Employee Management

Yes, you can compete with the big guys when it comes to employee retention. Here’s how.

When employees are surveyed about what makes them stick around, the answers they give have less to do with how much they get paid and more to do with quality of life, according to New York employee retention consulting firm Retensa. The good news for small business owners: “people are not leaving their jobs for more money,” says Chason Hecht, Retensa’s president.

“The small business owner’s biggest fear is, ‘Am I paying enough?’ But it’s rare that people leave for a few extra dollars,” he says. “People leave because they aren’t growing or learning, or they don’t feel successful in or a part of what they do. And a lot of that is tied directly to leadership.”

Retensa’s Hecht says that there are plenty of simple, cost-effective things that any company owner can do to ensure employee tenure and avoid the costly recruitment and training expenses associated with hiring new employees. Here are four tips that can transform someone’s job with your company into their career.

Give them ownership.

There are two types of ownership—psychological ownership and financial ownership. Both are crucial to keeping your employees on track.

Psychological ownership is created when employees feel like they make a difference or have a say in the growth or direction that a company takes. Financial ownership is just what it sounds like: giving employees a stake—however small—so if the company takes off, they benefit, too.

“This is one of the most powerful forms of motivation, and it’s what’s going to distinguish you from any other organization that comes along and offers $5,000 or $10,000 more,” says Hecht.

You can tie ownership to company revenue as well as employee tenure and performance so you’re not giving away the house, but you’re still rewarding employees who help build and nurture your dream, he says.

Give them feedback.

Feedback drives growth and development, and builds confidence that an individual is succeeding in what they do. But too often companies wait a whole year before delivering a performance review—and most reviews are filled with negatives, says Hecht. “Provide regular feedback and people are going to be more receptive to both positive and negative comments,” he says. “And when you’re telling people what they are doing right, it’s very hard for them to leave.”

Make sure reviews and feedback include actionable items—don’t just tell them how they are doing. Tell them what they are doing right and what they need to do to become even better at their jobs. Another good idea: let employees give each other accolades and reward them with something as simple as a half day off or a certificate of appreciation; something visible and real.

Give them good managers—and let them tell you if someone isn’t. One of the most significant drivers of employee turnover, says Hecht, is a difficult employee/manager relationship. And unfortunately, small businesses have more than their share of difficult managers, he says.

“Most small businesses have someone who was a great IT person or a top salesperson who was promoted. Now they are managing six or eight people but they never learned how to manage; they weren’t given a book or training or a course on how to manage,” says Hecht.

Give managers—old and new—the tools to succeed by providing ongoing training and support. You don’t need to pay for an MBA, though. Most community colleges offer management courses, as does the Small Business Administration’s online Small Business Training Network.

Once trained, make sure you’re asking employees to assess their managers, but make sure you do it in a way they can speak freely.

Give them flexibility.

Chances are that your employees are working hard and making plenty of sacrifices. While you can’t compete with a larger business with pay hikes, you can compete in the form of flexibility.

“Your staff will pay this back in spades,” says Hecht. “If it doesn’t impact your service or the quality of your product, let people come in later or leave earlier if they need to. Let them work from home occasionally,” he says. “Flexibility is paramount for a small business owner and employee.”

Make it a keeper: Five things that you can do today to retain your employees for the future.