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Body_Turnover-sm.jpgBy Sherron Lumley.

 

Small businesses want the same top talent that large businesses do, but holding on to good employees is challenging when jobs are plentiful. As a result, small business owners have to be especially creative when it comes to attracting—and retaining—the best workers.

 

The numbers help tell the story. Since the official end of the recession in July of 2009, job openings are up 45 percent, according to Bureau of Labor Statistics’ latest Job Openings and Labor Turnover survey. In the first month of 2012, there were a more robust 3.5-million job openings, although that number remains below the 4.3 million mark before the recession began in December 2007. But even in those good old pre-recession days, employee turnover was higher for small businesses than for larger businesses, according to a report by the U.S. Small Business Administration, (SBA). 

 

“Both large and small companies want to hire the same people,” says Casey Alseika, partner of WatsonBarron LLC, an executive recruiting firm in Spring Lake, N.J. His company works with clients ranging in size from major corporations to family-owned small businesses, providing him with a unique vantage point on the matter. 

 

“Larger companies have taken the stance that the job market is not great and they have reduced their numbers and have fewer people doing more work,” says Alseika. “On the other hand, smaller companies are doing the opposite, trying to create a better overall quality-of-life experience for their employees,” he says.

First, hire the right people

Shawn Whisenhunt is the owner of Performace Prototypes, a manufacturing business in Vancouver, Washington that makes parts for excavators, forklifts and other heavy industrial equipment. He’s in his eighth year of operations with 14 employees and has had zero employee turnover since day one. So what’s his secret?

 

When it comes to hiring, Whisenhunt admits to being selective, taking care to make sure it’s a good fit before a position is offered. After that, “It’s a pretty simple equation,” he says. “Treat employees decently and pay them decently and they will be loyal. I’ve yet to have anyone quit on me.”

 

He describes the culture at his company as busy yet laid back, and says even though the workers could possibly make a bit more elsewhere, they stay because they like the work atmosphere. 

 

“I let them listen to the stereo all day and they don’t have a set schedule. They can go to lunch when they want, and we have all-you-can-drink coffee,” he says.  “As long as they’re turning out good products, I’m happy.” 

PQ_Turnover.jpgThen, create the right culture

Kevin Sheridan is Senior Vice President of Human Resources Optimization for Avatar Solutions in Chicago and author of the new book, Building a Magnetic Culture. While he  was surprised to see his book shoot to best-seller status, he feels its popularity underscores the mounting concern and interest that businesses have in attracting and retaining talent.

 

“The top reason people leave,” says Sheridan, “is lack of work-life balance, combined with job stress, which is the perfect storm for disengagement.” Work-life balance, he explains, means employees want to have flexible job hours to deal with things that come up from day to day and they also want the ability to telecommute or work from home, which lets them save money on gas and avoid the stress of a commute.

 

Besides flexibility, giving employees time off is also part of the work-life balance formula. “This is especially valued by younger workers,” says Sheridan.

 

The magnetic small business culture that wins the loyalty of its people is one of values and emotional and intellectual commitment from employees, Sheridan explains. “Employee engagement is the attractor and glue of top talent.”

Next, engage employees at all levels

CDL Helpers in Winona, Minn., was created to tackle employee retention in the trucking trade, an industry with some of the highest annual turnover—81 percent last year.

 

“Employees that feel like their work destabilizes their lives or that their job keeps them from achieving their personal goals will leave,” says CDL Helper’s founder, Tucker Robeson. He recommends a focus on creating stability in the lives of employees and paying people what they need to lead a satisfying, fulfilling life.

 

Robeson also advises small business owners to reach out to employees personally on a regular basis, in a situation away from their peers. “Give them a chance to have a candid one-on-one discussion with you about what you can do to make their days easier and improve their work environment,” he says.


It’s also important to show your ground floor employees exactly how their small actions are crucial to the big goals of the business, Robeson adds. Tell them directly how important their job truly is to the overall success of the business.

 

Alseika from WatsonBarron concurs. “People are a small company’s biggest resource. It’s important to give everyone a sense that they are a part of the company’s long term plans.” 

Consider your employee benefits

Like it or not, “It’s difficult for a small business to retain employees if they don’t offer healthcare. People will take less money to get good health care benefits,” says Alseika. 

 

Health and retirement benefits are the most important factors contributing to employee turnover, he notes, and SBA research confirms that benefits decrease the probability of an employee leaving by 26.2 percent, reports the SBA’s Department of Advocacy.

 

Beyond healthcare and retirement, 44 million U.S. workers lack paid sick days, according to the Center for Law and Social Policy, and this is another motivator in the decision to stay or go. Although healthcare benefits may be too expensive for some small companies to offer and still stay in business, paid sick days and family leave are supportive policies that improve job quality and employee morale, which, in turn, reduce employee turnover. 

Finally, say 'Thank you.'

Back in Vancouver, Wash., Whisenhunt says his employees at Performance Prototypes know they are appreciated and he sees this as key to his success. “Thank them,” he advises, “give them a bonus, pay them for Christmas and major holidays and buy them lunch once in a while.” 

 

As for health or retirement benefits at Performance Prototypes, “No we haven’t got there yet,” he says, “but we’ve talked about doing it and it’s coming.”

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