Employee turnover is something with which all companies have to cope. It doesn’t matter if they are Fortune 500 corporations or small mom-and-pop storefronts. However, SMB employee turnover is particularly concerning.
Employee Turnover Is a Numbers Game
Simply put, employee turnover can have greater impact at a company with fewer overall employees.
The smaller a company is, the more impact each employee has. This is particularly true for highly skilled, productive employees.
If an excellent HR manager leaves a large organization, it may hurt, but the organization has the human capital and other resources to move on. If the excellent (and only) HR manager leaves a small organization, it can be devastating.
Small organizations may also have different thresholds for evaluating what represents a high cost and what represents a reasonable investment in retention strategies.
(Of course, one could argue that the converse is true as well. At an SMB, the attrition of low-performing employees can have greater benefit than at a large corporation.)
SMB Employee Turnover
SMB employee turnover can be higher than for large corporations. Furthermore, SMBs may have fewer processes in place to deal with it.
According to an Oxford Economics survey, 21 percent of SMBs say “shortages of skilled talent have a major future impact on their company.” Only 14 percent of all the companies surveyed shared this view.
Yet SMBs aren’t addressing the problem more aggressively than corporations are. Only about half of SMBs measure employee engagement or actively address employee turnover when it gets high.
Similar to employees from larger companies, SMB workers value competitive compensation, work/life balance, manager quality, and meaningful work—but their companies are less likely to offer those benefits. Just 40% of executives and 44% of employees from SMBs say their company offers competitive compensation.
These shortfalls may explain why SMBs are struggling with attrition. Nearly one-fifth say their employee turnover rate is higher than that of their competitors—a higher proportion than for larger companies in our survey.
SMB employees are less likely than others to say they are satisfied with their jobs, and only about half would turn down a comparable position with similar pay outside their company.
Addressing SMB Employee Turnover
For SMBs to remain competitive, they have to measure and address employee turnover as much if not more than their similarly sized and larger competitors.
SMBs need to find out how happy their employees are. If their employees aren’t happy, they need to make changes to improve on that.
—Ryan Braley, Avitus Group Director of Human Resources and Risk Management
Employees who are personally invested in the company are typically higher performers than those who are not.
But how do you get employees personally invested in your company? By personally investing your company in them.
Measure employee engagement. Talk to employees about their short-term and long-term professional goals. Find out whether they are happy doing the work they’re doing now or if they want to do something else. Put it all down in writing, as a reference for both parties down the road.
Also, offer your employees opportunities to go in different directions if that’s what they want and it makes sense for the company.
You may have hired someone to do one thing, but that doesn’t mean they can’t do something else. And if it’s something they want to do more, they may do it better. Engaged, satisfied employees tend to be better employees.
Work together with your employees to set concrete goals. Give them tools they need to reach their goals. Revisit the goals periodically to make sure both parties are happy with how things are going.
Setting goals and periodically revisiting expectations improves the success rate of any plan. With engagement, it shows employees that you’re committed to their happiness and professional development. It reassures them that you are, indeed, invested in them like you say.
Focus Energy on Engagement
By focusing on employee engagement, companies can reduce employee turnover. It doesn’t matter what size the company is.
However, this is especially important for SMBs, where employee turnover tends to have a bigger impact.