Question: As a small business, I get my best employees leaving for jobs at our bigger competitors. What’s my best strategy for keeping them on board with me?
Answer: With Americans increasingly optimistic about the job market, more individuals are gaining the confidence to leave unsatisfactory positions to find new work. The Bureau of Labor Statistics reports that the national quit rate has risen significantly over the past year.
That means small employers will have to work harder than ever to retain their best workers, says Tom Gimbel, president and chief executive of Chicago’s LaSalle Network, a staffing and recruiting company. “Workplace culture is playing a bigger role in overall job satisfaction and is a reason why smaller companies are losing key players to the Googles of the world,” Gimbel says.
At MBX Systems, a 125-employee custom server manufacturer in the Chicago area, Chief Information Officer Justin Formella recently lost one member of his seven-person IT team to Amazon.com (AMZN) and nearly lost another to Google (GOOG). “It’s been a lot harder for us to compete on a salary standpoint” when larger outfits will pay moving costs for new hires or allow them to work remotely, he says.
Another challenge for smaller companies is giving employees exciting work. “Big tech companies have a lot of fresh projects,” Formella says. “I can’t always compete with that. But employees don’t want to be working on boring stuff. They want to make a difference.”
He tries to balance those inherent disadvantages with such perks as flexibility. “As a small business, we have the luxury of telling employees they can decide whenever they want to start work and leave. And if they want to work from home a couple days a week, I can leverage that if they’re not working directly with customers,” he says.
Small business owners should also form personal relationships with their employees and learn what makes them tick. “Happy people rarely get poached,” says Jon Lal, founder and chief executive of Boston’s BeFrugal, an online coupon site. Of his 25 employees, more than half have been with his 13-year-old company more than eight years. The best staffers are “almost never motivated 100 percent by money,” he says.
He has been able to nurture employees by bringing them up through his company’s ranks and, in some cases, building job duties around their strengths. Promoting from within is cost-effective, too. “I can bring in new people at lower levels, and that way I’m not competing for talent in the same way larger companies are,” Lal says.
When it comes to compensation, pay fairly and investigate long-term incentive plans that give employees a stake in your company’s future growth—and give them pause about walking away, says Mae Lon Ding, a compensation consultant and president of Personnel Systems Associates in Anaheim, Calif. “Make sure you’re giving superior compensation for superior performance,” she adds.
Don’t forget that for most people, emotions play a large part in employment. Employees who have fun with their colleagues and look forward to being at work will be much more likely to stay than those whose managers are grouchy or unreasonable. “Understand if someone is going through something personally and offer to take something off their plate. Small gestures like that come full circle,” Gimbel says.
And in the long run, don’t forget that staff turnover isn’t the end of your business. “You want fresh employees to revitalize the place,” Lal says. “Zero turnover is not an ideal goal.”