With unemployment rates hovering at or near historic lows throughout most of the developed world, it’s getting harder than ever for businesses to recruit the talented employees they need to thrive. Even when they find the right people, however, there’s yet another struggle ahead: retaining them over the long term.
It’s a problem that’s even bigger than most business managers realize, with the annual average employee turnover rate in the US hitting an astounding 19.3% in 2018.
That equates to the average business losing one in every five employees per year. For a large organization, that might be easy to overlook. For a small business, though, it’s a problem that can derail the growth of the entire company. That means it’s more critical than ever for small businesses to pay renewed attention to their employee retention strategies, in the hopes of holding onto their most valued workers.
There are a variety of ways they can seek to do this, but as you might expect, the most effective means is through benefits and compensation. To help, here are some effective benefits and compensation enhancements—beyond employee salaries—that will help small businesses retain the workers they rely on to succeed.
1. Profit-Sharing Agreements
When it comes to providing employees with an incentive to stick with a company, there’s nothing like cold, hard, cash. For small businesses, however, it’s not always practical to take on the extra long-term human resources overhead that doling out raises entails. When they do, they risk stretching resources too thin or, worse, being forced to cut back in the event of a down year.
Instead, it’s a much better strategy to create a profit sharing program that employees can participate in. In that way, they will receive bonuses that are commensurate with the company’s overall success. That simultaneously provides a boost to teamwork and a financial impetus for top performers to remain with the company. Best of all, there’s no chance that the business will face an outlay it cannot afford, as the agreement is tied directly to the company’s bottom line.
2. Education Benefits
Another benefit that has excellent beneficial effects on employee retention is an education reimbursement or cost-sharing plan. In the past, businesses in general and small businesses, in particular, were hesitant to pick up employee education costs unless they were strictly related to an individual employee’s job description.
Today, with the level of student debt exploding an increasing number of people enter the workforce rather than take on a debt load they may never escape from. For small businesses, this is a retention opportunity. By offering to help employees defray some of the costs of their ongoing studies, they can engender loyalty and guarantee that employees will remain in their jobs for the duration of their continuing education. Plus, small businesses benefit by building a high-skill workforce—it’s a win-win no company should ignore.
3. Transportation Benefits
No matter where your business operates, it’s almost certain that one of the biggest employee pain points is their commute to and from work. In urban environments, workers waste up to an entire work week each year stuck in traffic during their commutes, while those in the suburbs have few mass-transit options to rely on. That’s what makes transportation benefits packages such a high-performance employee retention option.
For urban employees, subsidizing transit passes or organizing shuttle services can go a long way toward keeping employees happy and engaged, while offering benefits like novated leases or company fleet vehicles can help to reduce employees’ out of pocket transportation costs. In almost every case, offering benefits that alleviate the stress of the daily commute will be a popular perk that encourages employees to stick around.
Communication is Key
It’s important to realize, of course, that no two small businesses are alike, and therefore their employees will have different priorities and needs. The above options tend to be high-performing in most situations, but the best possible thing to do is to communicate with the rank-and-file employees and find out what benefits matter most to them. In most cases, they’ll be happy just knowing that the company they work for cares about their happiness and wellbeing—making the job of retaining them even easier.
The bottom line here is that there’s no need for small businesses to suffer crippling turnover. All they have to do is give employees what they need, and it doesn’t always have to be a raise.