Employee retention is becoming a priority for small businesses
Small business employers are struggling to hold on to their top talent as employees switch jobs to advance their careers. This is forcing businesses, especially smaller ones, to think on their feet and make radical changes to retain their valuable workforce.
The last five years have seen an increasing number of Americans leaving their jobs, making employee retention strategies crucial for small businesses. In April 2014, 2 percent of working-age Americans in the private sector voluntarily left their jobs compared to 1.8 percent during the same period a year ago. The rate of people quitting jobs was at its lowest in 2009 during the recession, the Bureau of Labor Statistics (BLS) reveals.
Employees are switching to companies that offer them better career opportunities at higher rates. From infusionsoft
The higher attrition rate is also attributed to the comparatively slower professional growth for employees who have a long-term association with the company. According to Forbes, those who stay with an organization for over two years make 50 percent less than those who move on.
An assessment by the Center for American Progress reveals that the cost of employee turnover was 21 percent of an employee’s annual salary in jobs requiring specific skills.
Aside from the financial loss that employers suffer, when an employee serving a long tenure leaves, the company also has to bear losing that employee’s experience, institutional knowledge, and familiarity with the work.
Businesses are also prone to losing younger workers far more quickly than older ones. Whereas older employees (between ages 55 and 60) stay for an average of 10.4 years with a company, for younger workers (between 25 and 34), the median employee tenure is only three years.
Keeping in mind the younger generation that comprises most of today’s workforce, experts suggest that more than managing, the new generation needs motivation. It also suggests small businesses imitate Fortune 500 companies to retain top professionals. Engaging workers in philanthropy, mentoring, and discussing their future career and other such activities can help keep employees satisfied where they are.
For example, when Kellie Love, an instructor at a dance studio who was bringing in large revenues for the business, decided to quit, studio owner Andrea Bisconti offered her a partnership in the company.
Jon Lal, founder of the 13-year-old online coupon site BeFrugal, has been able to retain most of his employees for over eight years. Lal believes that it takes more than just the money to keep the best employees motivated.
As the former COO of GE, Lawrence Bossidy aptly said, “I am convinced that nothing we do is more important than hiring and developing people. At the end of the day you bet on people, not on strategies.”
Category: New Products
