looking towards leaving full-time employment on or before their 65th birthday.
At the other end of the spectrum are the Generation Y workers - the demanding, technologically savvy yet high performing employees born after 1980 who change roles on a regular basis as part of their progression up the career ladder.
Managing the needs of these diverse groups can all seem a bit overwhelming to the business owner who just wants to initially attract the best people available and then, importantly, retain them.
Employees want stability at work
Overall, however, employee turnover is fairly low – 18% according to the Chartered Institute of Personnel and Development (CIPD). Average job tenure has remained fairly stable over recent years and almost a quarter of employees in the UK have been in their current jobs for five years. This suggests that given the right salary, working environment and opportunities, people are happy to remain with one company for a longer period.
Staff stability is vital to the success of any business and high staff turnover levels can be costly for a business on many levels – the financial cost of lost productivity and recruitment expenses, the impact on customer relationships and the negative effect on staff morale.
How to retain your staff
Despite the many different types of employee and their vastly contrasting employment needs, there are some fundamental principles that should be at the forefront of your mind when developing policies to keep your staff on board.
One thing that virtually everyone – no matter what their age or stage in life – wants more of is work/life balance. This is not something only sought by parents with young children.
Older employees seek more balance if they decide to continue working into their 60s, not wishing to have their job dominating their life completely, but wanting opportunities to travel or spend time with their grandchildren.
Generation Y employees are characterised by their rejection of the demanding work schedules of their parents, wanting more time to explore personal interests.
What is also a fundamental need of all employees is the opportunity to work in an environment where they have the opportunity to grow and be challenged; to feel they are make a meaningful contribution to the business and are appreciated.
Here are some initiatives to consider:
Implement flexible arrangements that can accommodate individual preferences on working hours. Consider options such as a reduced working day to allow school pick-ups; sabbaticals which allow for up to 12 months leave of absence without pay; or the ability to sacrifice a portion of income for more annual leave each year.
Make your workplace a warm, inviting and fun place to be where employees feel secure and inspired. That doesn’t mean encouraging people to slacken off, but it will ensure that they enjoy coming to work and feel that they have a long-term future with your company.
Money is not always the main reason people decide to stay or leave a company, but ensuring you pay in the top 25% of your industry will help your cause.
Maximise opportunities for individual employees to develop their skills and advance in their careers. This could include opportunities for promotion, alternative roles or sideways moves that vary experience and make the work more interesting.
Ensure that training and development opportunities are available to all staff. This could include ‘topping up’ previous qualifications or providing the scope to learn a new skill set.
Give your employees a voice through staff committees, newsletters, satisfaction surveys and staff meetings. Ask them what they like and dislike about working in your business. Ask them what could be changed to make it a better place to work.
Retention is much more likely when the right person is put into the right role from the outset. Make sure you have thorough recruitment processes in place that allow you to match the best applicant for each role.
There will always be a percentage of employees that decide to ‘move on’ to a new company. The trick is to ensure that they are not choosing to work for your competitors because they offer a more satisfying work environment.
