High rates of turnover have a negative impact on all businesses, but the toll is even greater on SMEs where margins are tight. At a time when the cost of running your business is increasing anyway, the last thing you need is to invest time and money into a new employee for them to leave within the first two years. High turnover is likely to have a wide ranging, negative impact on many areas of your business including:

Additional costs: for the first two years after an employee joins a business, it is estimated 10-20% of an employee's salary is spent on training. If that employee leaves during this time, your business will have to absorb that cost a second time for their replacement.  

Poor output: high turnover can impact an SMEs output directly and indirectly. Firstly there is the gap left by the employee that is leaving until their replacement has been found and trained to a similar standard of productivity. Then there is the impact high turnover has on other employees who may have to cover, resulting in lower outputs in other areas of the business. 

Low morale: high turnover can also negatively impact morale and the company culture within your business. It can be unsettling for other employees when a high number of people are leaving an organization. If this has an impact on the remaining employee’s mental health it is also likely to damage productivity. 

Post Covid-19, industries across the board are experiencing skills shortages. In many industries it is an employee’s market with many negotiating better terms and conditions of employment. Smaller businesses are not immune from this and statistics from the National Federation of Independent business showed 80% of small businesses were struggling to find qualified employees. 

It is easy to see why it is more important than ever for smaller businesses to take a proactive approach to hold onto the employees they have. 

Understanding the impact of high turnover is one thing but what can a small business do to keep their most valuable employees? Particularly when you may not have access to the financial packages of enterprise counterparts.

1. Tailor made benefit packages

Although as a small business you may not be able to offer the highest wages, you can make employees feel seen and valued by moving away from one size fits all benefits. Improve employee retention by providing options members of staff can choose from depending on their circumstance. For example, an extra day of PTO might be more valuable to one person, where as the ability to start later might be a more valuable benefit for another. 

2. Clear expectations around roles

Research by Gallup shows half of employees are not sure about what is expected of them at work. This can be confusing and frustrating in the long term. As a small business, ensure employees at every level have clear expectations around what they have to achieve in a fixed period of time. It is important that expectations are revaluated regularly too as business needs flux throughout the year. This may not only impact employee retention, but employees with clear expectations have been found to be 10% more productive. 

3. Improve employee recognition

The importance of employee recognition has been growing over the last decade. A study by Office Team on the value of recognition saw a 15% increase in its importance between 2012 and 2017. The more recent study showed two thirds of employees would quit if they don’t get enough recognition of the work they are doing. In many businesses recognition outside of management feedback sessions is team focused. Although this is important, individual recognition matters too.  

Ensure managers are taking the time to acknowledge employees who are going above and beyond individually to show them their exceptional work is not going unnoticed. 

4. Encourage feedback

Do not underestimate the power of feedback. Encourage employees to share their thoughts on your business through anonymous feedback. Take the time to review, listen and act on requests where possible, particularly if there are multiple requests for the same thing. 

There is no doubt employee churn is a significant challenge for business in 2022 but we hope these suggestions help your small business bolster itself against some of them. 

As you work towards improving your employee retention, let us take care of your short term health insurance needs when you are sending employees overseas for business or training.