It is generally accepted that a small business is one that employs fewer than 500 people. The Small Business Administration defines a small business by the revenue generated. That amount is between $1 million and $4 million annually. These businesses may be small, but they are mighty. In fact, almost all businesses in the U.S. are considered small businesses.
When it comes to staffing, small businesses face many of the same challenges that the larger corporations do. In a recent survey, finding skilled talent was the biggest hurdle to overcome. According to the National Federation of Independent Business, 43% of small-business owners said they had jobs they could not fill. However, unlike the bigger players, small businesses have fewer resources, limited budgets, high turnover rates and competition from larger firms.
What are small businesses doing to combat staffing issues?
Here are some strategies that may be applicable to your own situation:
- The shifting workforce landscape has forced small businesses to reassess how much autonomy they are willing to give their staff. Young people just entering the workplace are seeking greater life-work balance. As a result, these skilled professionals are seeking companies that offer remote work, flexible work hours, higher salaries and better benefits. The small business that fails to meet these expectations will have a hard time filling positions.
- Creating a positive company culture sets the stage for how the employees feel about your company’s brand and their role in it. The onboarding process needs to give the new hire the right tools and training to quickly become a productive member of the team.
- Employees want to feel that they are contributing to the company in a meaningful way. Small-business owners need to provide feedback on employee job performance. The idea is to improve employee performance through mentoring or additional training before the situation cannot be reversed.
- Small businesses that do manage to attract the right people often find themselves unable to retain them. To counter this, small businesses should create a positive working environment that encourages employee loyalty and job satisfaction. This includes establishing clear career paths for advancement, investing in professional development, and keeping salaries, benefits and bonuses competitive with those in the rest of the industry. Low pay is one of the most often-cited reason for leaving.
- The costs involved in replacing an employee are considerable, as is lower productivity when a company is not fully staffed. Company morale generally drops as the remaining employees feel greater pressure when they have to pick up the slack. Many companies will hire temporary freelancers to fill the gap until a permanent employee is hired.
- To improve recruitment, partner with local colleges and vocational programs to find skilled workers. You may want to create an internship program in your company to produce a pool of candidates that you are already familiar with. You may want to offer an employee referral bonus as an incentive to your current employees who recommend an eventual hire. The bonuses are usually paid after the new hire is employed for a set period of time.
- Conduct an exit interview to gather feedback from the departing employee. Keep an open mind as to what they have to say, as it may help you improve your company’s working environment, which could generate higher retention.
Your small business deserves to function smoothly and without the interruption inherent in employee resignations. The strategies outlined here give you practical approaches to retaining employees who are proud to work for your small business.