How can SMEs improve employee retention?

With employees being any company’s most valuable asset, associate director of advisory at Peninsula, Kate Palmer explains the importance of retaining skilled staff and how small businesses can achieve it.

Why retaining skilled staff is essential for SMEs

Starting your own small business comes with plenty of challenges. Therefore, it's not surprising that many SME employers see retaining skilled staff as one of the most vital ingredients for success.

With this in mind, here’s five ways SMEs can look to improve employee retention:

Ensure you stay competitive

Money can be a powerful motivator, and the opportunity to earn a higher salary will often cause individuals to look for work elsewhere. As such, SMEs should conduct regular salary reviews to ensure the wages on offer remain competitive. Those with extra capital may even look to pay above the market rate for critical roles, discouraging employees from leaving and attracting new talent at the same time.

Taking the same approach to staff benefits is also likely to have a similar effect. Employers can provide add-ons such as car allowances, while annual bonuses may also be an option for some. Smaller firms will still be able to achieve similar results without spending as much by considering benefits such as subsidised public transport to encourage staff loyalty.

Be flexible with work schedules

Aside from traditional income motivators, recent studies have suggested that a growing number of employees are giving strong consideration to the level of work-life balance on offer when making career decisions.

As a result, SMEs should look to embrace flexible working practices to give employees greater freedom in managing their time at work. Allowing staff to reduce their working hours or amend their working schedule will be appreciated and is likely to prevent frequent staff departures.

Proactively manage work-related stress

With figures showing work-related stress and poor mental health are on the rise, SMEs should ensure staff are getting enough time away from work to unwind. Not only should line managers be alert to workers who regularly stay late or take work home with them, SMEs should also ensure individuals feel comfortable asking for help if they are struggling with their workload.

All businesses should provide access to support systems too, such as an employee assistance programme (EAP) or a mental health first aider. The latter is likely to be particularly appealing to SMEs, given that the courses offered by accredited mental health practitioners are relatively inexpensive in comparison.

Offer clear career progression

Individuals may consider leaving a company if they feel there is no career progression and greater opportunities are available elsewhere. To avoid this, SMEs should review the training and development on offer within their organisation and increase this where necessary.

Managers should be able to identify areas of strength and weakness amongst employees and see if they can provide training to improve. Larger SMEs may also consider creating specific career pathways which will give staff a clear sense of what they can achieve in the company.

Create a culture of inclusivity and equality

Last, but by no means least, SMEs should cultivate a welcoming and positive workplace, free from discriminatory behaviour. Treating staff unfavourably or failing to protect them from harassment can be unlawful and allowing this to occur will create a hostile environment.

Aside from having a well-constructed anti-harassment policy in place, employers should actively guard against the impact of unconscious bias when looking to resolve workplace disputes. Taking these focused measures should help develop a shared sense of camaraderie and reduce the likelihood of affected individuals opting to leave the organisation.

About the author

Kate Palmer is associate director of advisory at Peninsula, a team of HR, employment law, and health and safety experts.

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