Effective Techniques to Reduce Employee Turnover

If you own a small business and are not seeing employee turnover of greater than 30% per year you are doing something right and need to advise all the other small businesses. As we all know; for small businesses the employee turnover is a fact of life. One of our clients tells us – “I am not in the restaurant business. I am running a training business because of the constant need to train stream of new employees that I have to hire because of turnover”.
In order to find ways to reduce the turnover it is important first to understand the causes behind it. Some of the causes listed below are obvious and are common across majority of small businesses.

• Most employees working in small business are paid minimum wage; so they have no hesitation to jump ship as soon as they find another job that pays just a little bit more.
• The employees do not see their current job as a career where they can grow to something meaningful in the future.
• It is very easy to learn new skills in a new job; so the new employers have no hesitation in hiring people who do not have required skills. This makes it easy for employees to switch jobs easily.

All the reasons cited above make it practically very difficult to hold onto good employees. However, there are steps you can take to deal with this issue and reduce the turnover. Here are our suggestions collected from personal experience and from talking to our business colleagues.

1. Give them a Share of Profit. Giving employees share of profit or sales gain will give them a sense of ownership and responsibility. Instead of giving them the share right away you should create an accrual plan such that the bonus is set aside for them over a period of time and they can collect it after a certain time period (6 months or 1 year). This is particularly effective to retain good employees who are contributing to the business success in the first place.
2. Build a Great Team. One of the primary reasons employees stay at their current job is because of the work environment and the colleagues they are working with. Building a good team of employees gives those reasons to actually enjoy their work and have fun. This will boost their chances of staying at the current job.
3. Find the Needs of Employees. My father, who has been a small business owner all his life used to say – “Every person has needs and wants that, if you can identify and provide, will increase his loyalty to your business and make him stay with you.” Different people work for different reasons and want different rewards. Some of the examples are flexible hours, health insurance, time/ money to study further and so on. Your job is to find out what they are looking for and find ways to give it to them.
4. Build Fun Workplace. Those who know about perks available in Google offices know what I am talking about. While you may not be able to provide gourmet food and massage chairs to your employees you can still build a fun workplace on the cheap. For example, you can bring donuts for the employees once in a while or have an outing in summer, etc.

After all is said and done you are going to have some turnover (hopefully lower than before); so you should be prepared to deal with it. We will explore how to do it in the future.
Do you have additional suggestions based on your experience? Please share them in the comments below.